Textile Industry 2

TEXTILE INDUSTRY A LEADING INDUSTRY

GROUP MEMBERS  SAMER  NAZIA

KAYANI

REHMANI

 NOMAN

BAIG

POINTS TO COVER Development  Importance  Global scenario  Economic Profile  Structure of the Industry  Export & Import  Investment  Government Policies 

Textile Vision 2005  SWOT Analysis  Textile Cities  WTO Effects  Environmental Program  Problems  Recommendations  Current Scenario 

ABOUT TEXTILE A

textile is a cloth, which is either woven by hand or machine.  "Textile" has traditionally meant, "a woven fabric".  The term comes from the Latin word ‘texere’, meaning ‘to weave’.

Development of Industry 

At the time of independence Only 6 Textile Units with:  



80,000 spindles 3000 looms,

Supply 8% of the domestic demand



The Government set the objective of promoting Textile Industry first as an import substitution industry and later as an export oriented industry.



Rapid growth during 50’s & 60’s.



With the sudden upsurge textile spinning and composite units started picking up roots

Development of Industry (Cont) 

Power looms number rose to 0.3million plus in the unorganized sector



In 50s Pakistan then reached the surplus stage to export yarn and cotton fabrics



APTPMA was registered with ministry of comm on 5th July 1990 under trade organization Ordinance,1961.



It started functioning in July 1991



The principal object of the association was to protect and promote interest of all person dealing in the processing of textile products.

Development of Industry (Cont) 

According to 1990-91 census of manufacturing textile industry account for  

24% of value added products 27% of industrial labor force



In 1990s textile industry have been completely deregulated to allow its expansion by the private sector



In 1996-97 the installed capacity was   



10,000 thousands looms 9000 thousands spindles 150 thousands rotors

There were about 500 cotton textile units in the organized sector

IMPORTANCE 

The textile and clothing industry is the backbone of Pakistan's economy



Single largest determinant of the growth in manufacturing sector



Pakistan is a monocrop economy as cotton contribute 10% in the agriculture GDP



4th largest Producer of Cotton



3rd largest Exporter of raw cotton



A leading Exporter of yarn in the World

IMPORTANCE (CONT) 

Cotton is the cash crop of Pakistan.



Availability of cheap labor and basic raw cotton



The exports of textile and textile products of Pakistan have shown a significant increase in the recent years.



Global textile and clothing trade is set at $ 356 Billions in 2000 with textiles trade at $ 157 billions and clothing trade at $ 199 billions (W.T.O report).



Pakistan has a strong presence in International Textile Market with share of $.4.53 billions export in textiles and $.2.144 billions exports in clothing (2000).

Textile in Brief GDP

10.5 % of total GDP

Exports

68% of total exports

Manufacturing

46 % of total manufacturing

Employment

38 % of total industrial workers

Investment

31 % of total investment

Taxes

Rs. 101 billion per annum

Value Addition (In Aggregate)

27%

Technology

Medium to High

Source of Machinery

Japan, Germany, Switzerland, Belgium, China

AIM  The

aim is to make Pakistan one of Asia’s top five textiles and clothing exporting nations.

GLOBAL SENARIO 

The demand for textiles in the world is around $18 trillion



Likely to increase by 6.5 % in 2005



Global demand for textile is growing at an average rate of 2.5%



China is the leading Textile exporter and India is second. India has potential to grab the world market to at least 10% from 3% (2005)

GLOBAL SENARIO (Cont) 

Pakistan has emerged as one of the major cotton textile product suppliers.



As a result global scenario has changed government & corporate textile sector adjusted their policies to achieve max benefit of free trade



Pak has great potential for textile exports as its present share is less than 1% in the international textile trade.

Country wise measure market share of textile of exporting countries COUNTRIES

MARKET SHARE

CHINA

$55 BILLION

INDIA

$- BILLION

KOREA

$35 BILLION

TAIWAN

$16 BILLION

INDONESIA

$9 BILLION

ECONOMIC PROFILE 

Cotton textile is the largest industry of Pakistan.



It is a broad industry and involves spinning yarn production weaving and cloth production.



