TEXTILE INDUSTRIES OF PAKISTAN

GROUPS MEMBERS:
M.AREEB ISRAR(02-111182-236)
M.KAIF (02-111182-175)
DANIAL RIAZ (02-111182-150)
SUBMITTED TO:
Dr. ASGHAR ALI

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OVERVIEW OF TEXTILE INDUSTRY IN
PAKISTAN

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 ABOUT TEXTILE
 Textile is a term that comes from “texture” which is a Latin
word that means “to weave”.

 A cloth is manufactured by weaving or knitting forms a

fabric.

 The textile industry is often considered a backbone of the

Islamic Republic of Pakistan’s economy.

 Pakistan’s textile Industry is the

 Fourth Largest Cotton Producer
 Sixth largest importer of raw cotton and
 The third largest Consumer.
 INTRODUCTION
The textile industry contributes approximately
46percent to the total output or 8.5 percent of the
country GDP.

In Asia, Pakistan is the eighth largest exporter of

textile products providing employment to
38percent of the employer of the country.

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OVERVIEW
 Pakistan’s textile industry ranks amongst the
top in the world.

 Cotton based textiles contribute over 60% to the

total exports, accounts for 46% of the total
manufacturing and provide employment to 38%
manufacturing labor force.

 The availability of cheap labor and basic raw

cotton as raw material for textile industry has
played a major role in the growth of the Cotton
Textile Industry in Pakistan.

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KEY PLAYESRS
 Nishat mills limited,
 Younus textile mills limited,
 GulAhmed textiles mills limited
 Kohinoor mills limited.

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IMPACT OF COVID IN TEXTILE
INDUSTRY
 The COVID-19 pandemic has challenged the textile industry drastically
in 2020. Asia, which is one of the largest markets for the textile industry
in the world, has suffered from the prolonged lockdowns and
restrictions.
 The textile industry is an ever-growing market, with key competitors
being China, the European Union, the United States, and India.
 The industry also suffered several supply chain disruptions due to the
shortages of cotton and other raw materials.

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PAKISTAN TEXTILE INDUSTRY
DURING COVID
1.About 50% of Pakistan’s exports are shipped to countries most affected
by COVID-19
2.When the pandemic first hit China in December 2019, Pakistan’s textile
industry experienced an increase in export demand. Some of this was
primarily attributed to the Pakistan-China Free Trade Agreement
3.many countries restrict their trade with China and redirect to Pakistan as an
alternative

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Due to covid the Western countries cancelled their orders from India and
Bangladesh because there was serious corona and the orders were given to
Pakistan aka faisalabad.
There was a boom in textile industries that worker went short and was
working at full capacity.
The cotton production went down to 7.5 million bale that was lowest in 3
decades and they had to imported the raw cotton from South Africa and
American Australia to complete the orders and this increased the cost of
production of textile products.

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THE COTTON VALUE CHAIN
 The CVC is one of the largest value chains in Pakistan,
extending from cotton production to ready-made garments
to exports.

 It takes many actors, industrial units and processes to

convert cotton lint into a final product.

 This value chain is spread across formal and informal

sectors.

 The formal sector is comprised of spinning units (textile

mills) while weaving, knitting, garments, and towels lie
mostly in the informal sector in the form of small/cottage
units.
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SECTORS OF TEXTILE INDUSTRY:

 Spinning
 Weaving
 Processing
 Printing
 Garment manufacturing
 Filament yarn manufacturing

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IMPORTANCE OF TEXTILE SECTOR:

 Textile Industry is one of Pakistan’s largest industries. It plays a vital role in

contributing to the country’s economy through its industrial production, high
employment opportunities and bringing in Foreign exchange.

 The proportion of textile industry in the country’s economy along with its
contribution to exports, in terms of GDP employment, foreign exchange earnings,
investment and value added, and revenue generation altogether placed the industry
as the single largest manufacturing sector of the country. 

 The Pakistan textile industry contributes more than 60 percent (US $ 9.6 billion) to
the country’s total exports

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 Pakistani textile experts also said that the
readymade garment industry has emerged
as one of the significant small scale
industries in the country. Its products have
large demand both at home and abroad. The
local requirements of readymade garments
are approximately totally met by this
industry. They have also recorded that most
of the machines utilized by this industry are
imported or domestically made/assembled

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CHALLENGES FACED BY TEXTILE
INDUSTRY IN PAKISTAN
 Power and Energy Crisis
 Electricity Crisis
 Gas Shortage
 Increasing Raw Material Prices
 Law & Order Situations in the Country
 Lack of R&D Institutions
 Lack of Modern Equipment and
Machinery
 Increasing Cost of Production
 Lack of New Investments

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SPECIAL
ORGANIZATION:

All Pakistan Textile Mills Association (APTMA) is the

chief organization that determines the rules and
regulations in the Pakistan textile industry. APTMA is the
premier national trade association of the textile spinning,
weaving and composite mills. APTMA represents 391
textile mills out of which309 are spinning, 45 weaving
and 37 composite units

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HUMAN RESOURCE:
 The textile sector employs 45% of overall labor force,
with 38% of the manufacturing Workers employed under
textile sector. Pakistan has the advantage of cheaper labor
as compared to its competitors, but unfortunately the labor
productivity is very low.

