The role of textile industry in development and growth of Pakistan &its
problems and solutions
Chapter 1 Introduction ...............................................................................................................
1.1 Introduction
.........................................................................................................................
1.2 Problem Statement ..........................................................................................................
1.3 Objective……………………………………………………………………………… ..
1.4 Literature review .............................................................................................................
4 Textile sector having
performance..................................................................................... 4
Ginning ..............................................................................................................................
6 Spinning
............................................................................................................................ 6Weaving
............................................................................................................................ 6
Processing .........................................................................................................................
7 Garments
............................................................................................................................ 7
Liberalization of Textiles and Trade ..................................................................................
7
1.5 Theoretical framework ...................................................................................................
12 With International Trade (Open Economy) of Nation A .................................................
12 With International Trade (Open Economy) of Nation B .................................................
13
Gains from International Trade ........................................................................................
14
Following are the Gains from International Trade in Each Nation ................................. 14
Equilibrium Relative Commodity Prices with Trade (ERCP) ......................................... 17
Equilibrium Relative Commodity Prices with Trade .......................................................
17
Incomplete Specialization ................................................................................................
18
Gains from Trade based on Different Tastes and Habits .................................................
19
Demand & Supply and International Prices.....................................................................
20
Demand & Supply and International Prices of x commodity ..........................................
20
The Equilibrium Relative Commodity Prices with trade with Partial Analysis ..............
20
Export Performance of Developing Countries in Textile Sector .........................................
21
Currency conversion rate .................................................................................................
21
i
Growth rate of GDP .........................................................................................................
21 Quality and Cost factor
.................................................................................................... 22
Technological factor ........................................................................................................
22
Non-Tariff and Tariff Restriction ....................................................................................
22 Why do Countries
Import?................................................................................................... 22 Exports affect the
economy ................................................................................................. 23
2.1 Overview of Textile Industry .........................................................................................
24
2.2 Imports of Pakistan ........................................................................................................
26
2.3 Export goods and services .............................................................................................
27 Free Trade
........................................................................................................................ 28
2.4 Textile industry's economic contribution 2011-12 ........................................................
28 Total Production cotton cloth and cotton yarn
................................................................. 32
Cotton and Fibre ..................................................................................................................
34
Export Quantity & Value of raw cotton ...............................................................................
39
Major Imports Markets ....................................................................................................
40
Issues ....................................................................................................................................
41
Shortage of Modern Equipment’s ....................................................................................
42
Production Cost increasing ..............................................................................................
42
Energy Crisis ....................................................................................................................
42
Performance of exports of textile sector ..........................................................................
43
Inflation rate effect ...........................................................................................................
43
Chapter 3 ..................................................................................................................................
44
Conclusion ...............................................................................................................................
44
Bibliography ............................................................................................................................
45
ii
1
2
Abstract
In the economic development the textile industry plays very important role. Approximately ( fifteen M)
individuals 38% in the industrial labor force works in the garment industry and approximately 20% work in
the textile industry (in mills and places ) More than 0.15 million individuals are working (directly or
indirectly) by the textile industry in Pakistan. In this project we will examines role of the textile
industry & the clothing textile industries play an important in the growth & development strategies
emerging countries. It mentions the textiles industry & clothing or garment industries are important
for the economic and development in the social terms and also providing incomes for short-run
incomes and jobs especially for women & export and import foreign receipts and also in the long
run. Providing the opportunity for foreign currency receipts and in the long run by providing countries
the opportunity for consent economic development in the development countries they adopted
applicable policies and industrial groups to improve and they are self- motivated effects in the Textiles
&
Garment. The budding of the Textile & Garment industries to add to long has factory in Karachi. The
purpose of this report is to formulate its problems and solutions of textile and clothing Industry
exports, GDP, Employment and how to contribute growth of the Pakistan economy.
3
CHAPTER ONE:
1.1 INTRODUCTION
Pakistan’s economy relies heavily on its cotton and textile sectors. The cotton-processing and textile
industries make up almost half the country’s manufacturing base, while cotton is Pakistan’s principal
industrial crop supplying critical income to rural households. Altogether the cotton-textile sectors
account for 11%of GDP and 60% of export receipts. Textile clothing industries consequently a major
part of manufacturing production (employment or labor force) and trade in Pakistan. This project is
observe importance of textile and clothing industry in development and growth strategies in
development of Pakistan. According to the economic survey of Pakistan 2008_09 the Pakistan textile
industry contributes more than 60% to the country total exports, which amounts to around 5.2 billion
US dollars. According to the 2012 economic survey of Pakistan, issued by the finance ministry, the
textile industry itself constituted about 4%of the total size of the Pakistan economy. Top Buyers of
Pakistan textile goods are

