Pakistan’s print and electronic media is abuzz with reports about the grant of Most Favoured Nation (MFN) status to India. Similarly, the local textile and garment industry is all gung-ho about exporting to India. Popular opinion is that textiles will get an overwhelming response because of superior quality of Pakistani products. But is that really the case?
Would our neighbours treat us as their long lost brothers and hand over their lucrative textile and garment market to us on a silver platter? The answer is, No! We would be naive if we are thinking on those lines. In fact, the ensuing battle for Indian market share would not be anything less but bloody and we should not expect their industry to play by the book.
Pakistan’s textile and garment sector is overwhelmingly export based while opposite is the case for our neighbour. India’s textile and garment sector is at least six times larger than that of Pakistan. During the year 2008-09, India produced 54,966 million square metres of textile and clothing. Only 22% was exported while the rest 78% was used for domestic consumption. Out of this, 50% was consumed by the household sector while 28% by non-household sector.
In comparison, Pakistan produced 9,015 million square metres of cloth in 2008-09, out of which 21% was exported and balance 79% was available for local market, according to APTMA statistics. This does not mean that we are similar to India, this actually means that 21% of grey cloth was exported while the rest was lifted by the mills for onward processing, ie, dyeing and printing. As household consumption figures are unavailable, the best guess is that the domestic market is only 20% of our production.
The Indian textile industry is a very powerful lobby and their government gives them special treatment. Only last year, Pakistan’s cotton importers from India suffered huge losses because the Indian industry went back on their contracts due to increasing cotton prices. More recently, the government of India was forced to backtrack on its plan to give foreign supermarkets access to its retail industry.
If Indian retailers can prevent global giants such as Walmart and Carrefour from entering India, restricting Pakistan’s textiles would not be an issue.
Indian retail textile & garment market
Indian market for textile and garments is strikingly similar to Pakistan’s. A large portion of this market consists of products catering to traditional wear that are almost in unstitched form. Although Indian market for western-style clothing is predominantly man-made fibre-based, in contrast traditional wear is mainly cotton-based. This presents a lucrative opportunity for Pakistani manufacturers and traders, who cater to the local market’s demand, to go out and carve out a niche for their fabric in India.
As India grows, so does its purchasing power. Indian consumers spend 9% of their disposable income on clothing and footwear, compared to 6% in Pakistan. India’s per capita consumption of textiles during 2009 was 23.04 metres, which was about 5% higher than the previous year. India’s per capita purchase of all textiles was estimated to be 2,981.92 Pakistani rupees (exchange rate of Dec 25, 2009 – INR 0.588/PKR), in comparison Pakistanis spend Rs2,134.62 on textile and clothing.
Urban demand pattern for textiles & garments in India
Cotton shirts: The urban market for cotton shirts stood at 74 million pieces in 2009 (an increase of 5.63% from the previous year). Some 58% of this consumption originated from higher income households. Shirts priced more than PKR 382.50 accounted for 40% of market share. As Pakistan does not specialise in producing shirts, this segment is of little significance.
Cotton trousers: The market for cotton trousers increased by 19% in 2009 from the previous year and total size of the urban market stood at 57 million pieces. Sixty per cent of this was consumed by higher income households. Trousers priced more than PKR 612 accounted for 24% of market share.
Denim jeans: The urban market size for men’s denim jeans was 76 million pieces (4% increase) and 11 million pieces for ladies jeans (38% increase). Out of the total, 49% purchases were made by high-income households. Men’s jeans costing PKR 637.50 and above accounted for 46% of this market, while ladies jeans costing the same accounted for 40% of the market. Pakistan can do very well in this segment, particularly if the branded jeans segment is targeted.
Men’s cotton t-shirts: Seventy million men’s cotton t-shirts were purchased by urban consumers, representing a 3% increase over the previous year. T-shirts costing PKR 510 and above accounted for 12% of this market. Higher income households represent 14% share of the market.
Men’s cotton kurta pajama: The market size for men’s kurta pajamas was 18 million pieces, an increase of 80% over the previous year. Thirty-eight per cent of this market comprised purchases from high-income households. Kurta pajama costing PRK 476 and above accounted for 32% of this market.
Ladies’ cotton shalwar kameez: In 2009, 53 million pieces of ladies cotton shalwar qameez were purchased in urban India, which represents 10% growth over the previous year. Fifty per cent of this consumption was done by higher income households. Products having prices of PKR 1,147.50 or above enjoyed 11% market share.
This segment is set to benefit the most from the trade liberalisation programme as Pakistani traditional wear is very well received in India.
Trade liberalisation with India is certainly a welcome move as ultimately the consumer will get the most benefit in terms of choice. However, the consumer does not have any voice on either side of the divide and hence of little consequence. The Indian market for textile and garment seems promising from Pakistani exporters’ perspective, but they should be vigilant as non-tariff barriers remain the most potent threat.
The writer is a senior research analyst with the Pakistan Readymade Garments Manufacturers & Exporters Association
Published in The Express Tribune, 25th, 2012.
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