Cotton Textile Industry-Investment Touches $4 Billion

By Memon, Noor Ahmed | Economic Review, November-December 2003 | Go to article overview
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Cotton Textile Industry-Investment Touches $4 Billion


Memon, Noor Ahmed, Economic Review


The textile sector has invested about $4 billion during last four years which has led to improvement in productivity, both in terms of quality and quantity in yarn, fabrics, home textiles and garments, besides generating more than 300,000 new jobs. Textile is the only sector in the country, which has prepared itself to face the tariff-free regime of WTO scheduled to begin from first day of 2005.

The Textile Commissioner's office has also estimated total investment in over $4 billion in the textile industry during 1999-2003. This includes $1.60 billion in foreign currency being the cost of imported machinery and equipment. Another $700 million investment is in infrastructure and $1.7 billion in acquisition of equipments and parts from domestic engineering industry.

Official estimate depicts that out of $4 billion investment, a sum of $1.83 billion has gone in spinning that includes $864 million in import of machinery, $370 million in development of infrastructure and $600 million worth of machinery and equipment from domestic engineering industry.

Weaving sector has received $722 million, processing $724 million, knitting $173 million, garments $100 million and synthetic $450 million. Spinning is the most capital intensive segment of the textile sector, but value added sectors--home textiles and garments--require relatively less capital investment, but they create more jobs.

Import of textile machinery during the fiscal year 2002-03 was about $525 million. It is about 29% more than about $406 million of textile machinery imported during the fiscal 2001-02. In the last three years, the textile operators imported more than $1 billion worth of machinery. The spinning sector has obviously received the highest attention and resources followed by weaving and then various sub-sectors of value added segments.

Market circles say that there are about 20 textile groups who are sound and conscious of the demands of export market. They have made bulk of the investment in the last four years and still are engaged in doing so. Import of textile machinery in Pakistan is given in Table-I.

Heavy investment and modernization has started paying the textile industry. At present, textile industry is comprised of 453 textile mills in the country (54 composite units and 399 spinning units) with 9.26 million spindles and 148 thousand rotors. Out of this, 7.59 million spindles and 69 thousand rotors are in operation. The capacity utilisation stagnated at 82% in spindles and 47% in rotors during the year 2002-03. The spinning sector of textile industry has shown an impressive growth during the fiscal year 2002-03.

The textile sector, which contributes 67% of Pakistan exports, would in 2005 face very severe competition from other major suppliers like China, Hong Kong, Thailand, India and Bangladesh. Pakistan has made some progress in facing post-quota era to take the production of textile goods upwards in the value chain.

After suffering stagnation for last 5 years, textile exports started improving, especially in the value-added product which performed well in export markets. After the exports of above $7 billion worth of textile goods during the fiscal year 2002-03, the three-textile bodies, knitwear, bed wear and readymade garments, have joined the elite club of 'dollar one billion'. Fabric was the only textile item, which stood above $1 billion mark ($1.13 billion), but this year knitwear exports exceeded the mark at $1.15 billion, followed by bed wear at $1.33 billion and readymade garments at $1.09 billion.

Export of textile manufactures from Pakistan increased from US$4.94 billion in 2001-02 to US$7.34 billion in 2002-03, thus showing an increase of 48%. Pakistan's textile industry aims to increase exports of $13 billion in the fiscal year ending June 2006 from the present level of about $7 billion. Export of textile manufactures from Pakistan is given in Table-II.

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Cotton Textile Industry-Investment Touches $4 Billion
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