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.
Size matters
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.
Traditional-wear
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.
Conclusion
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.
COMMENTS (32)
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@Ali tanoli,
No Halal meat for Sikhs and Rajputs, talk about yourself..
The cost and quality will be major determining factor in sale of clothes.
I have to point out that the memory of ethnic cleasing of Punjabi Hindus and Sikhs is still fresh in North India. Quit talking about Palestines, Punjabi Hindus and Sikhs were treated worse, their homeland snatched and they were driven out..it funny to see Punjabi muslims talking about Kashmiri's ..nobody drove Kashmiri muslims out of their homes and took their land.
please send us meat product and jewlery we gonna buy it i promissed ..
I dunno about shirts and jeans but I used to love frozen parathas from Karachi that are sold in the US. Please export those to India as well. I will definitely buy those.
Pakistan exports to India will be on similar terms as normally trade is been between other countries. Every country will do its best in its national interest. There are no altruistic agenda behind such trade , if some one assumes such thing then it is at its own ignorance and peril. How wil trade between us spread in future will depend on various factors, including economic growth of India. If Indian economy grows rapidly, strengths its currency , imports from Pakistan will become cheaper and trade can blossom further. Lets hope better sense prevails among all stakeholders and doomsayers are defeated.
I think the main textile markets that Pakistan can INITIALLY capture in India is either the very high end one (designer clothes that are very expensive) or intermediate goods that are resold as 'Indian'. If relations remain good over an extended period of time without fear mongering from either side, then I think Pakistan will be able to capture the 'regular' textile customers in India also conditional of high quality/reasonable price combination.
oh ya really india population is 1.2 billion not 1.3 billion and our population is 6x times more and our export is 12x times higher than your export so please don't compare your country with india .unlike your country our export is vary fast growing .
@Ali tanoli You are right $300 billion is peanuts for a country of 1.2 billion people, but you gotta realize we are a developing country with just a economy of $1.8 trillion GDP.So in comparison to GDP our exports numbers are not that bad.China has a manufacturing sector and most of theirs exports are manufactured goods.In 2014 when BJP comes to power with Narendra Modi as prime minister we may see a rise in exports given the fact that Gujrat accounts for 1/5th of India's exports due to its business friendly policies.The same might happen when Modi is in charge of the country.PS:If 900 million Euros is peanuts why were your leaders begging India for preferential treatment on trade.
@Fu, $ 300 billions worth of export is like a peanut compare to 1.3 billions peoples of country and u should compare india with china not pakistan because we are just 200 millions and thanks for E,U peanuts.
We already have a good market for made in Pakistan items. A few retailers in Delhi specializes in products from our neighbor . there is no harm in accepting the quality is really good. even if a few adamant minds don't accept the product from neighbor but a vast majority will accept it wholeheartedly, provided the products are of good quality.. I think only quality, pricing and branding are the things which will matter at the end. I am eager for the products from Pakistan and i am not a Muslim nor i am alone with this perception!!!!! good wishes from India!!!
@Ali tanoli:
Dear brother, how can you buys something that's already free?
@Ali Tanoli The last thing anyone wants is lecture on state terrorism from a Pakistani.Ask your all weather friend China with the same audacity you ask as about oppression of Muslims for statehood of Xinjiang. And as for our low quality exports you talked about is laughable. India's exports accounted for nearly $303 billion last year more than the entire GDP of Pakistan. Our exports include raw materials and high tech products. Whereas high quality Pakistan exports accounted for nearly just $25 billion which mostly includes towels and underwears known by a fancy name "Textiles". Don't forget EU waiver we gave you, you begged us for that. PS:Trade with Pakistan is mostly in our favor where we export more than billion dollar worth of goods.
@ahmed: The World is moving forward and Pakistan is going in the opposit direction. How do you expect convergence?
We are not begging to india to buy pakistani stuff and indian product quality is so low i wont buys it even its free.
@Fu And your civilized world are able to prevent state terrorism in kashmir and in palestine in central asia and in kashgher china tell me is not it truth hurts???
@Its (still) Econonmy Stupid: Soft power only exists if you have something that is (at least) perceived to be positive. Everything in Pak culture that could be portrayed as positive is already present in India. Surprisingly Pakistan is the only place where Arab soft power works!
from the above comments its evident, we pakistanis can never be friends with india, whatever maybe the reason, we the evil they the pious. both cant go along.
