Currently there is a lot of optimism in the textile sector with many analysts pinpointing the growth potential of the sector.
Driven by positivity at various fronts like revival of demand from the EU and the US and improved power and gas supply situation at home, textile exports from Pakistan showed a good front, growing by 5.9 percent year-on-year during the last financial year.
However, a more than cursory glance at the list of items that have contributed to this growth gives the game away.
To give credit where it is due, both the RMG and cotton fabric exports have indeed managed to show good resilience in grappling with the local energy crisis during the last fiscal year, but the growth is spearheaded once more by low-value added cotton yarn.
Additionally, export numbers are distorted because they dwarf over last fiscal years figures--which were dismal for a number of product categories due to a weakened global appetite for textiles following the slump in the last quarter of FY11.
For Pakistan--which remains one of the leading producers of cotton in the world--the development of a textile industry which can make full use of its abundant resources of cotton has been a long drawn out process.
Decades and a failed National Textile policy later, the downstream industry chain--which includes the weaving, finishing, made-ups, garments, towel and hosiery sub-sectors--and where the most margins are concentrated still remain a mass of unorganized units.
At present, there are 1,221 ginning units, 442 spinning units, 124 large spinning units and 425 small units that produce textile products and save the leading few composite textile mills, there is little investment being made for up-gradation in the value-added sector.
The biggest problem with the industry remains the fact that it myopically refuses to venture into value addition. Industry sources confirm that there is hardly any new project in the textile sector at the moment.
This is seconded by the data provided by SBP, according to which loans handed out under the government subsidized LTFF schemes for import of machinery have remained largely levelled this year, dominated by the weaving and spinning sector where capacity enhancement was called for after orders from China kept multiplying.
The rest is a case of the same old, same old. There was a small growth in borrowing for machinery by the woven apparel sector which saw sustained demand for hosiery and related items from some European destinations. Otherwise the value-added sector remained quite as usual.
The lobbyists stance on the whole matter, however, is another matter altogether. Talk to an active member of one of the many textile organizations, and he will tell you that everything and anything that goes wrong within the sector is the governments doing.
Like a hard to please wife, the sector is hardly ever happy with the set of incentives the government has already provided and save the government routing everyone elses electricity to the textile mills, there is apparently little else that will satisfy these lobbyists.
Historically, the fluctuations in the industrys performance--as measured by profitability and exports--are primarily a function of the price of cotton, which in turn depends entirely on the quantum of local cotton production in any given year. And going forward--what with the lack of attention being paid on going up the value-addition ladder--there is little indication that things are going to change any time soon.
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