Textile Industry: Backbone of Country

The textile and clothing industry is the backbone of Pakistan's economy. Pakistan's role as one of the world's leading cotton producers has provided the basis for the textile and clothing industry's development.

Pakistan's textile sector is the principal industry, contributing more than 67% to the country's total export earnings, and accounting for about 46% of total manufacturing. The sector employs over 38% of the manufacturing labor force. More than US$4 billion of textile and garment machinery has been imported in Pakistan in the last few years. The textile industry is today based almost entirely in the private sector.

Textile Machinery Industry:

Overview:

The Spinning Sector had grown with export demand & growth in cotton production. Weaving & Processing Sector followed. The major concentration of industry is in Karachi, Hyderabad, Multan, Lahore and Faisalabad. Unlike Spinning Sector the Weaving Sector comprises of large number of small units of power looms mainly clustering in Faisalabad Hafizabad Kasur and Multan. Recent trend is to set up Air-Jet loom units either as independent units are integrating it with spinning or processing units. Given economic stability as well as the importance of the industry to Pakistan's economy, the spinning sector is expected to grow by 8-10 percent over the next three years.

Though textile industry maintains its ranking of the single largest manufacturing sector in Pakistan, unfortunately indigenous manufacturing of its machinery could not develop along with the growth of textile industry. Resultantly, demand for textile machinery still is almost entirely met through global imports.

The usual and most effective channel for sale of machinery, equipment and spares is through a reliable agent. Foreign firms appoint local agents for the Pakistan market to provide them with market intelligence and to follow-up on sales. The most popular and possibly the most effective distributorship arrangement in Pakistan is the exclusive agency agreement. The exclusive agent receives commission on all sales of the product within the country, regardless of the channels through which they were ordered. The agent often imports and stocks spare, that are regularly required by end-users. He may also provide after-sales service.

Import- Export scenario:

Pakistan textile industry is facing problem of Low productivity due to its obsolete textile machineries. To overcome this problem and to stand in competition, Pakistan Textile Industry will require high investments. Pakistan is on the road to invest in processing sector, but traditional sector are also demanding high amount of investments. There is a continuous trend of investing in spinning since many years. Although, trend towards investment in Air Jet weaving segment is increasing day by day.

Pakistan's textile industry estimates that around Rs1, 400 billion (US$32 billion) of investment was required till 2010 in order to achieve the government's export target.- Former federal secretary and chairman of the National Tariffs Commission Masud Daher (Pakistan)

Pakistan has been a major Asian market for major textile machinery manufacturing nations. China and Switzerland has been among top exporter of textile machinery to Pakistan. Germany, Taiwan follows the lead. Switzerland exported machinery of around 91 million CHF to Pakistan in 2006.

Import of textile machinery in Pakistan registered an impressive growth of 66.29% in the fiscal year 2004-2005. And China and Taiwan continued to be key participants in the development of the textile industry in the country.

The potential of Pakistan's machine market has been well-taken by the Chinese business community as is evident from the fact that recently Chinese business showed keen interest in joint ventures with the textile sector in Pakistan. Exim Bank of China has in fact agreed to extend US$200 million credit to the textile industry of Pakistan for import of Chinese textile machinery.

Taiwan's exports of textile machinery to Pakistan have also seen a substantial increase in recent years. As per the estimates of TAMI (Taiwan Association of Machinery Industry), the export figures on textile machinery from Taiwan to Pakistan in the year 2002-04 placed Pakistan on the 9th position in terms of total value.

According to report on Shipment of various textile machinery in 2006 published by ITMF Pakistan stood third in Asia Spinning machinery scoring shipment of 670,000 spindles. In 2006 from 89 % of shuttleless looms exported to Asia Pakistan consumed 3.5% or 2,400.

During the fist six months of 2006-07, the imports of textile machinery stood at $280.22 million compared to $417.85 million in the same period of previous year.

Initiatives by Government:

Pakistan Government is strongly supporting its one of the most important industry and taking various measures like VISION 2005 and collaboration with China to give acceleration to its textile machinery industry.The products may include ring spinning frames, for which Chinese machines are already popular in the local market, and other equipment like shuttleless looms, blow room equipment, draw frames, carding machines, dyeing and finishing machines etc for which the Chinese have acquired latest technology from the Western sources.

As quoted by Textile Minister of Pakistan, Mushtaq Ahmad Cheema Government of Pakistan has made the US$ 3 billion worth of Pakistani textile machinery market quite lucrative for the global textile machinery manufacturers by taking initiatives like concession loans for purchase of textile machines and tax benefits to foreign investors along with 100% ownership etc.

Government is also considering Zero duty on textile machinery import to modernize and upgrade its textile machineries.

Future:

Market for imported textile machinery and equipment in Pakistan is directly proportional to the overall strength of the local textile industry. Pakistan is the eight largest textile exporters from Asia. The local industry desperately requires more modern machinery to compete in an increasingly competitive industry. Therefore, the demand for more advanced (including used) equipment is expected to grow significantly.

A study carried out by the Lahore Chamber of Commerce and Industry (LCCI) committee on WTO has mentioned that the world textile trade is set to increase from the existing $350 billion to $800 billion by 2014 and Pakistan's share in it is 2.7 percent.

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