Interviews
Textile sector loses early lead of modernisation
24 Mar '11
3 min read
The Pakistani textile sector which once was thriving and buoyant is now confronting threats from emerging markets like Vietnam and Bangladesh and also from the already established ones like India and China.
The sector is facing tough times with issues like dearth of new investments and utter disregard for up gradation and modernization, which is mainly due to soaring input cost, high cost of finance and flight of the industry to other countries like Bangladesh.
Pakistan is the fourth biggest producer and third biggest consumer of cotton across the globe. However, the textile sector, which is country's leading industry, and also the biggest employment generator and largest foreign exchange earner, seems to be in a gloomy state.
Failure to attract substantial new investments in the industry over the last five years has caused the country to lose the technology upper hand which it had over China, India and Bangladesh till the beginning of this century. This is also due to rapid up-gradation by competing countries.
Driven by the low interest rate regime, the sector largely invested in basic textiles. However, as the regime ended in 2004 with a sharp rise of 300 percent in interest rates, the industry has been caught unawares as the sudden rate hike wrecked all its financial plans.
Also, the reserves of all the textile mills which obtained bank loans at six to seven percent interest rates during modernization, have now exhausted due to heavy burden of bank credits of around 16 to 18 percent.
The industry claims that, those booming years could be retrieved by way of drawing fresh investment in the sector, but only when, it is available at reasonable interest rates.
The country's textile exports rose from $9.776 billion in 2008-09 to $ 10.182 billion in 2009-10. Meanwhile, exports in the initial seven months of the current financial year stood at $ 6.914 billion, as against $ 5.187 billion during corresponding period of last fiscal.
Further, as the Pakistani textile industry was phasing in high-tech technology, competing countries like India pressed on their governments to subsidise import of modern machinery.
Around 50 percent of the total 11.8 million spindles that Pakistan operated in 2003 were high-tech spindles, which India and China lacked then. But, thereafter the country hardly added two million spindles over the past seven years.
It did not import any spindles in 2007 and 2009, while in 2008, imports amounted to 238,000 spindles. Quite contrary to this, China imported 268 million high speed spindles during 2004-09.
Further, Pakistan had more than 23,000 shuttle-less and air-jet looms in 2003, but then it hardly added 5,425 looms by 2009. India and China each housed around 13,000 and 30,000 such looms in 2003 and there were none in Bangladesh.
China added 175,233 shuttle-less looms during the five year span from 2004-09, while India and Bangladesh each added 22,221 and 23,484 such looms respectively during the period. Conversely, Pakistan did not import any such looms during 2008-09.
Thus, governed by such technology up gradation from competing nations, a majority of the world's fabric and yarn production now happens in India and China which now house higher capacity.
In view of all this, an expert commented that, it is in Pakistan's interest to raise its textile productivity, in terms of value as well as volume, through introduction of modern spindles, looms and sewing machines through a meaningful facilitation.
The sector is facing tough times with issues like dearth of new investments and utter disregard for up gradation and modernization, which is mainly due to soaring input cost, high cost of finance and flight of the industry to other countries like Bangladesh.
Pakistan is the fourth biggest producer and third biggest consumer of cotton across the globe. However, the textile sector, which is country's leading industry, and also the biggest employment generator and largest foreign exchange earner, seems to be in a gloomy state.
Failure to attract substantial new investments in the industry over the last five years has caused the country to lose the technology upper hand which it had over China, India and Bangladesh till the beginning of this century. This is also due to rapid up-gradation by competing countries.
Driven by the low interest rate regime, the sector largely invested in basic textiles. However, as the regime ended in 2004 with a sharp rise of 300 percent in interest rates, the industry has been caught unawares as the sudden rate hike wrecked all its financial plans.
Also, the reserves of all the textile mills which obtained bank loans at six to seven percent interest rates during modernization, have now exhausted due to heavy burden of bank credits of around 16 to 18 percent.
The industry claims that, those booming years could be retrieved by way of drawing fresh investment in the sector, but only when, it is available at reasonable interest rates.
The country's textile exports rose from $9.776 billion in 2008-09 to $ 10.182 billion in 2009-10. Meanwhile, exports in the initial seven months of the current financial year stood at $ 6.914 billion, as against $ 5.187 billion during corresponding period of last fiscal.
Further, as the Pakistani textile industry was phasing in high-tech technology, competing countries like India pressed on their governments to subsidise import of modern machinery.
Around 50 percent of the total 11.8 million spindles that Pakistan operated in 2003 were high-tech spindles, which India and China lacked then. But, thereafter the country hardly added two million spindles over the past seven years.
It did not import any spindles in 2007 and 2009, while in 2008, imports amounted to 238,000 spindles. Quite contrary to this, China imported 268 million high speed spindles during 2004-09.
Further, Pakistan had more than 23,000 shuttle-less and air-jet looms in 2003, but then it hardly added 5,425 looms by 2009. India and China each housed around 13,000 and 30,000 such looms in 2003 and there were none in Bangladesh.
China added 175,233 shuttle-less looms during the five year span from 2004-09, while India and Bangladesh each added 22,221 and 23,484 such looms respectively during the period. Conversely, Pakistan did not import any such looms during 2008-09.
Thus, governed by such technology up gradation from competing nations, a majority of the world's fabric and yarn production now happens in India and China which now house higher capacity.
In view of all this, an expert commented that, it is in Pakistan's interest to raise its textile productivity, in terms of value as well as volume, through introduction of modern spindles, looms and sewing machines through a meaningful facilitation.
Fibre2fashion News Desk - India
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