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TEXTILE INDUSTRY

GROUP MEMBERS
ABBAS QURESHI
FARHAN NAWAZ
AGENDA
 Textile Vision 2006
 History
 Importance
 Global scenario
 Economic Profile
 Textile Cities
 Structure of the
Industry
 Export & Import
AGENDA
 Investment
 Government Policies
 SWOT Analysis
 Textile Cities
 WTO Effects
 Environmental
Program
 Problems
 Recommendations
TEXTILE VISION 2006
 An open, market driven, innovation & dynamic
textile sector, which is:-
 Internationally Integrated.
 Globally competitive.
 Fully equipped to exploit the opportunities created by the
Multi Fiber.
HISTORICAL BACKGROUND
 In 1959, the 9 largest industrial houses accounted for 50 percent of the total
production.
 Between 1960 and 1970 Pakistan’s textile industry enjoyed over 11 percent of
the world market share but today the corresponding figure is only slightly over 2
percent.
 In the nineties and the early 2000s a textile manufacturers were making large
profits by merely trading quotas rather that diversifying into higher value-added
products where quotas were not required.
 The period between 1958 to1968 is popularly known as the “decade of
development”. The economy, especially industry experienced a relatively higher
growth rate during the Ayub Regime.
 The decade of development was followed by the Bhutto years from 1972 to
1977. His regime was characterized by the nationalization of the large scale
manufacturing sector, insurance companies and banks.
HISTORICAL BACKGROUND
 During the nineties a combination of factors adversely effected the
industry, mainly:
1. Removal of export duty on raw cotton, increasing domestic prices
to international levels and beyond.
2. Infestation of the cotton crop by leaf curl virus, reducing supply
sharply and increasing prices.
3. Frequent changes in governments creating inconsistency in
policies of the Government and Financial Institutions.
4. Rapid expansion of the installed industry in the hands of new
entrants who did not have the managerial skills or the liquidity
base to succeed.
5. Rapidly changing global markets, especially the shift towards man
made fibers.
IMPORTANCE
 The textile and clothing industry is the backbone of Pakistan's
economy.
 Textile products are a basic human requirement next only to food.
 4th largest Producer of Cotton

 3rd largest Exporter of raw cotton

 A leading Exporter of yarn in the World


 Availability of cheap labor and basic raw cotton
GLOBAL SCENARIO
 Global textile trade in the world is estimated to be around
$300 billion currently and industry experts predict that by
2014 it would reach to $800 billion.
 Pakistan's share in the current trade volume is 2.7 per cent.
India has 4 per cent and China 26 per cent share.
 Asia's share in the world textile trade would increase from
the current level of 54 per cent to about 75 per cent by 2014.
 This scenario provides an opportunity to Pakistan to excel in
the sector and its share could reach to the level of 4 per cent
to 5 per cent.
GLOBAL SCENARIO
 Textilemarket stands today is worth more than
$400 billion and it is still growing every year
 The share of developing countries in world textile
exports improved from 15 to 50 per cent
 A variety of fabrics are used worldwide in different
applications such as apparel, household textiles
and furnishings, medical equipment, industrial and
technical products
GLOBAL SCENARIO (cont.)
 Recent studies have highlighted that fabric weaving alone
expends around 28 million tons of fibre every year
 It is predicted that global production will grow by 25%
between 2002 and 2010, to reach more than 35 million tons
 The demand for textiles in the world is around $18 trillion
 Global demand for textile is growing at an average rate of
2.5%
GLOBAL SCENARIO
 China is the leading Textile exporter and India is second.
India has potential to grab the world market to at least 10%
from 3% (2005)
 Pakistan has emerged as one of the major cotton textile
product suppliers.
 Pakistan has great potential for textile exports as its
present share is less than 1% in the international textile
trade.
Percent Share of Leading Cotton
Producers
MAIN MARKETS
 USA
 EU
 MIDDLE EAST
 SAUDI ARABIA
 HONK KONG
 RUSSIAN REPUBLIC
Country wise measure market share of
textile of exporting countries

COUNTRIES MARKET SHARE


CHINA $55 BILLION

INDIA $- BILLION

KOREA $35 BILLION

TAIWAN $16 BILLION

INDONESIA $9 BILLION
ECONOMIC PROFILE
 Cotton textile is the largest industry of Pakistan.

 It is a broad industry and involves spinning yarn


production weaving and cloth production.

 Completely regulated to allow expansion by the private


sector.