USA,EU,Gulf region ,UK,Hong

Kong. Korea, Saudi Arabia,

Italy ,Turkey, Germany, Norway France

Canada, Sweden, Australia, etc.
4
Role of textile industry in Pakistan development and growth
The textile industry of Pakistan is an eldest and the largest global textile industry in world. Textile
and garment industry is the typical starter for the different countries that are engaged in export and
import –orientated industrialization (Graffiti 2003) or works force intensive. Textile industry created
great opportunities within entry level employment for unskilled and skilled labor in emerging
countries. The industrial features of the Pakistan textile industry have made it apporatite as the starter
step of the industrialization ladder in developing countries some of them have experienced high
outcomes and growth rate in the sector of industry such as Sir Lanka, Bangladesh, Vietnam and Egypt
Mauritius and these since become inner income developing countries such( Brenton , Mauritius
Vietnam ).(2007) suggest that a number many reasons that a textile industry or sector plays such an
bery important role in growth of the developing countries .
The sector of textile industry provided large number of jobs for unskilled labour and drawings them
from rural and agricultural families that are located rural locations.
Regardless of relatively low start-up capital costs growth of the sector which created capital for more
scientifically demanding activities in the other sector in the economy.
Growth and development of the textile industry play an important role for imports and exports and
created great revenues for country from the exports of the garments and textile product.
However features textile of the industry (relatively low capital intensity low investment costs and
use of low skilled labor) too mean that of textile industry is comparatively uncommitted & able to
regulate the moving market circumstances rapidly (Nordas 2004).
Export and import trade polices& regulations has taken a main impact on a pattern of the textile and
clothing industry manufacture or a likely to do now & near future.
China textile industry sector become a major player in the market of the textile in the world constraints
on its trade of the china are gradually being lifted.
This has intensified competition for traditional textile and clothing producer’s especially small and
remote countries.
The earnings of a country can be calculated in different ways. GDP abbreviation is Gross Domestic
Product is such computation of indicator of country’s affluence indicates the value of goods and
5
services manufacture by one economy disregards of nationality with in a particular period of wealth
the GDP growth percentage cannot be make as an indicator since it effects the business confidence in
positive or in negative sense.
Worldwide recession investment is the negative sign in economic growth for two or more successive
quarter of any year.
Imports considered as those international goods or services acquire by local people of a country.
These people include inhabitants, different businesses and the government. This is not the matter of
those products which are sent by different means.
These goods can be sent through ship, alike hand carry in to some personal transport on a plane or
official luggage.
If those goods are manufactured outside any country or sales sold to local people that are considered
as imports.
Although tourist products or services are also imported globally. When someone travels outside the
country they may importing some souvenirs with them.
(Amadeo & Kimberly, 2017) Some countries used multivariate co-integration way and expected
antecedents of imports three months data set in case of Bangladesh.
They sort out that comparative income and rate have major influence on imports. The reciprocal of
income is positive and higher than 1 that means earnings encourage people to send special products
to other countries.
The reciprocal prices was negative but less than 1 that means Bangladesh variation in prices which
should not affects demand for import products.
Importance of textile industry in Pakistan development and growth
The textile industry of Pakistan is an eldest and the largest global textile industry in world. Textile
and garment industry is the typical starter for the different countries that are engaged in export and
import –orientated industrialization (Graffiti 2003) or works force intensive. Textile industry created
great opportunities within entry level employment for unskilled and skilled labor in emerging
countries. The industrial features of the Pakistan textile industry have made it apporatite as the starter
step of the industrialization ladder in developing countries some of them have experienced high
6
outcomes and growth rate in the sector of industry such as Sir Lanka, Bangladesh, Vietnam and Egypt
Mauritius and these since become inner income developing countries such( Brenton , Mauritius
Vietnam ).(2007) suggest that a number many reasons that a textile industry or sector plays such an
bery important role in growth of the developing countries .
The sector of textile industry provided large number of jobs for unskilled labour and drawings them
from rural and agricultural families that are located rural locations.
Regardless of relatively low start-up capital costs growth of the sector which created capital for more
scientifically demanding activities in the other sector in the economy.
Growth and development of the textile industry play an important role for imports and exports and
created great revenues for country from the exports of the garments and textile product.
However features textile of the industry (relatively low capital intensity low investment costs and use
of low skilled labor) too mean that of
textile industry is comparatively uncommitted & able to
regulate the moving market circumstances rapidly (Nordas 2004).
Export and import trade polices& regulations has taken a main impact on a pattern of the textile and
clothing industry manufacture or a likely to do now & near future.
China textile industry sector become a major player in the market of the textile in the world constraints
on its trade of the china are gradually being lifted.
This has intensified competition for traditional textile and clothing producer’s especially small and
remote countries.
The earnings of a country can be calculated in different ways. GDP abbreviation is Gross Domestic
Product is such computation of indicator of country’s affluence indicates the value of goods and
services manufacture by one economy disregards of nationality with in a particular period of wealth
the GDP growth percentage cannot be make as an indicator since it effects the business confidence in
positive or in negative sense.
Worldwide recession investment is the negative sign in economic growth for two or more successive
quarter of any year.
Imports considered as those international goods or services acquire by local people of a country.
7
These people include inhabitants, different businesses and the government. This is not the matter of
those products which are sent by different means.
These goods can be sent through ship, alike hand carry in to some personal transport on a plane or
official luggage.
If those goods are manufactured outside any country or sales sold to local people that are considered
as imports.
Although tourist products or services are also imported globally. When someone travels outside the
country they may importing some souvenirs with them.
(Amadeo & Kimberly, 2017) Some countries used multivariate co-integration way and expected
antecedents of imports three months data set in case of Bangladesh.
They sort out that comparative income and rate have major influence on imports. The reciprocal of
income is positive and higher than 1 that means earnings encourage people to send special products
to other countries.
The reciprocal prices was negative but less than 1 that means Bangladesh variation in prices which
should not affects demand for import products.
History of Textile Industry in Pakistan
8
“The sector of textile in Pakistan established in past year 1957 and in short time it comes to the
leading sector of the Pakistan. In these days the industry of textile is s base of Country’s
economy. Apart from this, the sector if spinning becomes the only user of cotton which is the
highly produced cash crop of the country. Allocation of policies become totally changed the
worldwide patterns of trade and level of competitiveness has increased, that is why the result of
distinct department was bring into existence on September, 2004 along with the allocation of
different obligations to make plans or programs which hold up the sector of textile. Pakistan
becomes the 4th among the cotton production in the world and 2nd in export ranking of yarn
and 3rd in cloth exports. Pakistan’s produces the cotton and reached highest sales of 14.81
million cotton bales on April 31, 2012 which breaks all the pasts’ record of 14.31 million cotton
bales in 2004-2005. The textile industry also break the record size as that are place up with
more than 13.44 million cotton bales out of total which is 14.81 million cotton bales. Pakistan
also imported about more than 1 million cotton bales of products quality from Brazil, USA and
India for combining function during the period. Brazilian cotton is well known among Pakistani
importers due to its better quality. In Brazil, cotton is picked up by using machines and in
Pakistan cotton is picked up by using labor. That is why Brazilian cotton is extensively used
when impure free cotton is required for production.”(Secom, 2012).
Pakistan is the four largest producer of cotton with the third largest spinning capacity in Asia
after china and India contributes 4 %to5 % to the global spinning capacity.
At present, there are 1,221 ginning units, 442 spinning units, 124 large spinning units and 425, small
units which produce textile.
The origin of the Indian textiles is thought to be the Indus valley civilization, situated in modern
Pakistan, where people used homespun cotton to weave garments. Historically, the Indus valley region
engaged in significant trade with the rest of the world. The silk from the regions, for example, in the
known to have been popular in Rome, Egypt, Britain, and Indonesia.
In the 1950s, textile manufacturing emerged as a central part of Pakistan’s
9
Industrialization, shortly following independence from the British rule in the South Asia.
In 1947, the Pakistan government established thee cotton Export Corporation of Pakistan (CEC).
The CEC served as a barrier to private manufactures from participating in international trade.
However, in the late 1980s, the CEC diminished and by 1988-89, private manufacturers were able to
buy cotton from and sell in both domestics and foreign markets. Between1947 and 2000, the number
of textile mills in Pakistan increased from 3 to 600. In the same time period spindles from 177,000 to
805 source of export earnings and employment. It also helps in value addition to the manufacturing
sector of the economy.
All through the six years between 1993and 1998, production of yarn in quantity terms quantity
terms) registered a steady annual million Cotton textile industry has been primary industry in
Pakistan and major growing rate of 302% in Bangladesh and 406% in India.
On the contrary Pakistan listed growth rate of 101% per annum in yarn production while it rated third
after China and India in the global yarn production during the same six years.
In exports, while Taiwan ,India and there public of Korea listed an annual increase of 18.1% and
27.7% or 5.4% correspondingly during 19 cotton textile industry has been first industry in Pakistan
and major basis of export earnings and employments.
It also helps in value adding to the industrial sector of the economy. During the six years among 1993
and 1998, production of yarn in quantity terms registered a stable annuals growth. Pakistan registered
a negative growth rate 7.5% one important.
Factors of Production Textile Industry:
Production
Textile industry has six key sections of the textile production in Pakistan.

Cotton

Filament yarn manufacturing

Spinning

Processing

Garment manufacturing

Printing
Cotton: Cotton is the largest section of textile production. Other fibers produced
10
Contain artificial fiber, yarn art silk, wool, and jute.
Cotton spinning: Cotton spinning is maybe the most important sector in Pakistan textile industry
with 521 set up and operational Units.
Synthetic fibers: In synthetic fibers nylon polyester acrylic and polyolefin govern the market. There
are currently five major producers of artificial fibers in Pakistan with a total capability of 636000 tons
per annum
Filament yarn manufacturing: Three types of thread yarn are shaped in Pakistan region. There are
acetate rayon yarn polyester thread yarn and nylon filament yarn. There are now about 6 units in the
country.
Artificial fiber: This fiber look like the silk but costs less to produce. There are about 90,000 looms
in country situated mainly in Karachi Gujranwala Faisalabad and Jalapur Jattan as well as some in
FATA
Wool: The main products artificial from wool holds woolen yarn acrylic yarn fabrics shawls carpets and
blankets.
JUTE: Jute sake and sacking cloth are commonly used for filling farming products such as gains and
rice. The manufacture of jute crops was about 100,000 tons in 2009_10.
Classification of textile industry: Department of these sectors
These are the main classification of textile sector.

Ginning

Spinning

Processing

Weaving

Garments
Ginning:
Ginning is the major step in the chain of Textiles. It splits cotton its seed and layers thus adding value
to the textile industry. There are about 1221 Ginning units in Pakistan there distribution is 1078 in the
Province of Punjab and in the Sindh province.
11
The overall volume is around 20 million cotton bales per year. Against all the capacity, the overall
production of cotton ginning is 10.0 million cotton bales deliberated an extra capacity the country
have in ginning sector.
Departments of Ginning:
Cotton ginning takes place throughout the area known as the Sunbelt. Four main production regions
can be designated.