Completely regulated to allow expansion by the private sector.



Important sector of economy as its product form almost 60% of Pakistan total exports and 18% weight in the country’s large scale industrial production.

::. TEXTILE

SECTOR PROFILE

Total Capacities: Spinning

1550 million Kgs Yarn

Weaving

4368 million Sq. Mtr. Fabric

Finishing

4000 million Sq. Mtr.

Garments

670 million Pcs.

Knitwear

400 million Pcs.

Towels

53 million Kgs.

Number of units:  

Ginning 1221

 

Spinning 442

Weaving:

Large 124 Small 425 Power Looms 20600

Finishing:

Large 10 Small 625

Garments:

Large 50 Small 2500 Knitwear 600 Towels 400

Contribution to total exports

68% (US $ 5.2 billion)

Contribution to manufacturing

46% of total manufacturing

Contribution to value addition

27% of industrial value addition

Contribution to GDP

10.5% of total GDP

Sector Employment

38% of total employment (15 million)

Skilled & Un skilled Ratio 70 : 30 Market Capitalization

12% of total market capitalization

Salaries and Wages

44 billion per annum

Total sector Investment 31% of total investment ( Rs.140 billion) Technology 

Medium

Sources of Machinery

Japan, Germany, Switzerland, Belgium, China

ENERGY 

Raw material prices decreasing but energy cost increasing



There is need to check the trend of further increases both by policy support as well as market forces.



Need to plan strategies to consolidate and redeveloped competitiveness.



Installation of their own power plants

BY-PRODUCT  Banola It

seed

is used to make cooking oil.

Sub-Sector

No of Units

Size (Installed Capacity

Production

1. Ginning

1221

5,488 Saws

10.314 M Bales

2. Spinning

456

a)

9.6 million spindles

b)

146,640 Rotors

3. Weaving

50

20,000 – 25,000 Shuttle-less looms

Composite Units

140

225,000 Conventional Looms

1.818 M. Kgs Yarn 5,600 M. Sq MT (Approx)

Independent Mills Power Loom Sector 4.

Finishing

-

2,700 M. Sq. MT

5,000

450,000 Sewing Machines

650 M Pcs.

6. Terry Towels

400

7,600 Looms

55 M. Kgs.

7. Canvas

100

2,000 Looms

35 M. Kgs.

8. Knitwear

700

21,000 Knitting Machines

Organized Sector Small Scale Sector 5. Garment Units

Source: TCO, APTMA, PHMA, PRGMEA

106 625

5.50 M. PCs.

PRODUCTION TREND 

COTTON AREA UNDER CULTIVATION, PRODUCTION AND YIELD

Year Area Production Yield

Hectare

million bales

Kgs/Hec

1999-00

2983

11.24

641

2000-01

2927

10.732

623

2001-02

3116

10.613

579

2002-3(pro)

2796

10.211(9.7)

621

MAIN MARKETS  USA  EU  MIDDLE

EAST  SAUDI ARABIA  HONK KONG  RUSSIAN REPUBLIC

Textile Share in Pakistan’s Exports

VALUE IN '000' US$ S.NO

CATEGORIES

19992000

20002001

20012002

2002-03 2003-04 2004-05

A TEXTILE & GARMENTS

5,858,86 6,115,07 5,996,91 7,457,7488,252,4039,030,000 1 0 0

B OTHER CORE CATEGORIES

1,878,64 2,134,18 2,079,82 2,252,4982,410,7293,086,000 3 6 6

C DEVELOPMENTAL CATEGORIES

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

D ALL OTHERS

351,453 386,121 441,915 598,403 818,006 1,427,000

TOTAL

Source: Export Promotion Bureau

8,568,59 9,201,59 9,134,56 11,160,2412,313,2814,410,00 9 5 8 6 5 0

Top Imports into Pakistan 000 US $ S.No.