 Important sector of economy as its product form almost


60% of Pakistan total exports and 18% weight in the
country’s large scale industrial production.
Textile in Brief
GDP 11 % of total GDP

Exports 68% of total exports

Manufacturing 46 % of total manufacturing

Employment 38 % of total industrial workers

Investment 31 % of total investment

Taxes Rs. 101 billion per annum

Value Addition (In Aggregate) 27%

Technology Medium to High

Source of Machinery Japan, Germany, Switzerland,


Belgium, China
NUMBERS OF UNITS AND
CAPACITIES
 TotalCapacities:
Spinning 1550 million Kgs
YarnWeaving 4368 million Sq. Mtr.
FabricFinishing 4000 million Sq. Mtr.
Garments 670 million Pcs.
Knitwear 400 million Pcs.
Towels 53 million Kgs
Number of units:

Ginning 1221
Spinning 442
Weaving :
 Large 124
Small 425
Power Looms 20600
Finishing :
 Large 10
Small 625
 Garments :
 Large 50
 Small 2500
 Knitwear 600
 Towels 400
PRODUCTION TREND
 COTTON AREA UNDER CULTIVATION, PRODUCTION AND YIELD

Year Area Hectare million bales Kgs/Hec


Production
Yield
1999-00 2983 11.24 641

2000-01 2927 10.732 623

2001-02 3116 10.613 579

2002-3(pro) 2796 10.211(9.7) 621


MAIN CONSTRAINTS
 Structure imbalances - technological gaps and resultant
lack of co-ordination amongst different sub-sector of
textile industry.

 Internal weaknesses of the industry and its inability to


improve quality - productivity and production efficiency to
the desired level.
 Neutralization of the incentive to the industry by recent
adjustment policies.
EXPORTS PERFORMANCE
 Pakistan’s textile sector remained heavily dependent upon the quota
markets i.e. the USA and the EU.

 The Textile Vision 2005 emphasized for the need to diversify towards
vital non-quota markets including Japan, Hong Kong and the Middle
East.

 Unit prices of yarn, fabric, made-ups and garments declined since


1998-99.

 The export growth in the textile sector, as envisioned in the Textile


Vision 2005, was driven by increase in unit price realization in each
product category.
EXPORTS PERFORMANCE
 The primary focus of the garments sector
remained on men garments, whereas the Textile
Vision 2005 explicitly highlighted the importance
of diversification towards women garments. This
shift was not achieved.
Textile Share in Pakistan’s Exports
VALUE IN '000' US$

S.N CATEGORIES 1999- 2000- 2001- 2002-03 2003-04 2004-05


O 2000 2001 2002

A TEXTILE & GARMENTS 5,858,86 6,115,07 5,996,91 7,457,74 8,252,40 9,030,00


1 0 0 8 3 0

B OTHER CORE 1,878,64 2,134,18 2,079,82 2,252,49 2,410,72 3,086,00


CATEGORIES 3 6 6 8 9 0

C DEVELOPMENTAL 479,642 566,218 615,917 851,597 832,147 867,000


CATEGORIES

D ALL OTHERS 351,453 386,121 441,915 598,403 818,006 1,427,00


0

TOTAL 8,568,59 9,201,59 9,134,56 11,160,2 12,313,2 14,410,0


9 5 8 46 85 00

Source: Export Promotion Bureau


Top Imports into Pakistan
000 US $
S.No. ITEMS 1999-2000 2000-2001 2001-2002 2002-03 2003-04 2004-05

1 Crude Petroleum 805 1,360 1,230 1,366 1,765 2,090

2 Petroleum Products 1,999 2,000 1,576 1,699 1,402 1,723

3 Road Motor Vehicles 345 320 329 501 653 972

4 Textile Machinery 210 370 406 531 598 902

-2.04% -3.45% -3.92% -4.34% -3.80% -4.40%

5 Iron And Steel 304 277 336 402 512 894


INVESTMENTS
 Textile Vision – 2005 has envisioned an investment program of
approximately US$0.6 billion by next five years

 Need for AIR JET LOOMS and ROTARY PRINTING MACHINES.

 The processing industry is catering the needs of both “Home Textiles”


& Readymade Garment Industry

 Introduction of Cad-Cam & laser techniques in Printing & Garment


Units
INVESTMENTS (Cont)
 For additional capacity total disbursement to this sector was only 36% of
the target, in garment manufacturing total disbursement was only 49%
of the targeted amount ,56% investment gone to spinning sector

 The bright side of the investments in textile industry is the high


investment in the Air Jet weaving segment, which likely to fuel value
addition in garments manufacturing
INVESTMENTS (Cont)
 Increased investment in textile sector has resulted in substantial
increased in production of yarn (18.2%), cloth (28.5%) and synthetic
fibers (26%) in 2004-05

 To ensure an abundant supply within the country, cotton is allowed to


be imported and exported freely.

 The inflow of foreign direct investment (FDI) almost doubled from $2.1
million in July-March 1999-2000 to $4.0 million in July-March 2000-01.
Investment And Imports
DEREGULATION STRATEGY
FOR INVESTMENTS
 Lack of infrastructure.

