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Pakistan as major Asian market for textile machinery manufacturing nations.

Byline: Dr. Noor Ahmed Memon

Pakistan textile industry is by far the most important sector of the economy contributing 63% to export earnings and engaging 38% of labour force. At present Pakistan has the third largest spinning capacity in Asia after China and India. The entire value chain represents production of cotton, ginning, spinning, weaving, dyeing, printing and finally garments manufacturing. Pakistan has emerged as one of the major cotton textile product suppliers in the world with a market share of about 28% in world yarn trade and 8% in cotton cloth. The value addition in the textile sector accounts for over 9% of GDP and its weigh-age in the quantum index of large-scale manufacturing is 20%.

The spinning sector had grown with yarn export and growth in cotton production, followed by logical growth in weaving and processing sector due to value addition. The major concentration of industry is in Karachi, Hyderabad, Multan, Lahore and Faisalabad. Unlike spinning sector the weaving sector comprises of large number of small power loom units, mainly clustering in Faisalabad, Hafizabad, Kasur and Multan. Recent trend is to set up Air-Jet loom either as independent units are integrating it with spinning or processing industries.

Though textile industry maintains its ranking of the single largest manufacturing sector in Pakistan, unfortunately indigenous manufacturing of its machinery could not develop along with the growth of textile industry. Therefore, demand for textile machinery still is almost entirely met through global imports.

The usual and most effective channel for sale of machinery, equipment and spares is through a reliable agent. Foreign firms appoint local agents for the Pakistan to provide them with market intelligence and to follow-up on sales. The most popular and possibly the most effective distributorship arrangement in Pakistan is the exclusive agency agreement. The exclusive agent receives commission on all sales of the product within the country, regardless of the channels through which they were ordered. The agent often imports and stocks spare parts inventory, that are regularly required by textile mills. The agency may also provide after-sales service. Pakistan has been a major Asian market for major textile machinery manufacturing nations. China Japan, Italy, Germany and Switzerland have been among top exporter of textile machinery to Pakistan.

Investment

Textile Industry has made an investment of about US$ 7.5 billion during the last eleven years. The total investment to be divided in various sub sector, indicates that 50.2% in spinning sector, followed by 17.8% in textile processing, 15.23% in weaving, while the investment and other sectors namely like knitwear, made ups and synthetic textile at respective rate of 7.02%, 4.71% and 5.76%. This investment includes both investment through bank loan as well as own sources. This investment has been made in the form of Balancing Modernization Replacement (BMR) expansion and new capacity.

Import of machinery

Textile machinery imports jumped to $297 million in the financial year 2009-10 from $211 million in the previous financial, registering a growth of 41%. Growth in the textile machinery is an encouraging sign, which has remained in the grip of uncertain and gloomy conditions for the last few years.

During the past four years textile machinery imports decreased heavily when textile industrialists halted making investments in their units due to falling export of textile goods.

During the year 2009-10 sector wise textile machinery imports in Pakistan shows that spinning sector share 34.37%, weaving 23,90%, knitting 19.33% finishing 20.57% and remaining 1.83% share by others machines. Sector -wise textile machinery imports in Pakistan is given in Table-1.

Table 1 Sector-wise imports of textile machinery in Pakistan

###(Value in $ 000)

Sector###2008-09###2009-10

###Value###% Share###Value###% Share

Spinning###88,406.45###42.17%###101,296.87###34.37%

Weaving###46,363.53###22.12%###70,442.17###23.90%

Knitting###32.835.72###15.66%###56,958.46###19.33%

Finishing###35,975.72###17.16%###60,615.62###20.57%

Others###8,850.44###2.89%###5,392.89###1.83%

Total###212,431.86###100.00%###294,706.01###100.00%

Source: Federal Bureau of Statistics, Government of Pakistan.

Spinning sector: At present, it is comprised of 521 textile units (50 composite units and 471 spinning units) with 10.1 million spindles and 114 thousand rotors in operation with capacity utilization of 89% and 60% respectively, during the year 2010-11. The cotton spinning sector has performed slightly better than other sub-sectors during the year 2010-11. This can be attributed to market demand and response, easing of raw materials through local supply and imports, diversification to blends and incentives granted by the Government under the support packages.

Spinning is the first process in the cotton value chain that adds value to cotton by converting it into a new product, i.e. from ginned cotton into cotton yarn. The process of yarn manufacturing of continuous length from different types of fibers (e.g: cotton, wool, polyester, viscose etc.) is known as textile spinning.

