Trade has always been an essential part of the human existence. Ever since time immemorial, with the start of communication; men and women of different color, creed and ethnicity have indulged themselves in the economics of the world and have earned their livelihood from it. Be it the barter system, the Silk Route or even the Great Depression, our existence has been linked with trade. In short this act of voluntary exchange of goods and services has been going on for centuries.

The commerce of fabric is no stranger to the Indian subcontinent. Ever since partition, officials have sought a higher rate of economic growth in order to lift the population out of poverty. Rapid industrialization was viewed as a basic necessity and as a vehicle for economic growth. For more than two decades, economic expansion was substantial and the-growth of industrial output was striking. Recent years have seen a drastic change/in the industry; especially the textile sector. At the time of independence, present-day Pakistan had only two textile mills. These units were self contained, having all the departments such as ginning, spinning, weaving, dyeing and bleaching as well as processing and printing. Although the printing of textiles was not as developed in those days as it is now, after independence, the process of developing the textile industry started to pick up gradually. By mid-sixties there were about 180 units of textile bleaching, printing and processing units, mostly situated in Karachi and a small number in the Punjab. In 1968, in consequence of change in the basis of collection of excise duty from capacity to production, most of the mills closed down their weaving sections. The looms which were removed from the mills, were installed outside the mills' premises in units of four, which have been exempted from excise duty.

About 31, 000 looms since 1969-70, continued to operate in the mill sector even after a general segregation of weaving. This number decreased to only 9,000 looms in the mill sector by the end of June, 2006. In the non-mill sector, a big majority of the units operate at a very low level, having little automatic machinery. In some factories, the printing of textile, is done by spreading the cloth on the top of tables, while pressing design screens on them - a method which is primitive as compared to the process in use by modern and automated factories. According to estimates, textile finishing industry consists of nearly 731 units, the majority of which are independent and complementary to the weaving industry. About 650 independent processing units are working in and around Faisalabad, Gujranwala and Karachi, in which about 50 integrated units have complete finishing facilities.

Textiles and clothing trade is a vital part of the world economy with many nations heavily dependent on this sector for foreign exchange earnings and employment generation. Today, textiles and clothing trade accounts for nearly 6% of total world exports. Many of the least developed-and small developing countries have built a huge dependency on the sector which often accounts for more than 90% of industrial exports and more than 50% of total employment. With increased global competition, many sectors within the textile industry are increasing production efficiency. Research, innovations and development in technical textiles, yarn quality, clothing products, process performance, fabric finishing, coloration technology and marketing can bring significant advancements in the textile sector in order to develop market supremacy. :.

Fabric processing is the most critical stage of value addition in the entire value chain. Woven or knit fabric can either be dyed or printed, depending upon the requirement of the customer who is the garment manufacturer. The use of colored cotton being unique and attractive has the potential to become a part of cotton fabric and apparel market.

After the abolition of quota regime, Asia has become a hub of textile trade as one of the major exporting countries of the region. Instead of importing yarn from Pakistan as the developed nations did, Asian countries have invested heavily in their spinning industries to produce yarn. Pakistani spinners were caught on the wrong foot as they invested heavily in spinning during the last eight years while their market in countries like Japan, the US, European Union and Hong Kong weakened after the textile trade was made quota-free at the start of 2005.

According to recent figures, the Pakistan's textile industry contributes more than 60% to the country's total exports, which amounts to around US $ 5.2 billion. The industry contributes around 46% to the total output produced and exported by Pakistan. The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of the work force in the country, which amounts to 15 million people.

However, the proportion of skilled labor is very less as compared to that of unskilled labor. The world demand for textiles is rising at around 2.5%, due to which there is a greater opportunity for rise in exports from Pakistan. With the end of the textile quota system and increased globalization of economy; with new players like Vietnam and Cambodia are entering the export arena vigorously; the global economic paradigm for a textile exporting country like Pakistan has to be changed to keep pace with the developments. The Government is trying' to enter the Free Tirade Agreements' with the major and minor countries. It has signed an FTA deal with China which offers great opportunities for Pakistani exports. A similar deal is being negotiated with the United States, the European Union and the Gulf Cooperation Council. It has already signed an FTA with Sri Lanka which has become operational. Negotiations for such a deal are also in progress with Bangladesh, Nepal, Malaysia and Jordan.