Cotton fiber

Man mad fiber

wool

Blow room
figure 1:Department of ginning.
In this table show the ginning steps fist separate the fibers from cotton seed.
12
Spinning:
Spinning sector is the important progress and all the future value flourishes which is garments and
processing and knitting are manufactured on spinning units. Any changes in character of straight
production of spinning affect the total value chain of textile industry. The textile sector of Pakistan is
attractive the oldest or many of the spinning plants have been there for the hurdle time. This is artificial
to become the very valuable split within the chain of textile industry production
. The key focus of the sector is in cities of Faisalabad, Karachi, Multan, Hyderabad and Lahore.
Weaving means merging two different sets of yarns or clothes to make a fabric or Cloth. This may
exist the easy and hard; easy way of weaving measured as the making cloth and the other items. Yarn
or pieces of rare material are send below and overhead one another.
Departments of spinning:
These are the main departments of spinning.
13

Blowing and mixing

Carding

Combining

Drawing

Simplex

Ring spinning

Cone winding
Spinning process flow
Figure2: Textile industry
Weaving
Weaving means combining two different sets of yarns or threads to make a fabric or
cloth. This may be the easy and hard; easy way of weaving considered as the making of cloth and
the other items. Yarn or pieces of raw material are send below and above one another.
14
Departments of weaving
Weaving process have seven departments

Raw material

Warping

Drawing in

Grey checking

Mending

Final checking

Rolling folding

Dispatch
Figure2
15
Processing
Processing sector in the textile industry clamps a important place with detail to
Adding value.
This sector won internationally respect to making better or lawn of different color that contracts with
current trade needs of the local and international.
Fashion and fabric which is mixture with cotton are linen, man-made and silk.
Bleaching, printing, finishing and coloring carry as procedures of fabric etc.
Garments in 70s, Pakistan garment sector was traditional and as time passed by and current
industrialization, this industry has distended very quickly.
More than 505 of the units producing fabrics of cotton are small and medium in terms of output, labors
and machines but for less exemptions which are spread domestically.
Liberalization of Textiles and Trade Textiles are still at top between manufacturing products created
not later than some Industrializing public.
These played a dangerous character the first stages of industrialization. Within the UK, some areas
of North America as well as Japan, also further highlighting on exports development of the economies
of East Asia (Yang with Zhong, 1998). Taiwan and
Korea rely importantly resting to textile and cotton produce e on behalf of their exports first the 1950s
on the road to the mid-1980s.
(Syed Abdul Sattar, 2014)
It has been immovable fact under economic literatures that generally happens after the crisis of East
Asia 1997-98 where exports are vital conditions for continuous growth of economy of any Country.
The principle purpose behind the growing economies to steady face foreign Exchange rate issue is
failure of improving or diminishing their exports differentiate with Imports.
Which leads to shortage BOP as well as extended trouble on the investment assets in the building of
import bill. Pakistan, as a less open growing country, also treats some huddles in textile industry.
16
In 70s, Pakistan garment sector was established and as time passed by and continuing industthe UK,
some areas of North America as well as Japan, also further emphasizing on this industry
Resultantly, rapid growth of Chinese economy highly influences under developed countries of Asia.
(Barry Eichengreen, 2004) Several things can be assessed from the environment and trade study under
a critical viewpoint on leather and clothing production of Pakistan.
Trade liberalization will lead to export through establishing countries of capital of environment.
Secondly, the costs of lessening these malicious environmental affects in the South are large.
It is found that, given the current position of following laws of environment in Pakistan, exports lured
by trade liberalization can definitely have huge disastrous environmental influences.
Nevertheless, no assistance for the costs of mitigation is found. Moreover, the mitigation benefits
exceed the costs.
(Shahrukh Rafi Khan, 2001) Under a study done on the long and short run antecedent of commerce
loss referred to Pakistan through Johansen co-integration approach and Error correction model (ECM)
it had been searched that FDI foreign income and local hold utilization and effective foreign rates have
visible effects on the trade loss.
In order to lighten short run dilemma the VECM (Vector Error correction model) was used. The results
of VECM sorted out that there is no equilibrium in short run that will be adjusted within a year.
(Muhammad S. D., 2012) In a study done by Donohue on the aftermaths of global decline on neighbor
countries.
Resultantly, rapid growth of Chinese economy highly influences under developed countries of Asia.
(Barry Eichengreen, 2004) Several things can be assessed from the environment and trade study under
a critical viewpoint on leather and clothing production of Pakistan.
Trade liberalization will lead to export through establishing countries of capital of environment.
Secondly the costs of lessening these malicious environmental affects ithe South are large.
It is found that, given the current position of following laws of environment in Pakistan, exports lured
by trade liberalization can definitely have huge disastrous environmental influences.
17
Nevertheless, no assistance for the costs of mitigation is found. Moreover, the mitigation benefits
exceed the costs.
(Shahrukh Rafi Khan, 2001) Under a study done on the long and short run antecedent of commerce
loss referred to Pakistan through Johansen co-integration approach and Error correction model (ECM)
it had been searched that FDI, foreign income and local hold utilization and effective foreign rates
have visible effects on the trade loss.
In order to lighten short run dilemma the VECM (Vector Error correction model) was used.
The results of VECM sorted out that there is no equilibrium in short run that will be adjusted within a
year.
(Muhammad S. D., 2012) In a study done by Donohue on the aftermaths of global decline on
Deprements of processing :
These are the main deprements of processing.
Figure4:
18
Garments:
In 70s, Pakistan garment sector was established and as time passed by and continuing industrialization,
this industry has enlarged very quickly. More than 505 of the units producing fabrics of cotton are
small and medium in terms of output, workers and machines except for less exceptions which are
spread domestically.
Textile value chain
19
Management hierarchy for textile industry:
Industries are the fast growing sector in developing and under develop countries. Different factors are
responsible behind this reason. Anyhow textile industry he textile and apparel is a series of interrelated
activities which originates with the manufacture of fiber and culminates in the delivery of a product
into the hands of the consumer. The textile and fashion industry is a major contributor to several
national economies including both small- and large-scale processes globally. Apparel
manufacturing is labor intensive, which is characterized by low fixed capital investment; a wide
range of product designs and hence input materials; variable production volumes; high
competitiveness and often high demand on product quality. Although the manufacturing process is
associated mainly with apparel and household linens, it is also used in a variety of industries and crafts
such as upholstery, shoe-making, sail-making, bookbinding and the production of varieties of sporting
goods. Sewing is the fundamental process, with ramifications into a variety of textile arts and crafts,
including tapestry, quilting, embroidery, appliqué and patchwork. Further, it is a sector where
comparatively modern technologies could be implemented even in poor countries at moderately low
investment costs.
With concern to the employment as well as production, the textile sector is one of the prime
industries in the world.
The textile and clothing sector also has the high potential market segment for value added products
where design and research and development (R&D) are key competitive factors. The luxury fashion
industry utilizes higher labor in design and marketing segments. The same applies to market sectors
like sportswear where both design and material technology are vital.
Structure
of
the
Textiles
and
Clothing
or
Apparel
Industry
The clothing or garment industry is a labor-oriented, low wage industry but a vibrant, innovative
sector, depending on the type of market segments upon which the industry focuses. The high-end
fashion sector is considered modern technology, with comparatively well-paid workers and designers
and a high degree of flexibility. There are wide varieties of clothing types that the apparel
manufacturers have to handle, which can be broadly divided into two categories: outer clothing and
inner clothing.
20
Fig: Clothing or garment industry
The core operations of industries servicing this market sector are mostly situated in developed
nations and often in certain geographical locations within these nations. The other kind of major
market sector is bulk production of standard products like t-shirts, uniforms, underwear, etc.
Manufacturers for this type of standard product market sector are mostly seen in developing
countries. For lower- to medium-priced products in the market, the responsibility of the retailer has
become more and more important in the organization of the supply chain. The retail market sector
has turned out to be more intense, leaving more market power to multinational retailers.
Textiles are responsible for the key raw material input to the garment industry, developing vertical
supply chain relationships between the two containing sales and distribution functions. The textile
and clothing sectors involve:

Acquiring and processing raw materials, that is, the preparation and production of textile
fibers.

Manufacturing of textile yarns and fabrics.

Dyeing and finishing of textile materials, which provide visual, physical and aesthetic
properties that consumers demand, such as bleaching, printing, dyeing and coating.

