Ambitious textile exports’ target smacks of non-starter amid capacity constraints

LAHORE: Amid a poor record of investments in industrial capacity enhancement in Pakistan, the fourth textile policy approved by the government to double the industry’s exports from the existing $13 billion happens to be a non-starter.

The Prime Minister Imran Khan recently approved a long-term textile policy proposed by the ministry of commerce. The commerce ministry envisages that the implementation of the policy would pave way for more than doubling textile exports in next five years to near $28 billion.

This would depend on many factors that include investment in technology, increase in labor productivity, compliance with global labor and environmental benchmarks and consistency in government policies.

The target sounds music to the ears but let us not forget that the textile industry particularly All Pakistan Textile Mills Association promised at the beginning of the tenure of this government that with regionally competitive power and energy rates they would double the textile exports to $25 billion.

The industry has been availing the subsidised energy and power tariff since December 2018, although there have been hiccups in flawless implementation but in the end industry got what government promised.

We have seen no appreciable increase in textile exports during this period. In fact, textile industry circles revealed last month that the industry is operating at full capacity that resulted in 13 percent increase in textile exports. This means that with current capacities there is no hope of further increasing textile exports.

To assess the new machine needs of the Pakistan, we will have to compare the installed textile industry capacities of Bangladesh, Vietnam and India with Pakistan. China is a giant and there is no use comparing its capacities with Pakistan. The three countries of the region mentioned above have textile exports ranging from $28 billion to $35 billion. To reach $28 billion export target in 5 years, Pakistan would have to bring its capacities at least near to those in Bangladesh.

Pakistan’s government

International Cotton Statistics 2018 published by International Textile Manufacturers Federation reveal that Bangladesh has 11,800 air jet spindles, 299,000 rotors and 13.5 million short staple spindles. In India, there are 1,800 air jet spindles, 900,000 rotors and 53 million short staple spindles.

Vietnam, a relatively new entrant in textile trade, has 7,000 air jet spindles, 180,000 rotors and 7 million short staple spindles. In Pakistan, the number of air jet spindles is only 4,200 – the lowest among it close competitors – the number of rotors is 198,000 and 13.49 million short staple spindles – nominally less than Bangladesh.

In the weaving sector, Bangladesh has 17,000 shuttle looms (obsolete technology) and 45,000 shuttle less looms and India has 45,500 shuttle looms and 125,000 shuttle less looms. Vietnam possesses 15,000 shuttle looms and 6,800 shuttle less looms. Pakistan has 375,000 shuttle looms (leader in obsolete technology) and 38,700 shuttle less looms.

As far as stitching machinery is concerned Pakistan is way behind all these countries that generate most of their exports through stitching and knitting garments.

The statistics about the use of raw material are also very interesting. Bangladesh consumes 43,000MT of cellulosic staple fibers, 1.7MT raw cotton and 150,000 MT synthetic staple fiber. Its total fiber use is 1.893MT. Pakistani textile industry consumes 158,000 MT of cellulosic staple fibers, 2.45 MT of raw cotton and 500,000 MT of synthetic staple fiber. In total, fiber consumption is 3.108MT. Bangladesh fetches $30 billion by using 1.8 million ton of fiber while Pakistan’s exports are only $13 billion from the use of 3.1 million ton of fiber.

The new textile policy target cotton consumption of 20 million bales up from current 14 million bales. Does that mean that the unlike Bangladesh and Vietnam that are in high value textile exports Pakistan would continue to be dominated by low textile valued exports?

For consuming more fiber, Pakistan would need enormous investment in new technology. The textile tycoons in Pakistan feel comfortable in tarn and fabric exports. Few of them are in high value addition. The small exporters that dominate the high value added exports have no voice in the policy corridors. This is the fourth long term textile policy that has been announced by planners in Pakistan. The first three policies were a non-starter. Would Pakistan be lucky with the fourth?