CRISIS IN TEXTILE

INDUSTRY
Muhammad Rizwan Chuadhry
Waqar Ahmad
MBA 1st Semester

COMSATS Institute of Information Technology

 CONTENTS
1. History
2. Introduction & Importance
3. Major Crisis in Industry
4. Conclusion
5. Recommendation
6. Refrences
 History
 Before World War I England’s merchants started
developing new technology (Sewing machine) in
Apparel Industry and gave England a distinct
competitive advantage over other countries because
its cloth was much cheaper.

 The invention of the sewing machine essentially

“turned an art into an industry” and brought about
the “democratization” of the apparel industry.
 History
 Increase in the cotton production and expansion of
textile industry has been impressive in Pakistan
since 1947.

 Number of mills increased from 3 to 600.

 spindles from about 177,000 to 805 million.

 Introduction & Importance
 Backbone of the economy

 From a most non-existence at the time of creation of

Pakistan in 1947, the Textile industry has grown
into the largest and most significant economic sector
of Pakistan.

 Plays pivotal position in the exports of Pakistan.

 Status of being the largest industry in Pakistan

 Introduction & Importance
 Pakistan is the 8th largest exporter of textile
products

 Has the comparative advantage of resource

utilization

 Major contributor towards GDP

 50% of industrial labour force

 Introduction & Importance
 Earns 65% foreign exchange of total exports.

 The industry consists of large-scale organized sector

and a highly fragmented cottage / small-scale sector.

 The industry consists of large-scale organized sector

and a highly fragmented cottage / small-scale sector.

 At present, there are 1,221 ginning units, 442

spinning units, 124 large spinning units and 425
small units which produce textile products.
Introduction & Importance
 Manufacturing sector………. 46%

 Export earnings……………... 68%

 Value addition………………. 09%

 Employment………………… 38%
 Major Crisis
 High interest rates

 High cost of inputs

 Non conducive government policies

 Non-guaranteed energy supplies hinder their

competitiveness
 Major Crisis
 The industry suffers from ‘severe technological
obsolescence,

 Insufficient R&D

 Falling cotton crop, and an unclear path forward

 Major Crisis
 Obsolete equipment and machinery.

 The inability to timely modernize the equipment and

machinery has led to the decline of Pakistani textile
competitiveness.
 Major Crisis
 Non-guaranteed supply of power by WAPDA is
another problem that negatively affects the textile
industry. Although, some textile units have built
their own energy generating plants to cut cost (these
units run on gas), small units production depends
entirely on the electricity supply of WAPDA.

 The textile industry suffered heavy financial losses

in Dec, Jan and Feb quarter, because of the
inconsistent electricity supplies
 Major Crisis
 The lack of production subsequently resulted in the
industry not meeting its target for the quarter,
massive financial losses were borne by textile owners
and sadly, it hit the most vulnerable: workers on
daily wages.

 After surviving from the load-shedding scenario the

industry has yet to survive the gas load shedding.
 Conclusion
 Structural imbalances.

 Technological gaps and lack of coordination

amongst different sub-sector of textile industry.

 Result into inadequate development of

downstream products.

 Internal weaknesses of the industry and its

inability to improve quality, productivity and
production efficiency to the desired level.
 Conclusion
 Textile industry is feeling the pinch of increase in
power interest rate, inflation and multiplicity of
taxes, which have increased the production costs.

 Productivity have further deteriorated due to

power break down – civil riots and other
disturbances and thus adding to the cost of the
products.

 Labour costs are amongst the lowest in the world,

the benefit is being wasted through operational
inefficiency.
 Conclusion
 The factor of high power cost, high interest cost
and high cost of inputs like Gas and Water are not
accounted for rebates to facilitate industry like
other countries.

 Industry had been burdened with too much of

taxes like Sales Tax – Excise – Income Tax – Turn
over tax, which have increased the capital
requirements and hence the cost of production as
the interest incurred on this capital is not rebated.
 Conclusion
 Due to entire situation the companies are
downsizing, production units are shutting down,
around 500,000 of the workers have already lost
their jobs.

 The textile sector is the backbone of Pakistan’s

economy, the Government as well as the textile
industry has kept their focus on technical textiles
and knowledge-based products.
 Recommendation
 Proper labour training is necessary to develop
skill, required to have desired production
efficiency.

 Rebate needs to be rationalized and dispersed at a

quicker pace.

 Import duty on cotton substitutes Viscose and

Acrylic which are presently not produced locally
may be further reduced to promote diversification
of products.
 Recommendation
 To sustain the Textile Industry, the government
has a tough task ahead and needs to urgently
implement a suitable long-term strategy that
provides a level-playing field against their
regional competitors.

 Exemption of duty and sales tax on power

Generators may be revived again.
 Recommendation
 Investments in developing human skills and
knowledge essential for upgrading competitive
advantages

 The commercially viable units may be considered

for revival by providing financial relief.

 Govt must granted a number of incentives for the

development of value added products.
 Recommendation
 All Pakistan Textile Mills Association to pool its
share for providing maximum benefits to cotton
growers.

 If the cotton growers received high rates of the

crop than they will not think to sow other crops in
their fields, he added. The minister called upon
APTMA to promote the establishment of research
department so that cotton growers could be aware
of the latest development as well as latest varieties
for achieving maximum yield per acre.

 Power crisis must be resolved by Government on

urgent basis.
 Recommendation
 Liberalized labour laws, tax and other benefits of
a Special Economic Zone need to be implemented

 Access to high quality and cost-effective

manpower

 Excellent connectivity by road, rail air and ports

 Single-window clearance
 References
 www.fibre2fashion.com/news/textile-fairs-
news/newsdetails.aspx?news_id=69173 - 61k
 www.yarnsandfibers.com/news/index_fullstory.php3?
id=17433&p_type=General - 74k
 www.ptj.com.pk/Web%202004/03-2004/trend.html
 www.scribd.com
 www.state.gov/r/pa/ei/bgn/3453.htm - 80k
 www.aptma.org.pk
 www.tco.gov.pk/webs/material%20for
%20Website/Reports/Cotton%20Textile%20industry.doc
THANK YOU