From the inception of Pakistan, textiles have been the mainstay of our economy and exports. This sector is providing livelihood to more than 10 million farming families. It also accounts for 40 percent of the industrial employment. This sector is the backbone of our economy having 56 percent of our total exports. Pakistan is the fourth largest producer of cotton and the third largest user of it.
There are a number of reasons behind the declining state of our textiles sector. Machinery and technology have not kept pace with the world standards, infrastructure has been lacking, particularly power, gas and clean water supplies, skills available are deficient in supply, high degree of fragmentation mars efficiency, uneven growth of value-chain undermines the balanced development of the sector, and absence of a well defined policy framework creates uncertainties and promotes haphazard development. The following measures, therefore, must be implemented to prevent this industry from a total collapse.
Since the textile sector has grown to be the single largest manufacturing sector of Pakistan, support industries like textile machinery manufacturing, chemicals and textile dyes and accessory industry have not developed in proportion. A major part proportion of the demand is met through imports. There is an urgent need to promote development that would ensure indigenous supply of such important technology and raw materials at home at competitive prices. A sufficient cotton reserve is necessary to save small, labour-intensive textile units from intense competition by cotton exporters and large textile mills. Most of the mills are too small to stock up without loans. In the absence of cheaper and adequate funds, mills lose out most when raw material prices go up.
To promote value addition in textile sector, the government would have to eliminate export of yarn and fabrics, in phases. The incentives that are being given to yarn and fabric manufacturers and exporters should be diverted towards those who are exporting high value added textile products. Value addition in textile would enhance exports, generate more foreign exchange, increase employment opportunities and enable Pakistan to avoid the World Bank and the IMF.
Most economic ministers and commercial counsellors are appointed on foreign missions on the basis of favouritism. They show little interest in working for the cause of the country and remain busy in pursuing their personal or vested interests. It is essential that the government disengage them from these missions and appoint their local experts with strong connections in the business community.
The persistent problem of contamination and trash content must be addressed through enforcement of the standards laid down in the Cotton Control Act and the Cotton Standardisation Ordinance. A capacity-building programme and comprehensive training must be developed to establish a system in the private sector for grading and classifying cotton. Incentives must be provided to ensure that proper premiums are paid for increased production of contaminated free cotton.
Appropriate measures need to be introduced for production of long staple cotton for value added products and to meet domestic demand for high quality fabrics. Simultaneously, measures must be introduced for cultivation of organic cotton in new areas to increase value and production.
Due to compliance standards imposed by the major importing countries, it is mandatory to develop a legal framework to specify standards and testing requirements, prescribe disclosure requirements and other matters relating to the practices and methods relevant to the sector. An insurance scheme to protect our exporters against unforeseen losses should be developed, which may arise due to failure of the buyer, bank or problems faced by the buyer country. A working group must be set up by the government to develop a feasible scheme. This will help remove uncertainties currently faced by the exporters.
Last but not least the most pressing issue faced by textile industry which hinders the economic growth is the current energy crisis.Pakistan can transform itself from being a stagnant economy to a fast-paced emergent economy if the government can rescue the textile industry through a revival package including uninterrupted energy supply to save the industry from total collapse.
The writer is the CEO of Terry Tex International. Email: email@example.com