 There are hardly any training programs to develop the

skills of labor hence, the craftsmen entirely depend upon
their inherited skills with no advancement and movement
towards technical knowledge.

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CLIMATIC CONDITION:
 Although Pakistan has the ideal climatic conditions for
the growth of cotton providing a factor advantage to the
textile industry, but it is also quite vulnerable to
pesticides that can lower the yield per hector.

 The textile sector is largely dependent on the supply of

raw material of the agricultural sector and hence
whatever happens to the agricultural sector like floods
will adversely affect the textile industry rendering it even
more vulnerable to environmental conditions.

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 ADVANTAGE:
The advantage of cheap labor as compared to its competitors, but unfortunately
the labor productivity is very low

 DISADVANTAGE:
There are hardly any training programs to develop on the skills of these labors
and the craftsmen depend upon their inherited skills with no advancement

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STRENGHTS
GOVERNMENT’S ROLE
 To promote the textile industry the government has taken
effective steps, which include:
 Reduction in sales tax from 18% to 12.5%
 10% on regulatory duty on all imports has been abolished
 Corporate income taxes have been reduced.
 Free imports are allowed for the spare parts of the weaving and
finishing units.
 Interest rates have been reduced which will lower the cost of
BMR.
 Imports of processing machinery are being liberalized as well.

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WEAKNESSES
 Highly fragmented sector
 High dependence on cotton
 Lower productivity
 Declining mill segment
 Technological obsolescence
 Non‐participants in trade agreement

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THREATS
1. New competitors
Pakistan are facing new competitors in textile sector such
as Bangladesh, Vietnam and Turkey. Though we cannot
avoid competition but we can always stay ahead of them
by reforming our strategies and educating our
entrepreneurs so as to move one step forward in every
aspect.

2. Phasing out of quota system

As the quota system is ruled out by WTO, there is a threat
by the Chinese and Indian manufacturer to gain most of the
market share. We have high costs, low labor productivity
and inefficient production processes.

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OPPORTUNITIES

 Prospects for exports and growth

of ready-made garments

 Growing popularity of the

knitting industry

 Cheap labor and domestic raw

material availability

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PORTER’S FIVE FORCES
MODEL

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THREAT OF NEW
ENTRANTS
FAVORABLE
 High capital requirements and significant economies of scale of existing producers are major
deterrents for new entrants in the integrated/composite sector
 Quota system for the west secures access to major export markets.

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 BARGAINING POWER OF
SUPPLIERS
FAVORABLE
 Most of the cotton grown is low count. Consequently product
differentiation is minimal and switching cost slow
 Deregulation of cotton trade allows manufacturers to import cotton
in periods of low cotton output or excess demand.
 Many manufacturers produce low quality yarn and fabric. Vertically
integrated units rely on in-house sources of supply.
 Spinning over-capacity discourages cotton growers to integrate
forward.

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BARGAINING POWER OF CUSTOMERS
UNFAVORABLE
 Buyers of Pakistani yarn and cloth are heavily concentrated in
East Asia.
 Competitors can supply similar products at lower prices.
 Buyers are highly price sensitive due to commodity nature of
items.
 Little threat of backward integration

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THREAT OF SUBSTITUTES
NEUTRAL
 Polyester Staple Fiber (PSF) considered the best for cotton increases in importance during
periods of poor crops. It also complements cotton. The PSF to cotton consumption
ratio has risen from a historical 20:80 to 35:65, in keeping with international trends.
 Reduced tariffs and adequate PSF capacity in Pakistan has led to price reductions
 Manufacturers encouraged producing blended fibers that fall outside quota restrictions.

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RIVALRY AMONG EXISTING
FIRMS IN THE INDUSTRY
UNFAVORABLE
 Existing competitors engaged in price undercutting to retain market share
 Excess spinning capacity has eroded margins while growth has been
mainly in the value added sectors
 Capacity utilization of integrated mills was a mere 48% in Fiscal Year
1997 but is on the increase. Textile products face tough price competition
from Indian and Chinese products.
 Comparative advantage of cheap labor and land are under threat from
other Asian rivals like Bangladesh and is likely to intensify in future.

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THE RESTRUCTURING CHALLENGE OF
TEXTILE INDUSTRY
There are positive factors, which need careful
hatching for profitable sustainable reproduction
of the sector. Negative factors, on the other
hand, frequently causes infection and is immune
from all the vaccines.

