Textileindustry in Pakistan has a total established capacity of spinning around 1550million kgs of yarn, weaving 4368 million sq meters of fabric, and finishingcapacity of 4000 million sq metres. It provides 38% of the total industrialemployment, contributes to 62% of its exports, and 27% to the industrial valueaddition. The sector contributes to nearly 8.5% to GDP. Pakistan has a dynamic export oriented textile industry, generating the highest exportearnings of the country. 9 million bales of cotton are produced every yearmaking it the fourth biggest cotton producer in the world

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Currently there are a multitude of issues facing theindustry. It needs to enhance its product quality, upgrade the technology, andencourage appropriate research and developmental activities. High interestrates, cots of inputs, and non-guaranteed energy supplies also hinder thecompetitiveness of the industry. Increasing interest rates have seriouslyaffected small owners, while hindering in the growth of textile tycoons. Due tothe global meltdown, textile exports of Pakistan were down by 9.5% during 2008.Textile owners felt it was imperative for the Government to take actions thatwould result in a positive impact on the industry.


First Textile Policy:

 

The Pakistan Government announced the first ever textilepolicy, 2009-2014, considering the exports of the country. Chaired and approvedby the Prime Minister Yousaf Raza Gilani, it aims to enhance the existing 10billion USD exports to 25 billion USD by 2015. The challenges faced by theindustry during the quota-free trade regime are optimistically believed to besuppressed by the policy.


Thepolicy enables an amount of 42 billion rupees in subsidies, and incentivesduring the fiscal year 2009-2010. Export refinance is reduced at a rate of 5%with a Rs. 2.5 billion allocation. Rs.5 billion is allocated as a relief on theexisting long term loans of the textile industry. Duty drawbacks are offeredbetween 1 to 3% for a period of two years for value added textile exports whichwill aid the industry to offset both its direct, and indirect costs. It alsoexempts the industry from lead shedding and allows it to have a prioritized gassupply.


A Technology Up gradation Fund (TUF) is proposed tocontribute around 20% of the capital cost as a grant. The Government hascurrently allotted Rs.1.6 billion for this, will is planned to be increased toRs.17 billion by 2014.

 

 

&sec=article&uinfo=<%=server.URLEncode(2307)%>" target="_blank">Fibre2Fashion had an exclusive interview with Mr Tariq Saeed Saigol, Chairman, Kohinoor Maple Leaf Group (KMLG). He spoke about the textile activities and the current situation of the sector in Pakistan.

  • How has the global slowdown hit you? Considering recent global scenario, what sort of impact be it short/long term, you expect in the Pakistan textile sector?

 

Due to worldwide economic crunch, no major development has been seen in textile sector and if we were to draw a graph of the first six months of 2009, market was very slow along with which orders book position was not so good and also leading to dilution in profit margins, the main reason being, the reduction in buying power of the end consumer.

  • Being a part of the industry, what is your outlook about the challenges threatening the industry?

He continued, Today the textile industry is going through serious operational problems due to an increase in cost of production, low productivity, and poor quality; hence the industry is facing serious threats of losing its share in the international markets. The current scenario posses challenges on dual fronts. First, by sustaining global positioning and second by increasing market share by increasing both, volumes and per unit prices.

The unit value can be increased only through marked improvement in quality, market tie-up, image building and change in business philosophy, which requires up-gradation in resource development both in manufacturing and marketing. The focus should be on R&D, technical innovation, product development on one hand and brand & market development on other with the goal of moving up in the global textile value chain, he concluded by saying.

  • What are your perceptions regarding the ups and downs in the current market?


Beginning with strengths, the low labor cost, along with availability of workforce and other raw materials are the basic strengths of textile and clothing (T&C) industry of Pakistan. The T&C industry is of immense importance to Pakistan as it provides an alternative to advance early stages of industrialization with high potential of employment generation and export expansion.


It has traditionally been the stepping-stone towards industrialization. The sector not only forms a significant share of GDP and foreign exchange earnings, but it also contributes to human development objectives such as (female) employment, diffusion of knowledge and technology, and generation of revenue. Among weaknesses, the industry faces a demand and supply gap of cotton. Moreover, contamination of cotton results in its low quality.


The low labor productivity, along with high-energy cost and subsequent high input costs are serious weaknesses of the industry. Moreover, lack of research & development has made the industry uncompetitive. Besides the poor infrastructure of the industrial sectors and the high utility expenses are also obstacles to proper growth. There is also a lack of some coordination and synergy between the public and private sector.

  • What benefits would the textile sector accrue from the first ever textile policy of the Government?


The policy sets an ambitious target of achieving exports totaling to US $25 billion over the next 5 years as compared to exports of $ 9.6 billion achieved during last fiscal year. The policy is really a broad based document which encompasses areas like technology up-gradation, infrastructure development, skill development, etc. and addresses rationalization of fiscal measures for the ailing textile industry along with removal of regulatory bottlenecks.


 

The government has for the first time, addressed all sub-sectors of this industry separately with special emphasis on the value added sectors and the policy mainly provides many measures to address the falling trend of textile exports, but the most notable are; Tiered drawback scheme with maximum benefit to the value added sub sectors; Full refund of past R&D claims; The availability of export refinance at 5%; Priority in gas and electricity load management; Relief on existing long term loans; Zerorating of exports and tax free import of machinery.


Although the textile policy is a very comprehensive one and covers almost all the relevant areas of the textile industry like skills development, market support, zero rating of exports, incentives for employment of women and disabled persons, etc. but the government will have to devise a proper SOP framework in order to implement and monitor policies which are contained in the policy. It is really advisable that the government should consider a fast and transparent procedure for the disbursement of funds allocated for various programs.


By breaking the overall target of $ 25 billion into intermediate yearly targets will also help the industry in monitoring its own progress. Only timely government decisions will make this policy meaningful and any delay in framework formulation will make this policy ineffective. Textile Policy 2009-14 is certainly a welcome initiative taken by the government. This policy seeks to revive the ailing textile sector through some key immediate measures and sets a vision for transforming the present textile industry into a new era.


The policy looks at the industry from almost every perspective and identifies key areas where investment can bring about fruitful results. By presenting this policy, the government has also recognized that only textile sector can be an engine for rapid growth for Pakistans economy. If this policy is properly implemented and if due market access is provided, Pakistans textile industry certainly has the capacity to bring about rapid progress and prosperity which may not be limited to industrial areas only and which may easily spill into the remote areas where progress is really needed.

  • As more international brands venture into the domestic market, what would u say is the USP of KTML?


Put the customer first, always; be flexible to the customers needs; adhere to the highest quality standards; think innovatively but make informed business decisions and last but not the least deliver results.


Textile industry in Pakistan has been a major source of foreign exchange revenue generation. Focus on this sector by the Government will alleviate poverty, result in better industrial development, generate more number of jobs, and ultimately the livelihoods of thousands of families.


References:

  1. &sec=article&uinfo=<%=server.URLEncode(2307)%>" target="_blank">http://changinguppakistan.wordpress.com
  2. &sec=article&uinfo=<%=server.URLEncode(2307)%>" target="_blank">http://www.pakspectator.com
  3. &sec=article&uinfo=<%=server.URLEncode(2307)%>" target="_blank">http://business.globaltimes.cn