Conversion of textiles into garments that can be either fashion or functional garments.
Textiles industry:
The textile industry is primarily concerned with the design and production of yarn, cloth, clothing,
and their distribution. So in the textile business generally needs more investment compared to the
garment sector and it is an extremely automated area. It comprises yarn manufacturing, fabric
manufacturing and dyeing and finishing, and these three functions could be carried out in integrated
plants. On the other hand, the textile sector suffers from the higher lead time as well as high
investment cost, which results in relatively large minimum orders.
21
Fig: Yarn manufacturing industry
Apparel industry:
Garment industry starting with the textile industry (producers of cotton, wool, fur, and synthetic
fiber) via fashion industry to fashion retailers. The fundamental manufacturing process of the
apparel industry has not undergone much change over the past century, and is considered by the
progressive bundle system. Work or operation is planned in a manner that each operator is
specialized in one or a few operations. The fabric is first cut into various garment panels and then
grouped by components of the garment, tied into bundles and sent to an assembling (sewing) section
for making a garment. An operator receives a bundle of cut garment panels and executes his or her
single operation and keeps the bundle in a buffer. A buffer of about one day’s work is common at
each operation. It takes about 40 operations to finish a pair of pants, which entails about 40 days of
in-process inventory.
Though numerous advances in the industrial engineering segment for systematizing the operations
and reducing the production time of each individual operation have taken place over a period of
time, the basic method has remained the same. However, the apparel industry, especially sewing
technology has remained significantly less automated compared to many other manufacturing
industries.
The new technologies, systems and innovations in the clothing sector have improved efficiency at
each production stage and enhanced the harmonization between stages and provided a more
seamless interface between them. The major breakthrough innovation was the use of computers in
clothing manufacturing in areas like pattern making, marker planning and computerized automatic
cutting machine.
This machine has made it possible to cut increasingly thick layers of cloth accurately. These
advancements are mainly associated with the preassembly phase of production, where technological
developments have been more important than at the assembly stage. The organization structure of a
medium-sized garment industry is shown in figure.
22
23
1.2 Problem Statement
As world trade expands what is the volume of Pakistan textile exports as well as Pakistani textile
imports and how does it impact on the economy growth &development of their produce nation.
1.3 objective
1. To analyze the impact of the (Imports and exports, employment, foreign reserves) of textile sector
on GDP and economy growth of Pakistan
2. to world textile exports and imports countries position of Pakistan
1.4 Literature review
Textile sector having performance
Very high weight of 20.91 in Quantum Index
Production remained downcast on account of uninspired performance of yarn 0.78% and cotton cloth
0.51% having a composite weight of 20.15 in textile industry.
The manufacturing of cotton decreased by 29% during last year and recorded an increase of 7.6% in
year 2017.
Along with increase in cotton prices internationally and export financial assistance package known
well for its production in future.
(Shah, 2017) In 2011, massive procurements of cotton were carried out by China with the intention
of encouraging its farmers to increase the production of the crop.
Because of its large scale operations, this policy by China increased the worldwide demand and
inflated world cotton prices which increased to a high of 229.7 US cents/lb. in 2011. After 11 million
tones had been accumulated approximately the Chinese government altered its policy to pay the
difference between target and prevailing market prices to the cotton growers.
Following this reversal policy the world cotton prices fell significantly to as low as 67.5 US cents/lb
in November 2014.
Furthermore, China also discouraged imports by imposing strict quality standards and minimum dutyfree import quotas along-side import tariffs on cotton and cotton products.
24
China’s influence on the cotton market cannot be overstated since it is a major producer in the global
market accounting for 22.8% of total world output.
The buying behavior of China expanded the demand trajectories of its import partners and favorably
affected their balance of trade. Similarly, the country’s policy shift resulted in loss of export revenue.
This however, is indicative of a significant threat to the world cotton market and global cotton prices.
In 2015 China sold around 63,412 tons of cotton (a meager 3.4% of the amount initially offered for
sale).
Even though the Chinese government aimed at selling as much as 1 million tons, the slow economy
and the risk of pushing the market prices down further constrained the cotton sales for China.
(Jazib Ahmed, 2016) An Analysis of the Impact of Imports and Exports on Textile Sector of Pakistan.
25
CHAPTER TWO
An Analysis of impact of Imports and Exports on Textile Sector of Pakistan
2.1Overview of Textile Industry:
Pakistan has very strong export align textile industry has a great influence on economy. Textile sector
is the greatest sector of Pakistan and make the country’s high exports income about 58 percent. It also
provides that immense rate of employment 39 percent largely underuse labor and add 8.5 percent to
Gross Domestic Product.
Now all the world’s famous brands produce textile items in Pakistan which give them high standard
of global quality and meet their desire.
The textile sector of the Pakistan established in 1957 and in short time it reached the leading sector
of the country. In these days textile sector is the mother of Pakistan’s economy.
Apart from this, spinning industry becomes the individual customer of cotton which is the largest
cash crop of Pakistan.
Policies of quota has totally changed the worldwide trade layout and level of rivalry has increased
that is why a result of distinct Ministry was bring into existence on September 2nd 2004 with the
allocation of duties to make programs and strategies to hold up the textile industry.
Pakistan is the fourth largest producer of yarn and cloth worldwide and ranks 2nd in yarn exports and
3rd in cloth exports. Pakistan’s manufacturing of cotton gained highest aspect of 14.81 million bales
of cotton on 31st April 2012 by eradicating all the old records of 14.31 million bales in the year 20042005.
The textile organizations break the record volumes as place up more than 13.44 million out of 14.81
million bales. Pakistan also imported about more than 1 million bales of good quality from Brazil
India and USA to combine objective during such period. Brazilian cotton is well known among
Pakistani importers due to its better quality.
In Brazil, cotton is picked up by using machines and in Pakistan cotton is picked up by using labor.
That is why Brazilian cotton is extensively used when impure free cotton is required for production.
(Secom, 2012) Pakistan textile sectors the major and significant industry of country’s economy that
contributes 63 percent to export income and occupy 38 percent of labor work force.
26
Now Pakistan has third largest spinning capability in Asia next to India and China. The whole value
chain represented production of ginning cotton weaving and printing, dyeing and finished goods
production.
Pakistan has declared as the one of the major cotton and yarn production industries that has market
share of 28% in yarn production and 8% in cotton production.
The importance to the textile industry reports for over 9% of GDP and its weight in quantity index of
largest-scale production is 20%.
(Memon D. N., 2011) In Pakistan (TCO) Textile Commission Organization accounts there are about
442 textile companies in working. 43 compound organizations and 399 conversion organizations with
about 13.27 million spindles 190,000 motors placed around 11.08 million spindles and 160 thousands
motors are in operating capacity consumption of 83 percent and 84 percent particularly during 20142015. (Memon D. N., 2016
2.1Tabl
Source: APTMLS
27
Table2.2
Table: 2.3
Textile Machinery and Spare Parts Imports (US$ Million)
28
2.3 Export goods and services
Exports are products that are manufactured in your own country or shipped to some
other country for sale purpose; they may also be use for trade with some other country if that
country needs goods from the country they are exporting. Exports are usually referred to that
when considering about international trading or business which is normally the conversion of
products and services with some other countries. Exports are the products or services
manufactured in one country and buy by resident of some other country, it does not matter
that what the products or services are. It does not concern how they are sent. It may be
shipped, or carried out by personal or official luggage in a plane. If that are manufactured
locally or sales from one foreign country, that is an export. (Amadeo, The Balance, 2017)
Free Trade
The capability of exporting products helps a country to grow by selling higher value of
overall products or services which raise the earnings and living standards of the residents of
any country. The main focuses of international policies in different countries is to motivate
and find best solutions that promote free trade. Which reduces additional taxes or constraints
on exported products such as tariffs and non-tariffs duties and quotas system.
(Hill, 2012)
2.4 Textile industry's economic contribution 2011-12
This table shows figures of different factors like exports, manufacturing,
Employment, GDP e.t.c
Table 2.1
29
Figure 1.1
Factors in Textile
Expots
3%
6%
Manufacturing
34%
27%
Employment
GDP
30%
Market Captilization (Listed
Companies)
The pie chart the percentage of factors which are mention in the previous table. Exports
portion contains highest percentage 34%, second highest portion is taken by manufacturing
30%, employment contain 27% of total portion, GDP contain 6% and lowest percentage
contain by market capitalization.
Table2.1
Table contains year wise production, imports and total value of textile products.
Amounts are in billions.
30
(Source: APTMA)
31
2
