Textile Industry

TEXTILE INDUSTRY

GROUP MEMBERS ABBAS QURESHI FARHAN NAWAZ

AGENDA  Textile

Vision 2006

 History  Importance  Global

scenario  Economic Profile  Textile Cities  Structure of the Industry  Export & Import

AGENDA  Investment  Government

Policies  SWOT Analysis  Textile Cities  WTO Effects  Environmental Program  Problems  Recommendations

TEXTILE VISION 2006  An

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

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

HISTORICAL BACKGROUND  

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In 1959, the 9 largest industrial houses accounted for 50 percent of the total production. Between 1960 and 1970 Pakistan’s textile industry enjoyed over 11 percent of the world market share but today the corresponding figure is only slightly over 2 percent. In the nineties and the early 2000s a textile manufacturers were making large profits by merely trading quotas rather that diversifying into higher value-added products where quotas were not required. The period between 1958 to1968 is popularly known as the “decade of development”. The economy, especially industry experienced a relatively higher growth rate during the Ayub Regime. The decade of development was followed by the Bhutto years from 1972 to 1977. His regime was characterized by the nationalization of the large scale manufacturing sector, insurance companies and banks.

HISTORICAL BACKGROUND  1. 2. 3. 4.

5.

During the nineties a combination of factors adversely effected the industry, mainly: Removal of export duty on raw cotton, increasing domestic prices to international levels and beyond. Infestation of the cotton crop by leaf curl virus, reducing supply sharply and increasing prices. Frequent changes in governments creating inconsistency in policies of the Government and Financial Institutions. Rapid expansion of the installed industry in the hands of new entrants who did not have the managerial skills or the liquidity base to succeed. Rapidly changing global markets, especially the shift towards man made fibers.

IMPORTANCE



The textile and clothing industry is the backbone of Pakistan's economy. Textile products are a basic human requirement next only to food. 4th largest Producer of Cotton

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3rd largest Exporter of raw cotton

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A leading Exporter of yarn in the World Availability of cheap labor and basic raw cotton

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GLOBAL SCENARIO

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Global textile trade in the world is estimated to be around $300 billion currently and industry experts predict that by 2014 it would reach to $800 billion. Pakistan's share in the current trade volume is 2.7 per cent. India has 4 per cent and China 26 per cent share. Asia's share in the world textile trade would increase from the current level of 54 per cent to about 75 per cent by 2014. This scenario provides an opportunity to Pakistan to excel in the sector and its share could reach to the level of 4 per cent to 5 per cent.

GLOBAL SCENARIO  Textile

market stands today is worth more than $400 billion and it is still growing every year  The share of developing countries in world textile exports improved from 15 to 50 per cent  A variety of fabrics are used worldwide in different applications such as apparel, household textiles and furnishings, medical equipment, industrial and technical products

GLOBAL SCENARIO (cont.)

 Recent

studies have highlighted that fabric weaving alone expends around 28 million tons of fibre every year  It is predicted that global production will grow by 25% between 2002 and 2010, to reach more than 35 million tons  The demand for textiles in the world is around $18 trillion  Global demand for textile is growing at an average rate of 2.5%

GLOBAL SCENARIO  China

is the leading Textile exporter and India is second. India has potential to grab the world market to at least 10% from 3% (2005)  Pakistan has emerged as one of the major cotton textile product suppliers.  Pakistan has great potential for textile exports as its present share is less than 1% in the international textile trade.

Percent Share of Leading Cotton Producers

MAIN MARKETS  USA  EU  MIDDLE

EAST  SAUDI ARABIA  HONK KONG  RUSSIAN REPUBLIC

Country wise measure market share of textile of exporting countries COUNTRIES

MARKET SHARE

CHINA

$55 BILLION

INDIA

$- BILLION

KOREA

$35 BILLION

TAIWAN

$16 BILLION

INDONESIA

$9 BILLION

ECONOMIC PROFILE 

Cotton textile is the largest industry of Pakistan.

