The textile industry is an ever-growing market worldwide; likewise, it is considered one of the most vital sectors for Pakistan’s economic growth. It is a significant contributor to its industrial exports. Over the years, this sector has seen cyclical results due to various reasons. The sector has struggled due to high manufacturing expenses, energy shortages, faulty strategies, and lack of support policies from the Government.
A worldwide recession and quality competence are also significant threats to the sector. The main segments of this sector are clothing and garments, readymade fabrics, weaved apparel, twisting sector, and processing sector. Even though most textile sales are made overseas to developed countries, the sector is still behind its South Asian regional competitors and has not performed to its full potential, particularly in recent years.
The rapid industrialization and evolving technology in other countries are helping their textile industry have modern installations capable of highly efficient fabric production, which allows industry to record more revenues.
Roadbumps towards growth
However, the journey of the textile industry in Pakistan has not been a smooth road. The emergence of the worldwide economic crisis was an instant setback, coupled with rising manufacturing expenses, escalating energy tariffs, rising prices & shortage of raw material, frail infrastructure, obsolete technology, and lack of investment were among various factors considered for the downfall of the textile industry. The major irritant in textile export growth is consistent low cotton production in the country.
Pakistan stood fourth in cotton production in 2012-13 with 11 million bales. Before that, the period between 1980-90 is considered the golden era for Pakistan regarding cotton production, when rapid growth was achieved. In 2014-15 the production increased 11 percent and held the record of 15 million bales.
However, cotton outputs in Pakistan in 2020-21 have plunged to a 21-year low to 6.5 million bales, whereas the textile sector’s requirement is 15-16 million bales. It has left the textile sector with no option but to import raw cotton from the US, Brazil, and Egypt.
As a result, the textile industry will have to import at least 10 million bales of cotton in the current year to meet local demands, which will significantly increase the country’s import bill.
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The reasons behind this tragic drop are low profitability, poor seed quality, and lack of technology and innovations, all threatening the livelihoods of growers and the textile sector’s viability. The textile export industry, which constitutes nearly 60 percent of the country’s total overseas shipments, is dependent on locally grown cotton.
The massive fall in cotton production has led the textile industry to import 331,560 tons of cotton worth US$ 532.1 million compared with the last year’s imports of 49,573 tons valuing at US$ 86.9 million.
Silver lining to Covid
The textile sector is on its way to recovery following the removal of Covid-19 restrictions witnessing a sharp surge in exports during the current fiscal year. However, the growth is being achieved through imports of cotton and man-made yarn. Current conditions for Pakistan’s textile industry are very favorable.
Covid-19 has turned out to be a blessing in disguise for the textile industry as global buyers are increasingly turning towards Pakistan by cutting orders to regional players, resulting in 100 percent utilization of available production capacity. Almost all the major players in the country are expanding their capacity to create room for the growing number of export orders, especially for home textile.
Textile orders have shifted to Pakistan because of the more severe impact of the Covid-19 pandemic on regional countries. This has given Pakistani exporters, particularly the key market players, an opportunity to quote competitive prices and offer better quality products so that the new buyers could become their customers permanently.
Exports of 13 sectors, including value-added textiles, posted double-digit growth in July-May 2020-21 compared to the same period a year ago. Growth in exports of value-added sectors contributed to an increase in overall exports from the sectors. One of the reasons for growth in these sectors is the low base of last year when export-oriented industries remained closed due to the Covid-19 lockdown and cancellation of orders from international buyers.
Read more: Cotton: Handling the White Gold Crisis of Pakistan
Exports of textiles registered an increase of 18.85 percent to US$ 13.74 billion in July-May 2020-21 compared to US$ 11.56 billion in the same period of the corresponding year. Exports of home textile products were up by 27percent to US$ 3.642 billion in July-May against US$ 2.879 billion over the last year, followed by a 16 percent increase in men’s garments to US$ 3.505 billion against US$ 3.019 billion last year.
An increase of 33 percent in women garments to US$ 646.49 million was noted against US$ 486.52 million over the corresponding months of the previous year. Similarly, in the value-added leather sector, exports of leather apparel posed a growth of 11 percent to US$ 584.02 million against US$ 528.02 million, followed by an increase of 57 percent in exports of jerseys, pullovers, and cardigans to US$ 530.14 million against US$ 337.39 million in the same period in FY20.
Export proceeds of copper and articles thereof posted growth of 44 percent to US$ 463.17m between July to May 2021 against US$ 321.95 million over the last year, followed by 14 percent in t-shirts to US$ 453.4 million against US$ 398.79 million last year, 15 percent in made-up articles of textile materials to US$ 432.47 million against US$ 377.24 million of last year.
The export of surgical instruments posted a growth of 17 percent to US$ 398.88 million against US$ 341.51 million over the last year, followed by 23 percent in gloves to US$ 285.13 million against US$ 232.44 million over the last year. The export of pharmaceutical products posted growth of 27 percent to US$ 240.04 million against US$ 188.47 million.
Amazon: A new window of opportunity for Pakistan
Pakistan’s addition to Amazon’s sellers’ list has created vast opportunities for Pakistani entrepreneurs to sell their products through the platform. The move will help promote more businesses, and online buyers get access to Pakistani brands, which can now reach all significant markets through Amazon. Global trade opportunities for Pakistani textiles are wide open now.
Pakistan’s textile exports have mostly recovered from the Covid-19 pandemic shocks and have picked up a growing pace. Multiple internal and external factors have helped textile exports after tough times. Internally, the energy package announced for the export industry and market-based exchange rates has helped exports become competitive.
Read more: APTMA requests govt. to continue RCET tariff policy to sustain rising textile exports
The textile industry is also envisaged to invest US$ 5 billion across the textile chain to double its exports by 2025. The new orders are a windfall for Pakistan’s industry. It can sustain for years to come; it all depends on how we steer this industry into the future. Pakistan can be confident that the growth momentum will continue allowing the country and its exports to scale new heights.
Azizullah Goheer is a Certified Director CCG and a Certified project management professional PMP. He is presently serving as the Secretary-General of Pakistan Textile Exporters Association (PTEA), the premier association of textile manufacturers and exporters. He is a member of the Advisory Committee of Sustainable Textile Asia Region (STAR) and has previously worked with the Government of Punjab as a consultant. His industrial exposure is spanned on two decades during which he has served some of the leading global companies. The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.