Production & Import
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Production
Import
Figure 1.3
The figure shows the production and import combination import of textile products
are very less according to the production. The peak point of production is about 15,000 and
the peak point of imports is about 5,000. This shows that the excess of production is exported
to other countries.
4
Grey
700,000
600,000
498,095 504,899
500,000
582,819 561,695
553,551 566,020 572,575
400,000
300,000
317,247 295,791 332,361
200,000
Bleached
100,000
100,000
0
80,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 86,127
2009-10 87,292
2010-11
82,381 78,354
78,201
71,681 73,311
60,000
43,841
40,000
32,227
20,000
18,281
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
This figure shows the production of clothes in category wise. The figures are showing
quantity in 000 sqmtrs. The highest production of grey cloth is between the year 2006-2007
i.e.582,819 thousand sqmtrs.
Figure 1.5
This figure shows the bleached cloth production. The peak point of bleached cloth
production is between the year 2010-2011 i.e. 87,292 thousand sq meters.
Blended
120,000
101,687
100,000
92,612
80,000
77,039
Dyed & Printed
61,100
60,000
350,000
40,000
300,000
51,453
292,743
20,000
250,000
0
200,000
150,000
2001-02
155,869
2002-03
161,515
2001-02
2002-03
205,503
2003-04 2004-05
52,273
279,730
2005-06
297,318
2006-07
60,671
59,441
56,093
326,647 331,838
297,999 309,134
54,737
2007-08
2008-09
2009-10
2010-11
100,000
50,000
0
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
This figure shows the blended cloth production. The peak point of blended cloth
production is between the years 2003-2004 i.e. 101,687 thousand sqmtrs.
Figure 1.7
This figure shows the dyed and printed production of cloth. The peak point of dyed
and printed production cloth is between the years 2008-2009 i.e. 326,647 thousand sqmtrs.
Total Production cotton cloth and cotton yarn
2010-11
Table 2.3
Years
cotton cloth (million
sqmtr)
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
Source: Economic Survey of Pakistan
cotton yarn (000 tones)
764.4
769.6
771.27
776.5
776.9
780.9
784.3
Figure 1.8
cotton cloth (million sq mtr)
790
785
780
775
770
765
760
755
750
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
This figure shows the cotton cloth production in million sqmtrs the
graph shows the upward direction throughout the period. Cotton cloth
production is increasing day by day.
2200.4
2225.31
2253.51
2293.2
2304.4
2552.6
2572.6
Figure 1.9
cotton yarn (000 tones)
2700
2600
2500
2400
2300
2200
2100
2000
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
This figure shows the little growth in 2011 to 2015 but high
growth in next two years i.e above 2500 thousand tones.
Cotton and Fibre
Table 2.4
Source: APTMA
Figure 2.1(Kg in 000)
Cotton & Fibre
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1
2
3
4
Cotton
5
6
7
8
9
10
FIbre
This figure shows the production quantity of cotton and fibre.
Figure 2.2
Total
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
0
2
4
6
Table 3.1
Shows the exported percentage of production.
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
29.67
27.28
26.52
22.74
31.2
25.64
21.18
8
10
12
2007-08
2008-09
2009-10
18.38
21.26
18.23
Figure 3.1
EXPORTS
31.2
29.67
27.28
26.52
25.64
22.74
21.26
21.18
18.38
2001 - 02
2002 - 03
2003 - 04
2004 - 05
2005 - 06
2006 - 07
2007 -08
2008 - 09
18.23
2009 - 10
This figure shows the exported percentage of production. The peak point
of exported percentage is between the years of 2005-2006 i.e. 31.2%.
Table 3.2
Table shows the export quantity and value of raw cotton.
Quantity (Million kg)
34,926
55,100
37,307
117,084
62,658
45,065
57,124
78,241
Rs(Million)
14,933
28,750
27,444
65,457
40,800
30,452
43,861
68,260
2010 - 11
160,136
142,239
163,660
307,400
Source: APTMA
Table 3.3
Exported cotton and woolen textile
woolen & woolen
textile(million US$)
Years cotton & cotton
textile(millions US$)
total textile
exports(million
US$)
textile as %
of exports
2010
9755
137
10338
54
2011
13147
132
13887
56
2012
11803
121
12470
53
2013
12628
122
13156
54
2014
13348
125
13856
55
2015
13139
119
13589
57
98
12553
60
2016
12168
Source: Economic Survey of Pakistan
Figure 3.2
Cotton & Cotton Textile(million
US$)
15000
10000
5000
0
2010
2011
2012
2013
2014
2015
This figure shows the export of cotton and cotton textile the graph
shows the variations in the growth some time it shows upward direction
and some time it shows the little downward direction. Highest growth is
in 2014.
Figure 3.3
2016
woolen & woolen textile(million
US$)
150
100
50
0
2010
2011
2012
2013
2014
2015
2016
This figure shows the export of woolen textile and the graph shows the
little downward direction in the next years. Highest export is in 2010.
Figure 3.4
total textile exports(million US$)
16000
14000
12000
10000
8000
6000
4000
2000
0
2010
2011
2012
2013
2014
2015
2016
This figure shows the total textile exports and the graph shows the variations in the
figures.
Highest textile export is in 2010.
Figure 3.5
textile as % of exports
62
60
58
56
54
52
50
48
2010
2011
2012
2013
2014
2015
2016
This figure shows the percentage of exports as textile the graph shows the
upward direction through 2012 to 2016. Highest rate is in 2016.
Export Quantity & Value of raw cotton
Figure 3.6
Quantity & Value
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2001-02
2002-03
2003-04
2004-05
2005-06
Quantity
2006-07
2007-08
2008-09
2009-10
Value
This figure shows the exported quantity and value of raw cotton. The
peak point is in
2010-2011 i.e. above 300,000 thousand kg and amount in 2009-2010 i.e. about
163,660.
2010-11
Major Imports Markets
Source: Economic Survey of Pakistan Issues
Liberalization of Textiles and Trade
Textiles are still at top amongst manufacturing products fashioned not later than
some industrializing state.
These played a critical character the first stages of industrialization indoors the UK,
some areas of North America as well as Japan, also further emphasizing on exports
progress of the economies of East Asia (Yang with Zhong, 1998).
China, Taiwan and
Korea rely greatly resting to textile and cotton produce on behalf of their exports
starting the
1950s on the road to the mid-1980s. (Syed Abdul Sattar, 2014)
It has been a rooted fact under economic writings that usually occurs
after the crisis of East Asia 1997-98 where exports are crucial riders for
continuous growth of economy of any country. The principle purpose behind
the growing economies to consistent face foreign exchange rate issue is decline
of enhancing or diminishing their exports differentiate with imports which leads
to deficit BOP as well as expanded trouble on the investment assets in the
structure of import bill. Pakistan, as a less open growing country, also treats
such hurdles whilst maintaining its external performance. In order to cater to
those issues, the monarchy has brought policies that provide incentives to build
up exports with a step to market rate of exchange. As per estimates for 2013,
Bangladesh and Pakistan, both economies have a population of 190 million.
According to latest (WEO), Pakistan’s capita income was US$1275 in contrast
to US$1033 of Bangladesh in 2013. Averagely, Economy of Pakistan grew to
4.5 percent in the last decade and 6.2 percent Bangladesh. In the words of
World Development Indicators, owing to trade, the trade to GDP ratio in
merchandize of
Bangladesh increased to 54 percent in 2013 differentiate with 31 percent of Pakistan
(Mehmood, 2015)
Clothing and textile sector remains significant factor as an economic
development of under developing countries and in Pakistan. It is the biggest
sector with regards to exports, employment and investment. A study on the
demand for textile and clothing in Pakistan highlights numerous deeds that
upgraded the access of products of textile sector of Pakistan to numerous
markets globally. It differentiates the export performance of developing
countries and of Pakistan. USA is the dominant buyer of textile products of
Pakistan. The export of Pakistan has risen to 1.1% and other countries had
significant risen up to 5%. The study states the aspects of Pakistan’s textile
industry that immense portion of yarn manufactured in the country, sold to
international markets as raw cotton used for quality products’ production as
fabric. In spite of the benefit of superior quality production of cotton and yarn,
the industry has hurdles as a decline in skilled labor and investment. The study
builds as a model of textile sector of Pakistan restructuring competitive and
liberalized trade environment. The textile sector of Pakistan played a pivotal
role in the development of economy of the country and according to this article
the textile sector wants to be established upon must go through aggressive
reshaping to be intensive in capital as it is in western countries. There is a want
to improve finished products quality in spite of spinning sector.
Finished products are mainly of production of good quality of cloth in textile
sector. Owing to less innovation, power looms must be declined and shuttle
looms must be grown that have capability to manufacture fine quality cloth for
global market. (Factors Affecting Textile Industry, 2017)
Some countries used multivariate co-integration way and expected
antecedents of imports three months data set in case of Bangladesh. They sort
out that comparative income and rate have major influence on imports. The
reciprocal of income is positive and higher than 1 that means earnings
encourage people to send special products to other countries. The reciprocal
prices was negative but less than 1 that means Bangladesh variation in prices
which should not affects demand for import products.
It is experimented that demand of import products of Pakistan by
applying Johansen multivariate co-integration approach in data range within
1975 to 2005. The results of research have stated that in high real income has
important and positive influence on import whereas, there is a negative
relationship between import rates and total imports. It is further conducted that
local rates have inverse effect on imports of the country. The research
concludes that in the tenor of expectation, demand of imports is stable in
Pakistan.
(Muhammad, 2014)
The following groups state the highest foreign exchange value in purchase of
import products in Pakistan in 2016. Also shown that the percentage of share of
products represent overall imports of Pakistan.
Computers: US$6.4 billion (15.7 percent of total imports)
•
Electric equipment: $4.7 billion (11.6percent)
•
Steel and iron: $2.3 billion (5.5percent)