To make the matters worse and future gloomier for potential investors, the global financial crunch has struck the back bone of Pakistan's textile industry. Resultantly, our textile industry is going through one of the toughest periods till decades. But the impact of the global recession hitting the global textile industry is not the only cause for concern. Serious internal issues plague Pakistan's textile industry. The high cost of production resulting from an incessant rise in the energy costs has been the primary cause of concern for the industry. Depreciation of the Pakistani rupee during the last year and half has significantly raised tine cast of imported inputs. Furthermore, double digit inflation and high cost of financing has seriously impaired the growth of the textile industry.

's textile exports in turn have gone down or at best have been stagnant during the last three years. Exporters, cannot effectively market their produce since buyers are not visiting Pakistan. Resultantly, the unfavorable travel, advisories have made it more difficult for prospective exporters to travel abroad. With the Western markets ordering fewer volumes from Pakistan because of the downturn, many Pakistani companies are responding with a strategy of lean management.

Pakistani textile manufacturers have been saying that the law and order situation in the country is also not satisfactory, and foreign buyers are reluctant to visit Pakistan. Overall, the country's textile exports stood at US$ 5.1'37 billion during the first half of the current fiscal year, compared to US.$ 5.228 billion in the same period of 21007/08 - a decline of US$ 91 million. If compared, Pakistan's textile exports have declined by 4.10/ percent. US$; 720.378 milliol11J was exported in December2008 as against US$ 751.2.12 million in December 2007. Textile exporters said that six textile products raw cotton, cotton cloth, and cotton carded knitwear; towels and made-up articles surged during the period under review, while exports of cotton yam. ready made garments, bed wear tents, canvas and tarpaulin, artificial silk and synthetic textiles declined1.Arnother Karachi-based textile mill, the AI-KaramTextile Mills Limited was the only firm I which was able to, absorb the aftershocks of the financial downturn because of it employed diverse product lines. AI-Karam Textiles. Which has been exporting to India, wants greater trade between India and Pakistan? Ahmed, the owner of AI-Karam Textiles said that his <company has business ties with India's Bombay Dyeing growth which is interested in AI-Karam's jacquard and bedding products. Yunus Textile Mills Limited, another Karachi based textile company which has an export turnover of US$ 210 million acknowledged that Pakistan was beginning to feel the effects of the downturn.

There is an urgent need to increase textile production and capacity" especially in the blended sector. I Blended products made' boom at combination of natural and man-made fabrics, are preferred in clothing .the world over. The textile Board should establish a separate training wing as a Center of Human Resource Development where training courses should be conducted for the capacity building of labor. There is also an urgent need to increase the number of such vocational institutions where modem technical education is provided'. We are fast approaching an era of Free: Trade Regime>, which requires standardization complied with WTO regulations. At present, due to non-availability of testing laboratories, Pakistani exporters have to spend huge money to get certification from abroad. If WTO recommended laboratories are established in Pakistan, a lot of valuable foreign exchange could be saved. The Ministry of Commerce and BO! Should set up such laboratories so that the exporters can get these standards at comparatively competitive prices.

At present, the cost of doing business in Pakistan is higher as compared to the regional countries, which has resulted in competitiveness of Pakistani products in foreign markets. China and India are the biggest competitors for Pakistan. Analyst believes that if the cost of doing business in Pakistan is not brought at par with other Asian countries,our products would find no place in regional and international markets losing on both quality and price. In the context of future trade, there is an urgent need to bring all the utility charges and levy of taxes down to minimum possible levels.

Originally published in New Cloth Market: June 2010