ITEMS

1

Crude Petroleum

2

1999-2000 2000-2001 2001-2002 2002-03 2003-04 2004-05

805

1,360

1,230

1,366

1,765

2,090

Petroleum Products

1,999

2,000

1,576

1,699

1,402

1,723

3

Road Motor Vehicles

345

320

329

501

653

972

4

Textile Machinery

210

370

406

531

598

902

-2.04%

-3.45%

-3.92%

304

277

336

5

Iron And Steel

-4.34% -3.80% -4.40%

402

512

894

Main constraints 

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



Internal weaknesses of the industry and its inability to improve quality - productivity and production efficiency to the desired level.



Neutralization of the incentive to the industry by recent adjustment policies.

EXPORTS PERFORMANCE 

Pakistan’s textile sector remained heavily dependent upon the quota markets i.e. the USA and the EU.



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



Unit prices of yarn, fabric, made-ups and garments declined since 1998-99.



The export growth in the textile sector, as envisioned in the Textile Vision 2005, was driven by increase in unit price realization in each product category.

EXPORTS PERFORMANCE (Cont) 

In retrospect it is evident that the negative trends of unit value prices in global markets was not incorporated in Textile Vision benchmarks.



The primary focus of the garments sector remained on men garments, whereas the Textile Vision 2005 explicitly highlighted the importance of diversification towards women garments. This shift was not achieved.

Textile & Garments Machinery Imports into Pakistan Key indicators at a Glance               (000USD)

amt.

Items 2002-2003 2000-2001 2002-2003   TOTAL    12,220,000   10,339,547   10,309,425 Textile Share(%)   

525,000 4.30 %   

406,908 3.94 %  

210,952  2.05 %

GRAPH PRESENTATION

INVESTMENTS 

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



Need for AIR JET LOOMS and ROTARY PRINTING MACHINES.



The processing industry is catering the needs of both “Home Textiles” & Readymade Garment Industry



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

INVESTMENTS (Cont) 

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



The bright side of the investments in textile industry is the high investment in the Air Jet weaving segment, which likely to fuel value addition in garments manufacturing

INVESTMENTS (Cont) 

Increased investment in textile sector has resulted in substantial increased in production of yarn (18.2%), cloth (28.5%) and synthetic fibers (26%) in 2004-05



To ensure an abundant supply within the country, cotton is allowed to be imported and exported freely.



The inflow of foreign direct investment (FDI) almost doubled from $2.1 million in July-March 1999-2000 to $4.0 million in July-March 2000-01.

 

Targe t for Priority Sectors 2001 Apparel  6.4 (Stitching) Knitting 1.8 Processing  &  4.1 Finishing Total 12.3 Traditional Sectors Weaving   Air Jet 2.4 Water Jet 2.4 Spinning 5.2 Polyester Fiber 1.8 Total 11.8 Grand Total 24.1

Amoun t Disburs ed 2.282 1.289 1.989 5.56

% of Targ et 36% 72% 49% 45%

Targe t for 2002 7.3 2.6 5.6 15.5

Amount Disburs ed in 1st Qtr (1.21) 0.375 0.962 1.337

0.325 3.726 0.582 16.344 2.703 23.68 29.24

  155% 24% 314% 150% 201% 121%

  3.7 3.6 7.8 2.6 17.7 33.2

0.35 0.817 0.044 1.931 0.351 3.493 4.83

DEREGULATION STRATEGY FOR INVESTMENTS 

Lack of infrastructure.



Non-availability of good quality soft water for the textile industry.



Not providing our exporters level playing field to procure raw material at the international rates



Arrangements to provide Insurance guarantees to U.S. investors on their investment in Pakistan

GOVERNMENT POLICIES 

Need to plan strategies to consolidate and redeveloped competitiveness



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



To create an environment in which firms can upgrade competitive advantages



The strategic objective is to upgrade Product Quality, Skill Levels, Productivity, Market Image.

LONG TERM TEXTILE POLICY  The

Government of Pakistan wanted to mobilize all its resources so as to establish a solid export base. Textile Sector

 Government

constituted a working group headed by a leading industrialist in the private sector in Jan-2000.

TEXTILE VISION 2005  An

open, market driven, innovation & dynamic textile sector, which is: Internationally

Integrated.  Globally competitive.  Fully equipped to exploit the opportunities created by the Multi Fiber.