•
•
Motor vehicles: $2 billion (5percent)
Animal/vegetable fats, oils, waxes: $2 billion (4.9percent)
•
Plastics, plastic articles: $1.8 billion (4.4percent)
•
Organic chemicals: $1.6 billion (4percent)
•
Cotton: $1.1 billion (2.7percent)
•
Mineral fuels including oil: $1.1 billion (2.7percent)
•
Manmade filaments: $1 billion (2.5percent)
Imported manmade filaments had the fastest-growing increase in value among
the top
10 import categories, up by 197.3% for the 7-year period starting in 2009.
(Workman, April 25, 2017)
Numerous literatures have concluded the export trend and performance
of organizations situated in an under developed country. Nevertheless, there is a
limited literature on effects of regulations on conduct of under developed
country that exporting organizations. In a research made to find the effects of
ISO 9000 certification on sales of export products and exports’ shares for agrofood and textile sector it is found out that the performance of exports is
correlated positively ISO 9000 certification. (Oliver Masakure, 2009)
Another study on the effect of growth of China on the exports of
different countries uses the gravity model to segregate commodity kinds by
virtue of endogenity of exports of China. The results of study confirm the
tendency for exports of China declines the exports of other states. But these
influences are prominent mostly in perfect competitive markets and hence under
developed countries, not in capital market of countries of Asia in which
equipment and machineries are important aspect of exports. Likewise, there is
perfect propensity for a fastly growing economy of China to attract in imported
products from neighbor countries. Resultantly, rapid growth of Chinese
economy highly influences under developed countries of Asia. (Barry
Eichengreen, 2004)
Several things can be assessed from the environment and trade study
under a critical viewpoint on leather and clothing production of Pakistan. Trade
liberalization will lead to export through establishing countries of capital of
environment. Secondly, the costs of lessening these malicious environmental
affects in the South are large. It is found that, given the current position of
following laws of environment in Pakistan, exports lured by trade liberalization
can definitely have huge disastrous environmental influences. Nevertheless, no
assistance for the costs of mitigation is found. Moreover, the mitigation benefits
exceed the costs. (Shahrukh Rafi Khan, 2001)
Under a study done on the long and short run antecedent of commerce
loss referred to Pakistan through Johansen co-integration approach and Error
correction model (ECM) it had been searched that FDI, foreign income and
local hold utilization and effective foreign rates have visible effects on the trade
loss. In order to lighten short run dilemma the VECM (Vector Error correction
model) was used. The results of VECM sorted out that there is no equilibrium
in short run that will be adjusted within a year. (Muhammad S. D., 2012)
In a study done by Donohue on the aftermaths of global decline on the
Pakistan economy, results suggested that timeframe of 2007 and 2009 the
poverty ratio is likely to be enhanced by almost 80%, from 22% to 40% points.
Nevertheless, the conclusions show that this enhancement is traceable partially,
to the food and fuel shortage which prior to the financial declines. The
conclusions also indicated different influence, with salary enhances for farm
labors and a decline in salaries for expert labor. (Donoghue2, 2010)
The modern effect is quantified to the infusion amount compulsory to
comprehend pollution. Between1997–2001 the paper reveals that the global utilization
of fabric manufacturing requires 256 Gm3 of water per year, out of which about 42
percent is blue water, 39 percent green water and 19 percent dilution water. Impacts
are generally crossborder. About 84 percent of the water footprint of cotton usage in
the EU25 region is located outside Europe, with major impacts specifically in
Uzbekistan and India. Given the common deficit of appropriate prices of water or
other methods of communicating production information, cotton buyers have
motivation to be accountable for the influences on water systems.
(exposeA.Y.Hoekstra, 2006)
Business dummies majorly connected with huge amount of production
and sales. Although development of industry has shifted to lesser external
effects, production and usage had risen to levels where advantages of
innovative advancements have lessened. A change is hence required to reach a
modern revolution, not in manufacturing but in utilization. The purpose of the
research is to discuss about the gaps in opportunities that profound variation in
this sector. The study presents paths to interpret and reconstruct businesses in
cloth and textile sector by providing a summary on numerous designing
techniques that can be found in niche markets. Moreover, we differentiate that
how new consumers work under designing strategies to develop and enhance
sustainable development through innovative ways.
(Niinimäkia, 2011).
Export Performance of Developing Countries in Textile Sector
1. Currency conversion rate
The conversion price is that rate in which currency of one country buys currency of
other countries. Similarly it is the buying powers of currency w.r.t other currency as
external value of respective currency.
The enhancement in conversion rates against other currency is called an appreciation
the decline in rate known as depreciation. The increase of conversion rates imperfectly
affects the exports and it decreases the profitability ratios of the exporters it is not only
the increment but ups and downs of conversion has effect on the export resolution.
2. Growth rate of GDP
The earnings of a country can be calculated in different ways. GDP abbreviation is
Gross Domestic Product is such computation of indicator of country’s affluence
indicates the value of goods and services manufacture by one economy disregards of
nationality with in a particular period of wealth the GDP growth percentage cannot be
make as an indicator since it effects the business confidence in positive or in negative
sense. Worldwide recession investment is the negative sign in economic growth for two
or more successive quarter of any year.
3. Quality and Cost factor
The most important contribution to end cost to most of the products and services is raw
product cost; the organizations mostly face the dilemma of cost and quality. It is very
known that the quality and cost has connection but inverse relation to worth addition.
The worth of the products can be increased by decreasing the price or enhancing the
cost, sometimes the cost or presence of raw product is much influenced by the prices
and presence of substitutes. (Jaganathan, 2013)
4. Technological factor
The qualities of final goods are measured by different variables especially the
antecedents that contribute more are raw product and machines. Mostly the exports
competition of organizations depends on the capability to pay price of innovation and
has access to that technology. Goods and manufacturing process innovations are the
important factors in controlling export performance and firm earnings. (IT) Information
technologies have also impact on the export production. There is a positive relation
between technology and firms capability to attain greater ability in garment designs and
manufacture globally quality products.
5. Non-Tariff and Tariff Restriction
Tariff hurdle are considered as straight and perceivable restriction where as non-tariff
hurdles are much difficult and invisible export sector in under develop countries is the
mostly influenced by non-tariff measurement in international business of highly
progressed countries. (Jaganathan, 2013)
Why do Countries Import?
Countries import products for many reasons it is important to consider that many
countries are not completely independent and even if they want to be it will come at a
higher cost that is not in their financial interest for this reason most of the countries
choose to import goods and services at least some of the products or services. Products
and services that are may be essential to economically welfare or highly interesting to
end users but there availability in the local market may not possible. Oil & natural gas
are best example for this for many countries. Most of the countries may do not have
such natural manufacturing or not sufficient oil to meet the demand and lifestyle so that
their residents require so they depend on buying these oil and gas resources from
different countries who sales to these countries. Coal, nickel, copper and iron also are
some common natural resources that most of the countries need but they do not have
these resources. Products and services that are manufactured high inexpensively and
efficiently to other countries and that is why sold at low prices.
Exports affect the economy
Most of economies need to raise exports and needs to sell more. They have sold entire
the required products they will sold to their residents, then they need to sell abroad as
well. The more they sold to abroad the more competitors and benefits. That is why
because they required expertise in manufacturing the products or services. They can get
expertise about what to sell internationally. (Amadeo, The Balance, 2017)
An Analysis of the Impact of Imports and Exports on Textile Sector of Pakistan 2
China’s.
The influence on the cotton market cannot be overstated since it is a major producer in
the global market accounting for 22.8% of total world output.
The buying behavior of China expanded the demand trajectories of its import partners
and favorably affected their balance of trade.
Garment Contribution in GDP and Economy of Pakistan
Industry has enlarged very quickly. More than 505 of the units Trade Textiles are still
at top amongst manufacturing products fashioned not later than some industrializing
state.
These played a critical character the first stages of producing fabrics of cotton are small
and medium in terms of output, workers and machines except for less exceptions which
are spread domestically.
Liberalization of Textiles and industrialization indoors exports progress of the
economies of East Asia (Yang with Zhong, 1998).
China, Taiwan and Korea rely greatly resting to textile and cotton produce on behalf of
their exports starting the 1950s on the road to the mid-1980s.
(Syed Abdul Sattar, 2014) It has been a rooted fact under economic writings that usually
occurs the crisis of East Asia 1997-98 where exports are crucial riders for continuous