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  Monitoring for quality is the biggest
challenge, because quality may be
multi-dimensional, un-quantifiable
in some respect and may contain an
irreducible subjective element.

 The major challenge for Pakistan’s T&C

producers is to enhance the competitiveness,
which is presently threatened by the internal
weaknesses. 

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A market economy devises various institutions to cope with the certainty about quality. These include
brand names, advertising, guarantees, warrantees, client relationships, service contracts and most
importantly effective information system.
For maintaining and enhancing competitive edge, the producers must develop these institutions.

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Substantial investment in real time systems is required for using information technology to
respond to changing customer preferences within the shortest possible time.  Maintaining
competitive edge in the 21st century necessarily requires improved relationship with the
customer.

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Suppliers who can give rapid response to satisfy their
customers will invariably be the winners.  On-line
facilities such as order status inquiry, delivery
timetable, video conferencing, new order booking and
customer inquiries will help to improve
competitiveness.

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 Essential intelligence
about customer and other
suppliers, specialized
product knowledge and
updating operational
information are
increasingly becoming
more and more important
inputs. 

These inputs must be produced, nurtured, managed, preserved and above all effectively utilized.
 

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 Government policies which create an environment for industry to invest in
upgradation / modernization and expansion, especially with a view to improve export
focus, need to be formulated. 
 Given that there is a greater value addition in fabrics and garments, the Government
policy must recognize the need for enhancing their finishing quality to the market
competitive levels.

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Both the Government and exporters are responsible for lower unit price realization of
Pakistan’s textile exports in the past.  The quota policy has always been remained tilted
towards volume exporters against those who make efforts to improve quality standard.

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During the transition period, the Government still has a good chance to encourage the
exporters in achieving higher unit price realization through quality improvement.

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A Textiles University, joined funded by textiles producers and the
Government, needs to be established for upgrading technical knowledge
and efficiency at all levels of production.  Further, a National Textile
Commission, consisting of textile producers and market experts, should
be setup to examine the most important global trends during the first
decade of the next century. 
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Given that even the best financial and business strategies get it wrong a lot of time, the
commission should particularly focus its attention on predicting when and how significant
changes might occur.  Without such preparations, life for textiles producers is not going to
be easy in the coming years.
 

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There are even suggestions for “Ministry of Textiles”.  Currently, day to day affairs of the
textiles sector are dealt by different ministries, including Ministry of Commerce, Ministry of
Finance and some line departments.  

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The creation of ‘Ministry of Textile’ can provide a ‘One Window Operation’ facility and will
certainly improve the performance Pakistan’s two major South Asian competitors, India and
Bangladesh, already have Ministry of Textiles in operations.
 

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Cont…
 Mutual consistency of fiscal, monetary and trade policies is the
most important prerequisite to increase the efficiency of all
economics sectors, including textiles.
⁃ The Pakistan Government has imposed sales tax on cotton at
ginned stage.
⁃ more than 90 percent of the cotton either in raw form or in the
shape of yarn, fabric or ready-made garments is exported, it
means that the tax paid has to be refunded.
⁃ net result of this futile exercise is the administrative cost for
collection and refund of the tax

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Addressing the problems:

⁃ Efforts to restore the international economic and political

relations.

⁃ Adjusting the value of Pakistani Rupee in relation to the

currencies of other developing countries’ competitors.

⁃ Addressing the anti-dumping duties.

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⁃ Another challenge is the risk of being left out of proliferating free trade
areas and custom unions.
⁃ NAFTA and EU are continuously growing both in width and depth and
now cover virtually all major markets of Pakistan’s T& C exporters.
⁃ The anti-dumping duty imported by the EU during 1997, on the imports of
unbleached cotton fabric from Pakistan was triggered by the campaign
jointly launched by the textiles producers in Greece, Spain, Portugal, France
and Italy, because the prices of unbleached cloth they produce were in-
competitive, making them unable to capture their own market.

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⁃ MFA dates back to the times when EU was an
intermediate, half functioning common market and the
poor relations, Greece, Spain and Portugal, were not even
considered to be qualified for its membership. 

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CONCLUSION:
it is expected that over the next decade the further introduction of
micro-controllers (the while collar microprocessor equivalent of the
blue-collar) in textiles, machinery will facilitate the shift of T&C
manufacturing back to the developed countries.
⁃ Although it is still not clear how the slump in the world
economy and the on going “Asian crisis” will effect productivity
⁃ Companies that emerge survivors from Asian crises will be
those who take calculated risk

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 MFA specifically should not simply reassure and lull textiles producers and
policy makers about a future with many uncertainties
 Trade and trade liberalization does not produce wealth and jobs; they only
help in the distribution of demand and jobs.
 Many of the changes that will occur are outside the control of Pakistan and
their textile producers.
 It is the responsibility of Pakistani government to assist producers in their
efforts to prepare for the looming challenge.

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THANK YOU

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