The spinning is the most important and the initial step in fabric manufacturing. The major and main goals of spinning is to produce the quality yarn from raw material, then remove the process faults afterwards, wind the short length bobbins on big packages (Cones) according to the market/customer demand. There are different types of spinning, the most commonly forms of spinning commercially available are:

Ring spinning,

Rotor spinning,

Air Jet spinning,

Friction spinning etc.

Roving is an important process in the conversion of fibers into yarn by the rising spinning system. However, it is no longer an indispensable process because of the development of ring spinning machines, which produce yarn straight from the finished draw frame silver. Nevertheless, most, if not all, of the spinning mills in Pakistan, operating ring spinning frames, spin yarn from roving produced on roving frames, rotors are installed and nearly 10.85 million spindles and 118 rotors are in operation.

Import of textile spinning machines and parts increased from US $ 88 million in 2008-09 to US $ 101 million in 2009-10, thus showing increased of 15%. Import of textile spinning machines and parts is given in Table-2

Table 2 Import of textile spinning machines and parts

###(Value in $ 000)

Countries###2008-09###2009-10

###Value###% Share###Value###% Share

China###20,047.13###22.68%###23,068.82###22.77%

Japan###16,605.68###18.78%###19,805.18###19.55%

Germany###16,699.92###18.89%###18,451.69###18.22%

Switzerland###16,077.02###18.19%###15,106.75###14.91%

Italy###5,730.16###6.48%###10,241.02###10.11%

U.S.A###2,287.95###2.59%###3,171.37###3.13%

India###2,063.64###2.33###3,069.66###3.03%

Spain###1,399.89###1.58###1,282,12###1.27%

Korea###1,066.93###1.21%###1,077.42###1.06

UK###822.73###0.93%###980.31###0.97%

Total###88,406.45###100.00%###101,296.87###100.00%

Source: Federal Bureau of Statistics, Government of Pakistan.

Weaving sector: The pattern of cloth production is different than spinning sector and there are three different sub-sectors in weaving industry: Integrated, Independent Weaving Units and Power Loom Units. Investment in the shuttle-less looms both in integrated and independent weaving sector has increased gradually and this trend is likely to intensify further.

The power loom sector have modernized and registered a phenomenal growth over the last two decades. This growth in power loom sector is due to favorable government policies as well as market forces. This sector is producing comparatively low value added grey cloth mostly of inferior quality. Te main issues and problems of the power loom sector revolve mainly around the poor technology, scarcity of quality yarn and lack of institutional financing for its development from unorganized sector to an organized one.

The progress of the power loom sector is due to favorable government policies as well as market forces. This sector is producing comparatively low value added grey cloth in unorganized sector. The growth record of Pakistan's textile industry shows a reverse trend, especially in the weaving capacity of the mill sector, in which the installed capacity of looms shrunk from 26,000 in 1978-79 to only 8,000 in 2009-2010, the working looms were reported to be only 4,000. Thus, the organized sector seemingly made an all-out shift towards cotton spinning and almost completely gave up efforts to develop and modernize the weaving sector.

During the past five years, new installations of shuttle-less machines has resulted in high growth in fabric production and exports. At present, the shuttle-less weaving industry is largest consumer of cotton yarn in Pakistan. The quality improvement in fabric production is directly related to the up gradation of technology in weaving and spinning sectors.

Import of textile weaving machines and parts increased from US $46.36 million in 2008-09 to US $ 70.44 million in 2009-10, thus showing an increase of 52%. Import of textile weaving machines and parts into Pakistan is given in Table-3.

Table 3 Import of textile weaving machines and parts

###(Value in $ 000)

Countries###2008-09###2009-10

###Value###% Share###Value###% Share

Switzerland###6,950.72###14.99%###15,394.74###21.85%

Japan###10,355.04###22.33%###15,260.93###21.66%

Belgium###8,385.61###18.09###14,527.39###20.62%

China###4,343.90###9.37%###8,294.10###11.77%

Germany###4,531.09###9.77%###6,801.15###9.65%

Italy###3,007.18###6.49%###3,863.17###5.48%

India###2,608.18###5.63%###891.70###1.27%

U.S.A###930.25###2.01%###746.69###1.06%

Korea###655.47###1.41%###691.42###0.98%

UAE###238.05###0.51%###566.99###0.80%

Total###46,363.53###100.00%###70,442.17###100.00%

Source: Federal Bureau of Statistics, Government of Pakistan.

