challenges to Pakistan textile industry
1. Compete with China, India, and Bangladesh:
Pakistan has a strong position in world textile exporter especially from last 40 year. Some changes at national and international level are trying to spoil the reputation of Pakistan at international level especially after WTO & MFA. After world trade agreement the trade between countries is free and now there is a competition between countries. Pakistan has to compete with world and defeat its problems. Trade restrictions are removed by multi fiber agreement and now there is no quota restriction but Pakistan is still not taking advantage of its superiority as other neighbor countries china India and Bangladesh are taking full advantage of their specializations. They have done all this by modernization of their industry.
Pakistan is an underdeveloped country but in this sector it has to compete with developed countries, which is not an easy task for Pakistan. Even the other countries are taking advantage from WTO but due to certain problems we did not get any margin from this facility. Bad recession in western markets reduce the demand of textile products. So Pakistan is much behind from their competitors. So it’s a big risk for Pakistan textile.
Textile industry of china is a leading textile industry with out barriers in international market. While global crises in 2008 china still leading in textile exports and hold a big share of international markets. China has 36 % and 29% share respectively in US and UEs total imports of textile products.
India is big producer of cotton jute and silk as a big agricultural country. India has a big share of 12% and 25% respectively in yarn and fiber export of the world.
The demand of Bangladeshi raw material is also increasing 20% annually. Bangladesh is also enjoying free trade and quota in international markets.
1.8.2 Price of Cotton & Labor:
Because of the export of cotton and yarn the prices level of raw cotton raise from 2000 to 6600 per 40kg, the export of yarn will be quantity of 614 million kg (about 14% export of textile) that boost mutually the volume of export and profit raw cottons producer. For instance result high rate of exports, local supply become short and lead to an extensive increase in price of local yarn. Optimistic decrease because of this has seen in YTD boundaries for yarn manufacturers. The overflow of similar has still been unhelpful for the profit addition sector that buys local yarn. A duty at the rate of 15% has been imposed by the central government on export of yarn for the protection of worth addition sector. Low quality of cotton seeds availability of smuggled products at lower price creates problem for industry.
An increase in lowest amount of wages by Government first from Rs.6000 to Rs.7000 and Rs.7000 to Rs.9000 and now in 2013 10% more by Rs.99000 which raise the expense of the textile manufactured finished goods. Due to this increase the cost of manufactured goods also increased and due to this increase in prices of final goods of textile industry of Pakistan competition in global market is not possible this by increasing cost. Due to this finally many small industrialist closes down their mills. An increase in minimum wage rate is a problem and increase in bank markup rate is also a problem. Increase in wages prices of cotton and yarn increase in tariff and transportation expenditures. All these factors are increasing cost per unit and in perfect competition increasing prices are not good for the health of industry. Due to our problems our customers are moving towards other producer’s especially to India and china.