Pakistani business has failed to understand the soft power that helps selling products without advertisement. Over the years Pakistan has generated negative softpower through support of non state actors, blocking NATO, women issues. These are thousand cuts hurting the demand for Pakistani goods. Business who are exporting should have a lobby to ask tough questions to the government. Instead of asking for grants or handout or cheap foreign trips they should ask why certain non sense is allowed in the society. Bollywood and Hollywood has helped respective countries generate softpower including for their armies, exporters etc. By banning cinema or music concerts, blowing up of CD shop government is killing the softpower. Pleasing relegious lobby is hurting the business in long run. Business lobby should ask why cinema is not promoted. They can ask policy for matching grants to promote the softpower. In every meeting remind the government officials end of the day its (still) the economy stupid.
@ an Indian
Your mission will remain confined to 'some' Indians. . Imagine whole world boycotting Indian goods on the same 'Sawadesi' principle! . Thank God we still have majority that believes in humanity, not only on the borders just because of accident of birth (we didn't choose our country, did we?)
Glad someone is drilling deeper. Kudos to Garments association and Ibrahim.
However, regardless of what it does to our trade balance we should not deny MFN to India. We have to play according to the rules even if we are a weak side.
The devil is not in MFN. It is in SAFTA. As of Jan 1, 2013 we will migrate from a 'restricted trade regime' to a preferential one. Unless all parties are willing to renegotiate SAFTA I am afraid the most desirable aim of normalization of trade relations will degenerate into acrimony. An unintended consequence, but nonetheless an inescapable epitaph.
I have nothing against Pakistani products and will buy anything that is of good quality. However, this inherent bias that certain Indian comments indicate could make our retailers wary of stocking Pak finished goods. On the other hand, I see significant scope for Pakistan to sell to Indian businesses for value addition - this will circumvent the made in Pakistan issue and allow Pakistani industries to take advantage of the comparatively higher rate of growth.
I am reminded of a Sanskrit proverb that translates,"There is none in the world that a hard knock can't reform!"
@Knotty
You are wrong .There are many Indians who still believe in "swadesi" . We won't buy any product of foreign origin .I as a part of NGO run a camphain against it.
Whether Indians will buy anything Pakistani (or vice versa) will depend ONLY on the quality and price of the product. . Everyone will find an excuse to justify their acts as long as they get something good for reasonable price!
@FU: Dude, even we North Indians wont buy anything.pakistani :)
@FU i understand and respect your sentiments. but let me offer you other dimension. trade relations will overcome that bitter opinion against each other. and in the long run, those are sustainable. think like a baniya / businessman. give a little to gain a lot. think about market of 20 crore people. which are more culturally / mentally inclined towards india than china. think about vast untapped mineral resources from pakistan, afghan and other central asian states. think about recent copper / aluminium / iron / gold or whatever metal mining contracts, worth of billions of dollars.
I don't know about Northern India where culture is similar but we in South India will not buy any made in Pakistan products except may be few Muslims who sympathize with Pakistanis.
@Sb: . I think Pakistan's Exports to China is One-Fifth of Chinese Imports by Pakistan. . Regarding Pakistan's MFN to India : Just as the Chinese "Free Trade" has Terminated-Destroyed- led to the Closure of more than Thirty Pakistani Industries similarly I feel that the Indian Imports will adversely effect the Pakistani Industry. . Pakistani Produce cannot compete with the Indian Manufactured Goods as Indian output, in most cases, is anywhere between SIX AND TEN and possibly TEN TIMES the corresponding class-type of Pakistani Manufactured Goods Output. . With China, Pakistan cannot say a "Dickie Bird". With India it might lead to WAR! . Cheers
for god sake, we have signed a free trade agreement with china, the cheapest producer and largest exporter of mass commodities, and we are well aware of its consequences in pakistan. Stop singling out India and present this scary picture. Ask yourself, why are we not successful in chinese(taller than mountain friend) market which is bigger than india?? Does China give us free access? Why our exports to china is 1/50 times of what they sell us?? Instead of throwing venom at India, we should learn trade basics.
@Ibrahim Mahmood: Can you please give the same compression with China.