Knitting sector: Knitting is second most frequently used method of fabric construction. The popularity of knitted fabrics has grown in the recent years, because of the increased versatility of techniques, the adaptability of many new man-made fibers and the growth in the consumer demand for wrinkle resistant, stretchable, snug fitted garments, particularly in greatly expanding areas of sports wear and other casual wear-segments.

At present there are about 12,000 knitting machines in Pakistan. The capacity utilization is approx.. 70%, out of this production, 60% comprises of jersey, knitted fabrics, T-shirts, sweat shirts, polo shirts, jogging suits, and track suits and children outer wear.

The knitwear industry has evolved considerably during the past few decades and now different technologies are available for producing good quality products to compete internationally. Technological advancements have brought automation and Computer Aided designing and also manufacturing. The use of modern consoles such as display panels on the machine, digital control systems, centralized lubrication systems, thread break stop motions are few of the common features available nowadays. This helps in better interaction between the man and machine along with the efficiency and quality improvement.

The machinery used in the knitting sector, especially for circular and flat is largely imported from China, Japan, Korea, Switzerland, Germany and Italy. Due to low-investment involvement this industry is very easy to install, as some of the machines and parts are also manufactured locally. It is also true that this industry is highly labour-intensive. This industry also does not create any pollution problem or health hazards. In fact it is one of the neatest and cleanest industry by every environmental and health standards.

Pakistan imported mainly automatic flat and circular knitting machines of different brands. Import of various types of knitting machines in Pakistan increased from US $32.83 million in 2008-09 to US $56.96 million in 2009-2010, thus showing an increase of 73%. Import of knitting machines and parts in Pakistan is given in Table 4.

Table 4 Import of knitting machines and parts

###(Value in $ 000)

Countries###2008-09###2009-10

###Value###% Share###Value###% Share

China###15,074.14###45.91%###34,935.39###61.33%

Japan###8,242.68###25.10%###10,109.60###17.75%

Korea###2,840.13###8.65%###4,501.63###7.90%

Switzerland###1,332.42###4.06%###1,757.02###3.08%

Germany###1,412.29###4.30%###1,565.53###2.75%

Italy###1,579.15###4.81%###1,076.08###1.89%

U.S.A###1,228.95###3.74%###710.55###1.25%

Other Asian Countries###248.95###0.76%###665.11###1.17%

France###0.00###0.00%###464.82###0.82%

UK###431.44###1.31%###288.50###0.52%

Total###32,835.72###100.00%###56,958.46###100.00%

Source: Federal Bureau of Statistics, Government of Pakistan.

Finishing sector: Most of printing and processing units working on Hi-Tec machines are owned by big industrial and commercial cartels. There are more than 700 independent processing units working in and around Faisalabad, Gujranwala and Karachi, of which 70 integrated units have complete finishing facilities, i.e. bleaching, mercerizing, dyeing, calendaring and printing as well as heat setting and embossing and dry finishing of fabrics.

These textile printing and processing units have been classified into three categories i.e. A, B and C. The category-A integrated units have complete finishing facilities i.e. bleaching mercerizing, dyeing, calendaring and printing. These units from the power loom sector, procure cloth and after processing they marked it under own brand names. At times, these units also provide finishing facilities to the traders on charge basis.

Category-B units directly compete with the products of integrated units. In terms of quality, design and colour, their products are in no-way inferior to the products of integrated mills. Like the integrated mills these units also sell their products in wholesale market.

Category-C units are those, which do not have complete finishing facilities. These are either engaged in bleaching and dyeing. In comparison with Type-A, these units perform more work on contract or job order basis. Besides, they also procure cloth from the market and after processing the same can market it under their own brand names.

Import of textile finishing machines and parts increased from US $ 35.97 million in 2008-09 to US $ 60.61 million in 2009-10, thus showing an increase of 68%. Import of textile finishing machinery and parts into Pakistan is given in Table 5.

Table 5 Import of textile finishing machines and parts

###(Value in $ 000)

Countries###2008-09###2009-10

###Value###% Share###Value###% Share

Italy###7,805.03###21.70%###14,811.16###24.43%

Germany###6,327.58###17.59%###13,835.58###22.83%

China###7,500.17###20.85%###12,052.31###19.88%

U.S.A###3,210.35###8.92%###4,987.26###8.23%

Switzerland###2,305.42###6.41%###3,033.82###5.01%

Japan###750.65###2.09%###2,914.91###4.81%

Turkey###1,756.07###4.88%###2,165.64###3.57%

Spain###1,436.16###3.99%###1,294.56###2.14%

Other Asian Countries###1,287.51###3.58%###1,100.06###1.81%

Korea###371.38###1.03%###1,004.90###1.66%

Total###35,975.72###100.00%###60,615.62###100.00%

Source: Federal Bureau of Statistics, Government of Pakistan.

