Textile products constitute 63 per cent of the country's overall exports. Due attention was paid to this sector in the early 1990's with the result that by 2004, exports stood at 9.5 billion dollars. Focus on provision of facilities to the private sector to improve competitiveness and productivity combined with the government's policy of deregulation, privatization and liberalization as well as continuity and transparency in procedures to encourage private sector to utilize opportunities finally paid off. Currently, the annual cotton consumption in Pakistan is 15 million bales and it is fast becoming the main source of best quality cloth the world over.

Although all else is showing potential, frequent power breakdowns during July- August this year caused losses to many cotton exporters, spinners and ginners. According to a report, knitwear and bed wear exports decreased by 1.11 per cent and 9.61 per cent while exports of towels showed an increase of 16.74 per cent and tents 9.04 per cent in July 2006 over the last year. On the other side, hand made articles, including other textiles declined by 39.8 per cent.

Moreover, Pakistan's textile exporters are complaining against the high cost of production courtesy higher rates of electricity and gas and high wages in relation to production of labour is a cause for concern. The easy availability of cheap exports from Bangladesh and China has added to their woes.

In terms of relief, besides a 6 per cent subsidy along with other tax exemptions, an amount of Rs25 billion has been earmarked to make this sector more competitive internationally and win the price war. The government has also decided to provide research and development (R&D) to home textile and dyed or printed cloth manufacturing-cum-exporting units. R&D support would be provided in accordance with the Pak-Customs Tariff at the specified rate of FOB value of exporting.

During a seminar organized by the Sustainable Development Policy Institute, Islamabad in June 2006, the speakers highlighted the status of labourers/workers in the textile industry. According to them, only 2 per cent of the workers are appointed while the rest work on daily wages.

Sohail Raza, the General Secretary went on to add that workers in the textile and garment sector were getting an average of Rs2500 per month while 19 per cent employees were receiving Rs4500 per month. A labourer earns 2-3 dollars a day to stitch t-shirts and trousers. This needs to be rectified as the sector employs as many as 35-38 per cent of the country's total work force.

USA was Pakistan's largest exporter of textiles, as much as 86 per cent. However, in the aftermath of 9/11, exports to USA fell by 68 per cent. There was a great demand that being a close ally in the war against terrorism, USA should suspend textile tariffs and raise or do away with quotas.

Ending of the generalised system of preferences (GSP) and imposition of anti-dumping duty by EU has also negatively affected Pakistan's textile industry.

It has also been suggested that textile units in USA have increasingly felt the thrust of cheap Pakistani textiles. Mill owners have, however, argued that reducing trade barriers would not threaten jobs in the southern region of USA, the heartland of the US textile and apparel industry.

Moreover, Pakistani firms have formidable competition from mills in South Africa, Jordan and Kenya since they enjoy easier access to the US market. Pakistan is the only regional country that has 70 per cent surplus fibre yarn and cotton. Given this scenario, it is only proper application of government policies that can bring about any positive trends.

Currently efforts are being made to encourage value addition by using the Export Development Fund (EDF). Pakistan also needs to increase cotton-made textile goods to 60 per cent against the existing 40 per cent. A plan to rehabilitate training programmes through public-private partnership is another step that seems to be in the right direction. Pakistan also wants that EU enlist Pakistan in the GSP plus and provide access to their markets.

Pakistani markets are also under threat from textile exporters from China, India, Bangladesh and other new players like Vietnam, Cambodia and Eastern Europe. They consider the incentive and subsidy packages offered by their governments after the export quota dismantle in January 2005 as the reason for success.

Pakistan too offers subsidies and other soft loans to its textile business. Latest in the series of incentives to the textile sector is the government's permission to refinance its outstanding fixed term loans availed from Banks or DFIs (on or after 1.1.2003 and on the principal amount) for import of plant and machinery. The purpose is to promote export-oriented industry, overcome the prevailing crises and remain competitive in the international market. The mark-up on the loans would be applicable prospectively and not with retrospective effect.

As usual, there are complains about discriminatory practices in the offering of incentives. It has been reported that many small textile mill owners were unable to arrange loans from banks. Banks are offering cotton finance on 13-14 per cent mark-up generally to the textile mills and yet there are allegedly groups that get loans at single digit interest.

Some mill owners have also pointed out that subsidy benefits explicitly kept out for commercial exporters and relatively small mill owners from the net of concession packages. During a meeting with the Prime Minister on 26th August, Aptma leaders pleaded for conversion of loans obtained in 2001 to 2003 into soft loans at the rate of 5-6 per cent as done in India for long term financing arrangements for export oriented units and credit for Locally Made Machinery (LMM).

In 2004, the former Governor State Bank of Pakistan Dr Ishrat Hussain had Commissioned Associated Productivity Consultants to study the competitiveness of the textile industry. The study revealed a minimal cost - financial 6 per cent, utilities-17 per cent, workers wages-17 per cent and 25 was incurred on administration.

While cotton in spinning and yarn in weaving constituted 58 to 59 per cent of the production cost. The study had also stated, the government offered a total loans Rs103 billion from 1999 to 2003 against textile owners investment of Rs39 billion.

Revelations by an Asia-Pacific UNDP Development Report 2006 shows Pakistan to be the lowest in the region in terms of textile exports - even compared to Bangladesh which is a non-cotton producing country.

In 2005, Pakistan, the fourth largest cotton producing country, earned less than 5.39 billion dollars against Bangladesh-6.99 billion dollars. The report also mentions that 102 countries import textile and apparel products while 104 states export these products, according to the UN's report. Global trade in these products is about 440 billion dollars and is likely to grow to almost 850 to900 billion dollars.

From Pakistan's perspective, concentration on (i) technological advancement (ii) sophisticated line of products with massive production (iii) export capacity and (iv) gas pricing issues are essential. These measures will help in achieving the $30 billion export target by 2010.

To facilitate lower cost of production, provision of adequate infrastructure and high labour productivity, exporters are also required to improve their delivery time, services and market approach to meet the new challenges.