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

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Completely regulated to allow expansion by the private sector.

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

Textile in Brief GDP

11 % of total GDP

Exports

68% of total exports

Manufacturing

46 % of total manufacturing

Employment

38 % of total industrial workers

Investment

31 % of total investment

Taxes

Rs. 101 billion per annum

Value Addition (In Aggregate)

27%

Technology

Medium to High

Source of Machinery

Japan, Germany, Switzerland, Belgium, China

NUMBERS OF UNITS AND CAPACITIES  Total

Capacities: Spinning 1550 million Kgs YarnWeaving 4368 million Sq. Mtr. FabricFinishing 4000 million Sq. Mtr. Garments 670 million Pcs. Knitwear 400 million Pcs. Towels 53 million Kgs

Number

of units:





     

Ginning Spinning Weaving : Large Small Power Looms Finishing : Large Small Garments : Large Small Knitwear Towels

1221 442 124 425 20600 10 625 50 2500 600 400

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 CONSTRAINTS 

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

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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.

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EXPORTS PERFORMANCE 

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

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

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

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

EXPORTS PERFORMANCE  The

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

Textile Share in Pakistan’s Exports VALUE IN '000' US$ S.N O

CATEGORIES

19992000

20002001

20012002

2002-03 2003-04 2004-05

A TEXTILE & GARMENTS

5,858,86 6,115,07 5,996,91 7,457,74 8,252,40 9,030,00 1 0 0 8 3 0

B OTHER CORE CATEGORIES

1,878,64 2,134,18 2,079,82 2,252,49 2,410,72 3,086,00 3 6 6 8 9 0

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 1,427,00 0

TOTAL

Source: Export Promotion Bureau

8,568,59 9,201,59 9,134,56 11,160,2 12,313,2 14,410,0 9 5 8 46 85 00

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

INVESTMENTS 

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

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Need for AIR JET LOOMS and ROTARY PRINTING MACHINES.

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

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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

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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

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

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

Investment And Imports

DEREGULATION STRATEGY FOR INVESTMENTS 

Lack of infrastructure.

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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

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GOVERNMENT POLICIES 

Need to plan strategies to consolidate and redeveloped competitiveness

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

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To create an environment in which firms can upgrade competitive advantages

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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

STRENGHTS & OPPORTUNITIES 

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

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

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It has Large spinning and weaving capacity

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

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Large domestic market.

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Good and clear investment policies.

STRENGHTS & OPPORTUNITIES (Cont) 

Strong presence in international market.

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

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Production of commodity products at good quality levels.

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Market Franchise Technical know how Agreements.

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Joint Venture in Higher Value Added Segments.

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Product & market diversification.

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Improvement in marketing skills and country’s image

WEAKNESSES 

Outdated technology

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Poor quality

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Low productivity

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High proportion of operations are in small and medium sized companies

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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.

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

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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)

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There would be 5 Textile Cities     

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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

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

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

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Pakistan should focus on increasing productivity

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The clothing sector will have greater opportunities

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

ENVIORMENTAL PROGRAM 

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

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

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

BENEFITS (Cont)  The

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

PROBLEMS 

WTO and quotas

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Sales tax on cotton

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DTRE (Duty and Tax Remission for Exports)

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Lack of Infrastructure

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Lack of synergy

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Inefficient industry

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Trade remedy actions

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Cotton

RECOMMENDATIONS  Remedy

though FDI

 Image

Building of Pakistan to Attract FDI

 Focus

on Value Addition

 Creation

Board

of Ministry of Textiles instead of Textile

 Technology

Up-gradation & capacity building

RECOMMENDATIONS (Cont)  Human

Resources Development

 Accreditation  Reducing

Pakistan

 Need

and Certification

the cost of doing Business in

for Improving Textile Production

COTTON PRICES 2007 - 08 Rs Per Maund 2876 2006 - 07 Rs Per Maund Average 2326

Average

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

Thanks for being with us.