growth of after economy of any country.
The principle purpose behind the growing economies to consistent face foreign
exchange rate issue is decline of enhancing or diminishing their exports differentiate
with imports which leads to deficit BOP as well as expanded trouble on the investment
assets in the structure of import bill.
Pakistan, as a less open growing country, also treats such hurdles An Analysis of the
Impact of Imports and Exports on Textile Sector of Pakistan 8 whilst maintaining its
external performance.
In order to cater to those issues, the monarchy has brought policies that provide
incentives to build up exports with a step to market rate of exchange. As per estimates
for 2013, Bangladesh and Pakistan, both economies have a population of 190 million.
According to latest (WEO), Pakistan’s capita income was US$1275 in contrast to
US$1033 of Bangladesh in 2013. Averagely, Economy of Pakistan grew to 4.5 percent
in the last decade and 6.2 percent Bangladesh.
In the words of World Development Indicators, owing to trade, the trade to GDP ratio
in merchandize of Bangladesh increased to 54 percent in 2013 differentiate with 31
percent of Pakistan (Mehmood, 2015) Clothing and textile sector remains significant
factor as an economic development of under developing countries and in Pakistan.
It is the biggest sector with regards to exports, employment and investment.
A study on the demand for textile and clothing in Pakistan highlights numerous deeds
that upgraded the access of products of textile sector of Pakistan to numerous markets
globally.
It differentiates the export performance of developing countries and of Pakistan. USA
is the dominant buyer of textile products of Pakistan. The export of Pakistan has risen
to 1.1% and other countries had significant risen up to 5%.
The study states the aspects of Pakistan’s textile industry that immense portion of yarn
manufactured in the country, sold to international markets as raw cotton used for quality
products’ production as fabric.
In spite of the benefit of superior quality production of cotton and yarn, the industry has
hurdles as a decline in skilled labor and investment.
The stud builds as a model of textile sector of Pakistan restructuring competitive and
liberalized trade environment.
The textile sector of Pakistan played a pivotal role in the development of economy of
the country and according to this article the textile sector wants to be established upon
must go through aggressive reshaping to be intensive in capital as it is in western
countries.
There is a want to improve finished products quality in spite of spinning sector.
An Analysis of the Impact of Imports and Exports on Textile Sector of Pakistan 9
Finished products are mainly of production of good quality of cloth in textile sector.
Owing to less innovation, power looms must be declined and shuttle looms must be
grown that have capability to manufacture fine quality cloth for global market.
(Factors Affecting Textile Industry, 2017) Some countries used multivariate cointegration way and expected antecedents of imports three months data set in case of
Bangladesh.
They sort out that comparative income and rate have major influence on imports.
The reciprocal of income is positive and higher than 1 that means earnings encourage
people to send special products to other countries.
The reciprocal prices was negative but less than 1 that means Bangladesh variation in
prices which should not affects demand for import products.
It is experimented that demand of import products of Pakistan by applying Johansen
multivariate co-integration approach in data range within 1975 to 2005.
The results of research have stated that in high real income has important and positive
influence on import whereas, there is a negative relationship between import rates and
total imports.
It is further conducted that local rates have inverse effect on imports of the country.
The research concludes that in the tenor of expectation, demand of imports is stable in
Pakistan.
(Muhammad, 2014) The following groups state the highest foreign exchange value in
purchase of import products in Pakistan in 2016.
Also shown that the percentage of share of products represent overall imports of
Pakistan. Computers: US$6.4 billion (15.7 percent of total imports)
 Electronic tools: $4.7 billion (11.6percent)
 Steel and iron: $2.3 billion (5.5percent)
 Mechanical vehicles: $2 billion (5percent)
 Animal vegetable fats oils waxes: $2 billion (4.9percent)
 Plastics plastic articles: $1.8 billion (4.4percent)
 Biological chemicals: $1.6 billion (4percent)
 Cotton: $1.1 billion (2.7percent)
 Mineral oils including oil: $1.1 billion (2.7percent)
 Synthetic filaments: $1 billion (2.5percent)
Imported manmade filaments had the fastest-growing increase in value among the top
10 import categories, up by 197.3% for the 7-year period starting in 2009.
(Workman, April 25, 2017) Numerous literatures have concluded the export trend and
performance of organizations situated in an under developed country.
Nevertheless, there is a limited literature on effects of regulations on conduct of under
developed country that exporting organizations.
In a research made to find the effects of ISO 9000 certification on sales of export
products and exports’ shares for agro-food and textile sector it is found out that the
performance of exports is correlated positively ISO 9000 certification.
(Oliver Masakure, 2009) Another study on the effect of growth of China on the exports
of different countries uses the gravity model to segregate commodity kinds by virtue of
endogenity of exports of China.
The results of study confirm the tendency for exports of China declines the exports of
other states.
But these influences are prominent mostly in perfect competitive markets and hence
under developed countries, not in capital market of countries of Asia in which
equipment and machineries are important aspect of exports.
Likewise, there is perfect propensity for a fastly growing economy of China to attract
in imported products from neighbor countries.
Resultantly, rapid growth of Chinese economy highly influences under developed
countries of Asia. (Barry Eichengreen, 2004) Several things can be assessed from the
environment and trade study under a critical viewpoint on leather and clothing
production of Pakistan.
Trade liberalization will lead to export through establishing countries of capital of
environment. Secondly, the costs of lessening these malicious environmental affects in
the South are large.
It is found that, given the current position of following laws of environment in Pakistan,
exports lured by trade liberalization can definitely have huge disastrous environmental
influences.
Nevertheless, no assistance for the costs of mitigation is found. Moreover, the
mitigation benefits exceed the costs.
(Shahrukh Rafi Khan, 2001) Under a study done on the long and short run antecedent
of commerce loss referred to Pakistan through Johansen co-integration approach and
Error correction model (ECM) it had been searched that FDI, foreign income and local
hold utilization and effective foreign rates have visible effects on the trade loss.
In order to lighten short run dilemma the VECM (Vector Error correction model) was
used.
The results of VECM sorted out that there is no equilibrium in short run that will be
adjusted within a year.
(Muhammad S. D., 2012) In a study done by Donohue on the aftermaths of global
decline on neighbor countries.
Resultantly, rapid growth of Chinese economy highly influences under developed
countries of Asia.
(Barry Eichengreen, 2004) Several things can be assessed from the environment and
trade study under a critical viewpoint on leather and clothing production of Pakistan.
Trade liberalization will lead to export through establishing countries of capital of
environment. Secondly, the costs of lessening these malicious environmental affects in
the South are large.
It is found that, given the current position of following laws of environment in Pakistan,
exports lured by trade liberalization can definitely have huge disastrous environmental
influences.
Nevertheless, no assistance for the costs of mitigation is found. Moreover, the
mitigation benefits exceed the costs.
(Shahrukh Rafi Khan, 2001) Under a study done on the long and short run antecedent
of commerce loss referred to Pakistan through Johansen co-integration approach and
Error correction model (ECM) it had been searched that FDI foreign income and local
hold utilization and effective foreign rates have visible effects on the trade loss.
In order to lighten short run dilemma the VECM (Vector Error correction model) was
used. The results of VECM sorted out that there is no equilibrium in short run that will
be adjusted within a year.
(Muhammad S. D., 2012) In a study done by Donohue on the aftermaths of global
decline on neighbor countries.
Resultantly, rapid growth of Chinese economy highly influences under developed
countries of Asia.
(Barry Eichengreen, 2004) Several things can be assessed from the environment and
trade study under a critical viewpoint on leather and clothing production of Pakistan.
Trade liberalization will lead to export through establishing countries of capital of
environment. Secondly the costs of lessening these malicious environmental affects ithe
South are large.
It is found that, given the current position of following laws of environment in Pakistan,
exports lured by trade liberalization can definitely have huge disastrous environmental
influences.
Nevertheless, no assistance for the costs of mitigation is found. Moreover, the
mitigation benefits exceed the costs.
(Shahrukh Rafi Khan, 2001) Under a study done on the long and short run antecedent
of commerce loss referred to Pakistan through Johansen co-integration approach and
Error correction model (ECM) it had been searched that FDI, foreign income and local
hold utilization and effective foreign rates have visible effects on the trade loss.
In order to lighten short run dilemma the VECM (Vector Error correction model) was
used.
The results of VECM sorted out that there is no equilibrium in short run that will be
adjusted within a year.(Muhammad S. D., 2012) In a study done by Donohue on the
aftermaths of global decline on
2.2 Imports of Pakistan
If any countries import products higher than it exports this country faces trade loss.
Many countries would like to prefer low imports & more export. Likewise a country
may prefers to be a supplier of different states.
Government motivates exports-driven strategies. It is the way to boom up economic
