Challenges Faced By the Textile Industry In Pakistan
The Pakistani textile Industry is one of the most prominent and mature industries in Pakistan, and though the industry has numerous strengths; it is losing its competitiveness with other countries, especially in comparison to emerging markets. To keep up with this increasing demand and challenges the textile industry in Pakistan is in urgent need of financial investments and technological developments.
Pakistan is the eighth biggest exporter of textile goods in Asia, the fourth largest manufacturer of raw cotton, and the third-largest purchaser of raw cotton. Pakistan's textile industry contributes more than 60% to the country’s total exports; and around 46% to the total output produced in the country. It also contributes about 8.5% to the total GDP and it also provides jobs to 40% of the overall workforce. Some of the top exporters in Pakistan being Style Textile (pvt) Ltd, Nishat Mills Ltd and Yunus Textile Mills Ltd.
Textile’s huge contribution to our economy rightfully places it at the heart of our industrial center, yet it is nonetheless plagued by a slew of issues that have led to stagnant growth.
The energy issue is the most significant hindrance to the textile industry’s growth. The country’s general energy crisis has had many negative consequences, but the textile industry is one that has been hit hard.
Due to this manufacturers try to implement different means of power generation such as high KvA generators leading to a rise in the costs of production. Hence increasing expenses and reducing profitability for textile exporters in Pakistan.
Pakistan’s textile industry faces fierce competition from countries like Bangladesh, Vietnam, India, and Thailand in the foreign market. And with expensive utilities, wage rates and an inadequate flow of investment in the country, the textile industry is unable to rise to the challenge.
Lack of modern equipment and machinery
With a lack of investment and other issues such as the depreciation of the national currency and increasing interest rates, there has been no timely modernization of the equipment and machinery. The textile industry is largely still conducting all business manually when on a global scale procurement processes have been digitized.
As a result, Pakistan is losing its competitive edge when compared to the Indian textile industry for example has adopted the newest technologies and come out with the latest product designs to be competitive in the global textile market.
Increasing Raw Material Prices
Pakistan’s textile industry’s challenges have worsened because of Increasing textile industry raw material prices which include yarn fabric and cotton raw material. This rise in yarn fabric and raw cotton prices is due to a lack of policies supporting the textile sector and low support to cotton farmers to produce at optimal capacity.
Pakistan’s textile industry raw material and cotton production has gone down in the last few years, there has been a severe decline of around 35% in raw cotton production by the end of January, 2021, the lowest in 30 years. The reason of this decline being pests, drought, seed degradation, and reduction of planting area. A consequence of this being that Pakistan is now a net importer of raw cotton which also greatly affects yarn prices.
Then comes in the massive credit problem small businesses face when trying to procure raw cotton or yarn which has become harder due to the increase in yarn prices. There are high premiums that need to be paid when buying on credit because exporters receive payment 3-4 months after procurement due to the manufacturing and logistics process. Making the raw material expensive and inaccessible. However a raw material procurement platform like Zaraye can help by providing flexible financing options and by financing working capital for manufacturers.
Lack of Information
With a lack of digitization in the textile industry of Pakistan, one of the biggest problems buyers face is not having access to the best prices for yarn. Due to this lack of information buyers do not know exactly where the best prices are hence there is competitive pressure locally and globally because of the inefficiency. Zaraye offers a seamless platform with that offers manufacturers information and options to make quick and efficient buying decisions, all while being able to select the best rate possible for yarn and other raw materials.
Lack of R&D institutions
Pakistan is lacking sufficient links between research organizations and the textile industry to develop new products. This has resulted in low quality of raw cotton and consequently yarn fabric when compared to other countries in the region. Resulting in less value-added product which adversely affects the bottom line.
In conclusion, the textile industry of Pakistan has enormous potential to grow, if taken into consideration the various obstacles that require almost immediate action, especially by the government to strengthen the sector. To optimize the textile industry on a global level, Pakistan needs to meet more and more customers’ needs. The government’s policy is highly important to bring in foreign investment and also policy that uplifts and profits the local entrepreneur
What’s next for the textile industry?
Each and every industry today is leaning towards tech including the textile industry in Pakistan. Though technological progress is slow, eventually most businesses big or small will be using technology to become more efficient if they want to stay relevant in a globally competitive market.
The textile industry in Pakistan is in dire need of this change but implementation is a challenge. However, once this is done carefully, it has the potential to revolutionize the textile landscape completely and make Pakistani textiles competitive again.
The textile industry in Pakistan has immense potential which can be reached using digitization platforms like Yarn Online, Sanatkar and Zaraye etc through making the information available to buyers and sellers which leads to efficiency and optimization. However, the way forward for this industry also depends on governmental policies that support the textile sectors and the raw cotton farmers.
Where does Pakistan export textiles?
Some of the main countries that Pakistan exports textiles to include the United States, the United Kingdom, China, Germany, and Spain. Pakistani textile exports were recorded at $14,242.623 million in July-March (2021-22) and when compared to July-March (2021-21) with a total of $11,355.465 million there was a growth of 25.43%