THREE SCENARIO  LOW

ROAD SCENARIO

 DO-ABLE  HIGH

SCENARIO

ROAD SCENARIO

STRENGHTS & OPPORTUNITIES 

Pakistan is the 4th largest producer of Cotton in the World.



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



It has Large spinning and weaving capacity

Large, well equipped finishing sector  Availability of cheap labour 



Large domestic market.



Good and clear investment policies.

Strengths & Opportunities (Cont) 

Strong presence in international market.



Volumes of yarns with synthetic fibres in various blends & counts are increasing.



Production of commodity products at good quality levels.



Market Franchise Technical know how Agreements.



Joint Venture in Higher Value Added Segments.



Product & market diversification.



Improvement in marketing skills and country’s image.

WEAKNESSES 

Outdated technology



Poor quality



Low productivity



High proportion of operations are in small and medium sized companies



Tend to be inefficient and lack the resources to effect an improvement

Potential of Textile Industry 

Pakistan emerged as the major supply source of cotton textiles.



Pakistan’s share in the world yarn trade is about 30% and the share in cloth is 8%.



The Textile Industry has an in built potential for performing better.

TEXTILE CITIES 

To meet the challenge of post-quota regime the government has formed a company named PTCL (PAKISTAN TEXTILE CITY LIMITED)



There would be 5 Textile Cities     



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

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

TEXTILE CITIES (Cont)  The

city will have a number of supporting and ancillary industrial units in the area.

 The

concept of Textile City is based on supply of industrial infrastructure.

Effects of WTO 

Abolition of textile quota is likely to have a negative impact unless the domestic pricing system is reformed.



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



Pakistan should focus on increasing productivity



The clothing sector will have greater opportunities



Only 10% of the local exporters are mentally prepared to meet the WTO challenges (Chairman Export Promotion Bureau (EPB) Tariq Ikram).

Environmental Program 

The sector is facing the challenge of conforming to international quality standards and abiding the given legislations.



Pakistan has recently initiated a project funded by EU - “Promoting Better Environmental Practices in the Textile Processing Sector of Pakistan”.



This project aims to promote environmental reporting in the sector through organizing awareness sessions and rewarding industries for their transparency.

Project Title

Promotion of Cleaner Production and Environmental Reporting in the Textile Processing Sector of Pakistan

Lead Applicant

WWF - Pakistan

Partners

• Cleaner Production Institute (CPI)/Cleaner Technology Programme for Textile • ACCA Pakistan • All Pakistan Textile Mills Association (APTMA)

Project Location

Punjab Province ; Lahore , Faisalabad , Islamabad , Multan Sindh Province ; Karachi

Sector

Textile Processing Sector of Pakistan

Objectives

• To identify and explore the environmental problems in the Textile Processing Sector of Pakistan and find solutions through research and consultations. • To enhance the awareness level of Textile Processing Sector and promote cleaner production techniques. • To provide incentives and direction to the Textile Processing Sector to obtain international certification by meeting international environmental standards of production and reporting

Main Activities

• Developing reference materials on BEMPs (Better Environmental Management Practices) in the textile processing sector by learning through local and European examples. • Capacity building of stakeholders in Cleaner Production techniques in the sector. • Promoting transparency through capacity building on Environmental Reporting in the sector.

Total project cost

EUR 103,089

EC Contribution

EUR 88,685

Start Date

June 01, 2005

Duration

1 year

Industry

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

Problems 

WTO and quotas



Sales tax on cotton



DTRE (Duty and Tax Remission for Exports)



Lack of Infrastructure



Lack of synergy



Inefficient industry



Trade remedy actions



Cotton

Recommendations 

Remedy though FDI



Image Building of Pakistan to Attract FDI



Focus on Value Addition



Creation of Ministry of Textiles instead of Textile Board



Technology Up-gradation & capacity building

Recommendations (Cont) 

Human Resources Development



Accreditation and Certification



Reducing the cost of doing Business in Pakistan



Need for Improving Textile Production

CURRENT SCENARIO

THANKS QUESTIONS ???????