productivity which is measured by GDP and increases jobs and raise their salaries, in
addition to this increases people living style.
This makes more able to canvass votes for their domestic leaders in democracy. In
different states where there is no democratic leader, it means that there is no chance of
a resolution.
The other aspect is that high number of imported products makes companies
dependency.
This is especially fair the imports goods i.e. Oil, food, and industrial products, then
these countries relied on international power to keep up their citizens feed and their
organizations bustle.
States with highest imports must raise country reserves of foreign currency. That can
be affected the local rupee value, inflation rate and interest rate. Local organizations
must compete with imports that can ride lot of small enterprises to save from
bankruptcy. (Amadeo & Kimberly, 2017)
Issues and problems of textile industry
Role of Government
Textile sector is the heart of the economy of Pakistan with government always keenly
interested in the textile sector.
Its shares in economy of the country with contributions of exporter’s foreign exchange
earnings value added and investment that made it only biggest producing sector of
Pakistan.
It contributed 9% to GDP, employs 41% of the total producing work force and devotes
between 60% to 70% to entire produce according to the Economic Survey of Pakistan
(2015).
In 2011massive procurements of cotton were carried out by China with the intention
of encouraging its farmers to increase the production of the crop.
Because of its large scale operations this policy by China increased the worldwide
demand and inflated world cotton prices which increased to a high of 229.7 US cents/lb.
in 2011.
After 11 million tonnes had been accumulated approximately the Chinese government
altered its policy to pay the difference between target and prevailing market prices to
the cotton growers.
Following this reversal policy, the world cotton prices fell significantly to as low as
67.5 US cents/lb in November 2014.
Furthermore, China also discouraged imports by imposing strict quality standards and
minimum duty-free import quotas along-side import tariffs on cotton and cotton
products.
China’s influence on the cotton market cannot be overstated since it is a major producer
in the global market, accounting for 22.8% of total world output.
The buying behavior of China expanded the demand trajectories of its import partners
and favorably affected their balance of trade. Similarly the country’s policy shift
resulted in loss of export revenue.
This however is indicative of a significant threat to the world cotton market and global
cotton prices. In 2015 China sold around 63,412 tons of cotton (a meager 3.4% of the
amount initially offered for sale).
Even though the Chinese government aimed at selling as much as 1 million tonnes the
slow economy and the risk of pushing the market prices down further constrained the
cotton sales for China (Jazib Ahmed, 2016)
The deficiency of Research and Development in the cotton industries of Pakistan have
proceeded in less quality cotton in differentiation to rest areas of Asian continent, owing
to the upcoming less earnings in crops of cotton. Farmer is changing to other crops like
sugar canes.
On account of not proper R&D that has leads to more profitability. Then further charge
with high level and restricting competition specially the pesticide industry for making
proper R&D. The pesticeiding industry for cotton crop alerts to beneficial from
restricted local (R&D) as highest supply of cotton and is much proof against pesticide.
Shortage of Modern Equipment’s
Besides the arguments that the textile sector has an old equipment and machinery the
incapability to suitable modernized equipment’s and machinery has leads to the
reduction of Pakistani textile competition.
Due to old technologies the price of manufacturing is high in Pakistan as compared
with other countries such as like India Bangladesh & china.
Production Cost increasing
The price of manufacturing of textile products increases due to different reasons like
rise in interest rate two-digit inflation rate and decline in value of Pakistani currency,
the all reason in increasing the production cost of textile sector which generate problem
for a textile sector to compete in global market.
Energy Crisis
As a result of load-shedding in Pakistan the textile manufacturing capacity of different
sub-sectors has been decreased up to 30% the combine meeting of APTMA (All
Pakistan Textile Members Association) and other related organization was held and
they formulate a combine strategy to inscription of the alarming electricity shortfall
which is being faced by the textile sector.
APTMA decided to make a joint working group in which electricity manage for the
textile industry in the higher interests in the worth of the textile industry. That joint
working group will make shortly to plan a complete procedure to achieve the goals like
quickly total exception from electricity load-shedding for the textile sector value chain
rationalized and decrease in electricity duty.
Performance of exports of textile sector
From last two years, the country cannot meet annual textile export goal of 12 billion
dollars by 20% due to highest production cost shortage of power and hard competition
with local competitors.
Federal government predicts that 15% growth is set to textile export to achieve the
target of 12 billion dollars for year 2008-09 against 10.35 billion dollars for 2007- 08
but in 2008-09 the country not only drop its textile export target but also shows a
decrease in percentage of 6% as related to 2007-08.
The country has down fall of textile export figure by over 2 billion dollars due to the
internationally breakdown and different hurdles faced by textile sector.
Inflation rate effect
Inflation rate is identifying as the difference in (CPI) consumer price index. Inflation
is normally a general increase in the level of price.
It is decrease in the actual value of money. Inflation can have different effect on
Pakistan economy. Pakistan is one of intimidate of inflation it quiet faces highest twodigit inflation rate.
The rise in inflation rate causes the rise in the production cost of textile products which
return in downfall. The two-digit inflation rate causes decrease in exports of textile
industry. (Aftab A. Khan, 2010)
Very high initial investment:
Woven projects are associated with very high investment, only large entrepreneurs are
interested in woven projects. Government can encourage entrepreneurs by providing
advantages like soft loans tax holiday stax free import of machinery etc. Other sectors
like spinning dyeing printing and finishing and garment manufacturing sectors should
not be comparable with this sector. This is required to manufacture woven fabric locally
at lower price so that the cost of garments will be decreased and profit will be increased.
Introduce blend processing:
The main requirement of yarn for weaving is its strength. During weaving the yarns
are subjected to various types of stretching forces. To counteract these forces yarns are
sized. Yarn breaks during weaving due to low strength. Bangladesh processes 100%
cotton yarns whose strength is much lower than blended yarns.
Training for the operator
BGMEA could run several training centers where the fresh operators will be trained
up to get satisfactory performance by hiring some highly skilled instructors. BGMEA
factories can recruit these people with confidence.
In-service training for the freshly recruited technical personnel
Apart from the operators, export-oriented textile and garment factories recruit various
types of technical people having qualifications like diploma and degrees. These
freshly recruited experts should be trained by skilled personnel (of the relevant field).
At present none of the training institutes in Pakistan have this type of in-service
training facility. Therefore a separate training institute can be set up to train freshly
recruited graduates as well as in-service training necessary for improving
performance.
Develop Local Dye & Chemical Manufacturing Facility
The cost of dyes and chemicals that are incurred in textile processing plants are
substantial. We do not have any dyes, chemicals and auxiliaries manufacturing
facility in Pakistan therefore we have to import them using foreign currency.
Therefore, we should develop our own manufacturing facility to reduce our cost of
production.
Develop Facility for Machinery & Spare Parts
Most of our competitors like China, India and Pakistan manufacture their own spare
parts as well as some machinery. In general Pakistan does not produce less spare parts
at all machinery except simple weaving machines like shuttle loom. Pakistan is
heavily involved with textile business manufacturing of textile machinery could be a
very big and profitable industrial sector.
Lower Interest rates of banks:
If the bank interest rate is lower like other developing countries it could be a big
incentive for increasing industrial growth.
Chapter 3
Conclusion
Pakistan’s economy contains major contribution of textile sector. Textile sector may
also call the back bone of Pakistan economy.
Production in textile sector is more than the production in other sectors.
Pakistan is 4th largest producer of cotton and 3 rd. largest producer of spinning.
Pakistan contribute major portion of cotton production in the world. Cotton cloth
production rapidly increases through the last number of years and in 2016 the
production of cotton is on peak point i.e. 784 million sq meters.
Pakistan has more potential in textile production sector if the energy crises will
overcome by the government and give relief to the textile sector.
Textile sector imports are minor. The analysis shoes that major portion of textile
imports are machinery and chemicals used in textile sector.
Power looms are also imported from different countries. Pakistan has highest imports
of Pakistan also imports cotton from China and India in small quantity.
Spare parts of machines are also imported. Major importers of Pakistan are China and
UAE. China is very important to Pakistan because of many reasons the major one is
Sea-Pack which facilitates Pakistan in many ways.
Textile sector have huge export contribution in all products. Textile sector contributes
52% of total exports. Cotton yarn and cotton cloth are major exported products.
The analysis shows that the in 2016 Pakistan has highest export percentage i. about
60%. Garments are also exported in large numbers. Export potential may increase by
making trade policies and trade facilities.