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AS the leading industrial sector, textile provides livelihood to more than 10 million farming families and accounts for 40 per cent of industrial jobs while contributing well over 50 per cent of total exports.
Pakistan is the fourth largest producer and fourth largest user of cotton. But despite its enormous importance to the national economy, the textile sector is a state of decline.
There are a number of reasons behind this decline. Machinery and technology have not kept pace with world standards, infrastructure has been lacking—— particularly power, gas and clean water supplies—— and skills are scarce. A high degree of fragmentation mars efficiency, and uneven growth of value-chain undermines balanced development of the sector.
And the absence of a well defined policy framework creates uncertainties and promotes haphazard development.
While the textiles have 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 proportionately. A major part of the demand of these goods is met through imports. There is an urgent need to promote such industries that would ensure indigenous production and supply of such important technology and raw materials at competitive prices.
A sufficient reserve of cotton stock 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 build stocks without bank loans. In the absence of cheaper and adequate funds, small mills lose out most when raw material prices go up.
To promote value addition, 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 job opportunities and to reduce/eliminate foreign dependence.
Most of the economic ministers and commercial counsellors are appointed in the foreign missions show the least interest in working for promotng foreign trade and economic ties with countries where they are posted. It is essential that the government should replace economic ministers and commercial counsellors from the diplomatic missions with professionals with strong connections with the business community.
The persistent problem of contamination and trash content in cotton must be addressed through enforcement of standards laid down in the Cotton Control Act and Cotton Standardisation Ordinance. A capacity building programme and comprehensive training must be developed to establish an affective system in the private sector for grading and classifying cotton. It must be ensured that proper premiums are paid for 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 major importing countries , it is mandatory to develop a legal framework to specify standards and testing requirements, prescribe disclosure requirements etc relating to the practices and methods relevant to the sector.
An insurance scheme to protect 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, to help remove uncertainties faced by the exporters.
Last but not least the most pressing issue faced by textile industry which hinders economic growth is the current energy crisis. Pakistan can transform itself from a stagnant economy to a fast-paced emergent economy if government rescues the textile industry through a revival package.
The writer is CEO, Terry Tex International
