Facing Goliath

Published: March 29, 2012

The writer is chairman of the Pakistan Readymade Garments Manufacturers and Exporters Association

Pakistan’s print and electronic media is abuzz these days with the government having granted the most-favoured nation status to India. Similarly, Pakistan’s textile and garment (T&G) industry is all gung-ho about plans to export its products to India. Popular opinion is that our textiles will get an overwhelming response because of our superior quality. But is that really the case? Will our neighbours treat us as their long lost brothers and hand over their lucrative domestic T&G market to us on a silver platter? In my opinion, we would be naïve to think along those lines.

Pakistan’s T&G sector is overwhelmingly export-based, while the opposite is true for India. India’s T&G sector is at least six times larger than that of Pakistan’s. In 2008-09, India produced 54,966 million square meters of textile and clothing. Only 22 per cent of this was exported while the rest was used for domestic consumption. Out of this, 50 per cent was consumed by the household sector, while 29 per cent was consumed by the non-household sector. In comparison, Pakistan produced 9,015 million square meters of cloth in 2008-09, out of which 21 per cent was exported and the rest was available to the local market, according to official records kept by the All Pakistan Textile Mills Association. This does not mean that we are similar to India. As household consumption figures are unavailable, the best guess is that the domestic market consumes only 20 per cent of our production.

The Indian textile industry is very powerful and receives preferential treatment from the government. Last year, Indian importers who were importing Pakistani cotton, suffered huge losses because their industry went back on their contracts due to increasing cotton prices. Recently, the Indian government was forced to backtrack on its plan to give foreign supermarkets access to India’s retail industry. If Indian retailers can prevent global giants such as Wal-Mart and Carrefour from entering India, restricting Pakistan’s textiles would not be an issue for them.

However, there are certain opportunities that the Indian market presents to the Pakistani textile industry. The Indian T&G market is strikingly similar to ours. A large portion of it consists of products catering to traditional-wear that is mostly in unstitched form. Although the Indian market for western style clothing is predominantly fiber-based, in contrast, the traditional-wear market in India is mainly cotton-based. This presents a lucrative opportunity for Pakistani textile industry to carve a niche for Pakistani fabric in India.

Indian consumers spend nine per cent of their disposable income on clothing and footwear. India’s per capita consumption of textiles during 2009 was 23.04 metres, which was about five per cent higher than the previous year’s. India’s per capita purchase of all textiles was estimated to be Rs2,981.92, compared to Pakistanis spending Rs2,134.62 on textile and clothing. This means that the Pakistani textile industry can benefit from the Indian consumers increasing their spending on clothing.

Trade liberalisation with India is certainly a welcome move as ultimately the consumer will benefit the most from this. The Indian T&G market seems promising from the Pakistani exporters’ perspective, but they should keep vigilant as non-tariff barriers pose the most potent threat for them. From the policymakers’ perspective, Pakistan should be wary of these non-tariff barriers and be prepared to initiate countervailing measures if required.

Published in The Express Tribune, March 29th, 2012.

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Reader Comments (9)

  • Myrtle
    Mar 29, 2012 - 3:18AM

    I agree..do we have the strategy-foresight-determination to overcome the nontarrif barriers? not so sure…unity within our ranks wud be required but so far indian industry (which is accustomed to a closed atmosphere from the start) is more adept at getting rid of competition!

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  • Mar 29, 2012 - 9:12AM

    What an article that contradicts its statements repeatedly and without any convincing explanation. The writer needs to do more research.

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  • sidjeen
    Mar 29, 2012 - 10:25AM

    i did not understand whether the writer is in favor or not of MFN status to india he contradicts himself on too many occasions in this article.

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  • Dee Cee
    Mar 29, 2012 - 10:41AM

    You also need to think about branding. If you are going B2C, the “Made in Pakistan” tag may create some issues. However, in a B2B scenario, traders would just look at the money. What about some smart re-branding of Pakistan in India with Ms Khar and the cultural ambassadors? Welcome and best of luck! An Indian Consumer

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  • Zoro
    Mar 29, 2012 - 12:47PM

    Platter or No Platter…\
    If Pakistani goods are superior to Indian and are fairly priced… Indians will go for that .. as now Indians know what to buy and where to buy.. they are not stupid anymore as they have a choice and its not the same situation as in 1980 anymore … All the best to our parted brothers …

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  • spacedoutwriting
    Mar 29, 2012 - 2:47PM

    Trade in textiles is very different from giving opening up retail sector to Wal Mart etc. Please do not confuse the issue.

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  • Naveed
    Mar 29, 2012 - 7:11PM

    First of all the article is confusing. It neither touches here nor there so author doesn’t really seem to know what he wants to convey.
    Second, he concluded quality of our goods is better than theirs, he must really be dreaming as in export markets, their quality beats every bid that we make on any given day.
    Moreover, our experience is that brand India has a far better saleability that brand Pakistan.

    So qualitywise we are no where near them. Only alternative is to price the products competetively and make inroads into their markets.

    MFN is no doubt a win situation for customers of both the sides. People here get (import )
    Indian brands through gulf, paying much higher price, now we can hope to get them at cheaper price.

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  • let there be peace
    Mar 29, 2012 - 10:32PM

    I agree with @Dee Cee:
    As a buyer, if I see ‘made in Pakistan’ on any kind of product , I don’t think I will ever buy it. I will not even think about it, it will be a subconscious reflex. Question of price and quality does not arise, I will not even bother to check it. ‘made in Pakistan’ will bring image of Ajmal Kasab in front of my eyes and its not going to change in for least next 20 years.
    However if I know the product by its brand and even for a product that is just associated with local name such as Karachi, Lahore, Peshawar, or Sialkot, I may not have such repulsive reflex.

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  • Salim Ansari
    Mar 29, 2012 - 10:56PM

    @let there be peace: As a buyer, if I see ‘made in Pakistan’ on any kind of product , I don’t think I will ever buy it. I will not even think about it, it will be a subconscious reflex.

    How do Pakistani businessmen plan to get over this non-tarrif barrier ?

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