Textile sector - where is the value addition

Cloaked by the protectionist policies extended regime after regime, Pakistans textile industry is a coddled child. And the outgoing government has done more than its share to fuel the industrys incompetency during its reign.
Despite the fact that the government provided a helping hand to the textile industry on everything from agricultural inputs to the provision of gas at the cost of holding other industries hostage, the sectors inherent inefficiencies coupled with the energy crises debacle and double-digit inflation have pushed up the prices of Pakistani textiles to uncompetitive highs.
The last five years have consequently seen softening external demand for the countrys textiles, making closures and dwindling capacity utilisation the norm.
During the PPP-led coalition, the labour and capital transfer as a result of Pakistani textile industries shifting shop to Bangladesh is another blow that needs special mention, and not just because of the obvious effect it had on the local industry.
One justification that has been extended has been that Bangladesh - with its Preferential Trade Agreements with major importing nations which allow it non-tariff access to these markets - was the right place to be at. While there may be some truth to it, if that were the biggest reason of this outflow, India and China, the biggest competitors within the region would have lost looms to Bangladesh too.
And since that did not happen, the capital flight hinges unflinchingly on the outgoing governments lack of ability to provide a cohesive environment that could direct the sectors growth in the right direction.
Another important function contributing to the sectors underperformance these past few years has been the continued lack of investments into new machinery, and technology, which has blighted the export competitiveness of the countrys textile.
And it has worsened over the course of the last few years as a result of high interest rates of bank financing which has increasingly hindered up gradation.
During the current governments reign, Pakistan has been able to add only about 2.6 million spindles and over 3,100 shuttle-less looms, taking the total installed spindles to 11.4 million and shuttle-less looms to 24,000, whereas, during 2006-11, India added 15.33 million spindles and more than 30,000 shuttle-less looms to its textile sector, taking the total to 41.27 million spindles and around 38,000 shuttle-less looms.
The outgoing government also did little during its reign to devise a cohesive plan to bring the value-added sector - which is made up of an unorganised and fragmented mass of units- up to par.
Despite a commendable initiative to devise the first ever Textile Policy in the history of the country, the last few years have seen the countrys textile make little head-way up the value addition ladder. As a result, the export of value-added made-ups- which should technically be contributing the plumpest share of foreign exchange earnings to the exchequer- have been in a steady decline.
And while export in absolute terms have climbed up during the 12 months, they have been largely at the hands of exorbitant amounts of yarn dispatches to China- which altogether speaks volumes about the foresight of both policy-makers and industry players who sit jubilant on the pile of dispatches sent out to countries like China which are now choosing to add value to its textiles from the spinning stage forward.
For a sector that had the capacity to get up and climb higher even in the post quota-era of global textile trade, the last four years performance in a nutshell is a tale riddled with a myriad of problems. And the penchant for the textile lobby to blame the government for all its woes, while not completely justified is not entirely baseless either.