 Non-availability of good quality soft water for the textile


industry.
 Not providing our exporters level playing field to procure
raw material at the international rates
 Arrangements to provide Insurance guarantees to U.S.
investors on their investment in Pakistan
GOVERNMENT POLICIES
 Need to plan strategies to consolidate and redeveloped competitiveness

 Policies for revival of sick mills have the sole objective to accelerate the
production and exports.

 To create an environment in which firms can upgrade competitive


advantages

 The strategic objective is to upgrade Product Quality, Skill Levels,


Productivity, Market Image.
LONG TERM TEXTILE POLICY
 TheGovernment of
Pakistan wanted to
mobilize all its
resources so as to
establish a solid
export base. Textile
Sector
STRENGHTS &
OPPORTUNITIES
 Pakistan is the 4th largest producer of Cotton in the World.

 It ranks 2nd in export of yarn & 3rd in export of cloth.

 It has Large spinning and weaving capacity

 Large, well equipped finishing sector


 Availability of cheap labour

 Large domestic market.

 Good and clear investment policies.


STRENGHTS &
OPPORTUNITIES (Cont)
 Strong presence in international market.

 Volumes of yarns with synthetic fibres in various blends & counts


are increasing.

 Production of commodity products at good quality levels.

 Market Franchise Technical know how Agreements.

 Joint Venture in Higher Value Added Segments.

 Product & market diversification.

 Improvement in marketing skills and country’s image


WEAKNESSES
 Outdated technology

 Poor quality

 Low productivity

 High proportion of operations are in small


and medium sized companies

 Tend to be inefficient and lack the resources


to effect an improvement
POTENTIAL OF TEXTILE
INDUSTRY
 Pakistan emerged as the
major supply source of cotton
textiles.

 Pakistan’s share in the world


yarn trade is about 30% and
the share in cloth is 8%.

 The Textile Industry has an in


built potential for performing
better.
TEXTILE CITIES
 To meet the challenge of post-quota regime the
government has formed a company named PTCL
(PAKISTAN TEXTILE CITY LIMITED)

 There would be 5 Textile Cities


 Karachi (total cost Rs.1.1 billion)
 Lahore
 Faisalabad
 Hyderabad
 Multan

 Total cost of the Project is approximated to be Rs.3.6


billion
TEXTILE CITIES (Cont)
 The city will have a number of supporting and
ancillary industrial units in the area.

 Theconcept of Textile City is based on supply of


industrial infrastructure
EFFECTS OF WTO
 Abolition of textile quota is likely to have a negative impact unless the
domestic pricing system is reformed.

 Quota abolition will create opportunities, but will increase competition in the
international markets.

 Pakistan should focus on increasing productivity

 The clothing sector will have greater opportunities

 Only 10% of the local exporters are mentally prepared to meet the WTO
challenges (Chairman Export Promotion Bureau (EPB) Tariq Ikram).
ENVIORMENTAL PROGRAM
 The sector is facing the challenge of conforming to
international quality standards and abiding the given
legislations.

 Pakistan has recently initiated a project funded by EU -


“Promoting Better Environmental Practices in the
Textile Processing Sector of Pakistan”.

 This project aims to promote environmental reporting in


the sector through organizing awareness sessions and
rewarding industries for their transparency.
BENEFITS (Cont)
 The action will improve the situation of the textile
processing sector through:
• Savings on raw materials and energy, thus
reducing production costs;
• Increased quality and competitiveness through the
use of new and improved technologies;
• Reduced concerns over environmental legislation;
• Reduced liability associated with the treatment,
storage and disposal of hazardous wastes;
• Improved health, safety and morale of employees;
• Improved company image; and
• Reduced costs of end-of-pipe solutions
PROBLEMS
 WTO and quotas

 Sales tax on cotton

 DTRE (Duty and Tax Remission for Exports)

 Lack of Infrastructure

 Lack of synergy

 Inefficient industry

 Trade remedy actions

 Cotton
RECOMMENDATIONS
 Remedy though FDI

 Image Building of Pakistan to Attract FDI

 Focus on Value Addition

 Creation of Ministry of Textiles instead of Textile


Board

 Technology Up-gradation & capacity building


RECOMMENDATIONS (Cont)
 Human Resources Development

 Accreditation and Certification

 Reducing the cost of doing Business in


Pakistan

 Need for Improving Textile Production


COTTON PRICES
2007 - 08
Rs Per Maund

Average
2876
2006 - 07
Rs Per Maund
Average 2326
In conclusion we take this opportunity to
express our gratitude to our respectable
Instructor
Mr. AFAQ ALI KHAN for the valuable
guidance and efforts granted by him to
our team which will definitely leads to
achieve the goal of success in
presentation on
“TEXTILE INDUSTRY”.

Thanks for being with us.