Rising gas, power prices affecting textile industryJuly 11, 2013
KARACHI: Textiles is the most important manufacturing sector of Pakistan and has the longest production chain, with inherent potential for value addition at each stage of processing, from cotton to ginning, spinning, fabric, processing, made-ups and garments. The sector contributes nearly one-fourth of industrial value-added, provides employment to about 40 percent of industrial labour force, consumes more than 40 percent of banking credit to manufacturing sector.
According to a latest government report, Pakistan is facing the problems of shortage of electricity, gas and the deteriorating law and order situation. The unscheduled/scheduled load shedding along with increasing rates of gas and electricity have obstructed the viability of the textile industry as the exporters were unable to meet their commitments. In addition our exports confined to raw materials to the global textile buyers and the same raw material comes back to the domestic market in form of finished value-added textile product.
The capacity utilization in textile sector is only 60 percent. There are some positive initiatives like the announcement of duty waiver on 75 products by the EU from November15, 2012 which provided impetus to textile exports. Furthermore it is
expected that if GSP plus status operational in 2014, the exporters would be able to boost the exports to EU particularly in textile. American buyers are also re-establishing links with Pakistan’s textile and clothing manufacturers.
The textile industry of Pakistan has potential for performing better both in productions as well as in export by virtue of its inherent competitiveness in the international market for its conventional products. However, to sustain its position and to move in high value added products as well as for the increased market share, a large investment in machinery equipment and new technology is essential.
The ancillary textile industry includes cotton spinning, cotton cloth, cotton yarn, cotton fabric, fabric processing, home textiles, towels, hosiery and knitwear and readymade garments. These components are being produced both in the large scale organized sector as well as in the unorganized cottage/small and medium units.
The pattern of cloth production is different than spinning sector. There are three different sub-sectors in weaving i.e. integrated, independent weaving units, and power loom units. The power loom sector have modernized and registered a phenomenal growth over the last two decades. The growth of power loom sector is due to favourable government policies and more importantly the market forces. Production of cloth in mill sector is reported whereas the production in non-mills sector is estimated. The production of cloth had increased substantially thus served as the main strength for down stream sectors like bed wear made-ups & garments.
The garment industry provides highest value addition in textile sector and has tremendous export performance in the past. During July-March 2012-13, ready made garments worth $ 1.3 billion were exported as compared to $ 1.2 billion in comparable period of last year. Even in quantity terms the exports of readymade garment increased by 12 percent and helped by higher unit value prices, the export grew by 10.3 percent in value terms.