Future trends

The economic recovery after global recession has already started and some prominent Asian countries such as China, India, Malaysia, Indonesia, Pakistan and Bangladesh are heading towards recovery, while Western countries like USA and prominent European countries which were hard hit by the global economic recession are still struggling to come out of the recession.

Pakistan has achieved its highest ever exports mark of $19.3 billion in the financial year 2009-10. The country has so far recorded exports worth $19.3 billion which not only exceeds the target set for exports in 2009-10 i.e. $18.8 billion.

Pakistan's textile exports fetched a lion's share of 51.8% in value terms out of the total exports for the financial year 2009-2010 Exports of textile and clothing, which crossed the $10 billion mark, recorded a growth of 7% as compared to the last year.

Increase in the value of exports was a result of increase in the prices only. However, only raw cotton and yarn export witnessed major shift destination, which is a positive sign for the country, which relied mainly on the traditional markets over the years. The textile exports recorded a substantial increase to existing market, but also sent to markets like Turkey, Portugal and Singapore, which broadened the customer base.

According to one Chinese survey, world textile market is of US $540 billions of which China has 27.18% and India only 3.68%. Other small countries like Bangladesh, Pakistan and Thailand have shares even bigger than India.

Despite all odds China and India have enough potential to fight the effects of global recession and their economies would absorb the shocks at comparatively low cost. Bangladesh, Thailand, Vietnam, Sri Lanka are in the second line in textile exports. Presently, China, India, Pakistan and Bangladesh share about 50% of US imports of cloth and textiles. China has lion share of over 35%, while India and Pakistan share is small as compared to China. India and Pakistan have great potential as both produce large cotton crops and can exploit their resources to increase their share in textile exports to US.

Pakistan would have to enlarge its product base. Currently, the global trade is dominated by blended textile products, in which the ratio of manmade fiber to cotton is 80:20. Pakistan's textile products on average use 80% cotton and 20% manmade fiber. Besides that, local entrepreneurs have confined themselves to exploring markets in few countries like the US, European Union, Canada and Turkey. In order to achieve the textile exports target of $25 billion by 2014, there is need for further diversification both in terms of exploring new markets and adding further value added products.

Pakistan government's decision to withdraw duties on imported textile machineries under National Textile Strategy 2009-2014, has proved to be a big boost for its textile industry. After this decision, the country has registered a growth rate of 25% in textile exports. It also helped to attract higher foreign investments in the country.

Pakistan invests $ 35 Million in 40 new ginning factories

With a large new crop of high-priced cotton on its way, investors in Pakistan are increasing their ginning capacity by investing nearly $35 million into the opening of 40 new plants and expanding the capacity of existing ones.

According to Naseem Usman, a cotton consultant and Chairman of the Cotton Brokers Forum, thirty of the new ginning factories have been established in Sindh and the others in Punjab (15 in the Sanghar district, seven in Mirpurkhas, and a total of 8 factories in Hyderabad and Kotri). The four ginning factories are ready for operation in Chicha Watani and 4 more in Burewala, with one each in Layyah, Arifwala and Mianwali.

A ginning factory removes the seeds from the cotton and is the first step in the value-addition chain subsequent to the harvesting of the cotton crop. Thus the objective of the $35 million investment is to support efforts towards higher value-addition of raw cotton domestically then it stands to reason that if the cotton output has risen then so would the need for more ginning factories.

The factories will help in handling Pakistan's bumper crop of cotton, which is estimated to be more than 15 million bales this year. Currently, there are nearly 1,000 ginning factories in the country: 250 in Sindh and more than 720 in Punjab, with the others in Balochistan with installed capacity of more than 1.0 million bales on a single shift basis and a total capacity of around 20 million bales on a three-shift basis.

Naseem Usman further said that a top commodity company on the globe Louis Dreyfus of Switzerland has set up an office in Pakistan with the name of Louis Dreyfus Commodities Pakistan Pvt Ltd to deal in cotton.

Other international trading companies including Cargil International of Switzerland and Noble Group of Singapore are also operating through their agents in Pakistan. One ginning factory with five to six gin saws can be set up at a cost of Rs 60 to 70 million.
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Author:Memon, Noor Ahmed
Publication:Pakistan Textile Journal
Article Type:Industry overview
Geographic Code:9PAKI
Date:Aug 31, 2011
Words:3381
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