Comment: How Pakistani spinners lost market share

LAHORE: In 2000, Pakistan was a leading supplier of cotton yarn to major textile hubs — China, Bangladesh, Hong Kong and, to some extent, India and Indonesia. A quarter century later, Pakistani spinners find themselves squeezed out of those export markets and outbid at home.

Pakistan’s spinners were not banished by fate: they were overtaken by a mix of external competition, shifting fibre choices and, most importantly, missed opportunities to modernise under a stable public policy.

This is not a single cause story. The collapse of Pakistan’s yarn market share is the result of a dangerous combination of complacency in parts of the industry, under-investment in technology, and inconsistent — sometimes counterproductive — public policy. The result: buyers who once turned to Karachi or Faisalabad for yarn now source it from domestic mills in Bangladesh and India, from Turkey and increasingly from Vietnam and China itself.

Three market shifts changed the rules. First, the rise of rival spinning capacity in South and Southeast Asia has increased competition and lowered prices. Bangladesh and Vietnam — once large yarn importers — have expanded spinning capacity to service their growing garment industries and even export yarn to markets such as China.

Second, buyers have diversified sourcing under ‘China-plus-one’ and supply-chain resilience strategies. This has favoured countries with rapid capacity additions (India, Vietnam) and producers closer to key consumption markets (Turkey for Europe). Third, fibre mix has changed: industries elsewhere are shifting towards man-made fibres and blends — in which Pakistan has lagged investment — narrowing markets where cotton yarn dominates.

Many Pakistani spinning units were built to serve traditional markets and product mixes. Where competitors reinvested, automated and moved up the value curve, parts of Pakistan’s spinning base remained with older frames, higher energy consumption and lower efficiency. Research on competitiveness shows Pakistan’s historic comparative advantage in cotton yarn has eroded where investments and product upgrading did not keep pace with rivals.

Government choices amplified the industry’s problems. Recurrent issues include erratic energy pricing and interruptions, high costs of imported spare parts and spare capital goods (tariffs and regulatory unpredictability), and tax-policy shifts that raise working capital costs for exporters. A recent assessment points to high energy costs and sudden tax changes as key drags on Pakistan’s cotton consumption and textile competitiveness.

Dramatic expansion in spinning means large RMG firms now buy much more domestically; Bangladesh has even exported yarn (notably to China) as its spinning sector has grown.

India and Vietnam both have ramped capacity and improved product breadth. India’s massive spinning base plus a strategic push into MMF and blends has made it an attractive supplier. Vietnam’s growing textile sector is also developing upstream capabilities. For European buyers seeking speed and higher-quality counts, Turkey remains a preferred supplier. Turkish mills are competitive on quality and proximity to the EU market.

China has been steadily re-internalising its supply chains and continues to import yarn from diverse origins, but it also sources from local and nearby producers as part of reshoring and diversification.

Reports from trade and FAS offices show meaningful increases in spinning inventories and installed capacity in Bangladesh and India over the last five years; Bangladesh now fulfils a large share of its knit fabric demand domestically and has become a yarn exporter for specific counts and product classes. Global cotton outlooks also project increased mill use in emerging textile countries, implying rising local spinning output

Pakistan’s spinning industry needs targeted capital investment. Focused upgrades where returns are highest: finer counts, blends, compact spinning and automation to cut costs per kilogramme and improve quality consistency. Expand into specialty yarns (combed, compact, ring-spun, blends with M MF) and technical textiles where margins are higher and competition is less purely price-driven.

The government must guarantee predictable tariffs on capital goods, consistent energy pricing structures for exporters and measured tax incentives tied to reinvestment in modernisation; lower the cost of doing spinning (reliable power, improved rail/port logistics) — small changes in energy or freight per kg massively change competitiveness; provide concessional, long-tenor financing for modernisation (not blanket subsidies); and encourage public-private R&D that helps mills adopt higher-productivity processes.