Essay Proposal RSM 480

Saad Anjum Saleem

1001849681

October 11, 2017

Essay Prompt: Decline in Exports of Textile Products in Pakistan

Overview

Pakistan’s textile Industry is largely based on three products. There is a significant textile

spinning sector, a textile weaving sector and a value-added sector. Pakistan is currently the

world’s 8th largest textile exporter in the world, with the value of Pakistani textiles at 9 billion

dollars.

In the past 15 years textile exports of Pakistan have seen a steep decline in the overall

global economy. A variety of factors have contributed to the steep decline of Pakistan’s textile

lag in exports. Some of those problems include security challenges, high interest rates, lack of

positive policies, and high gas/utility prices.

In 2013 the Pakistani textile industry was granted a GSP plus status, which allowed 20 %

of Pakistani textile exports to enter the EU at a 0% tariff rate and 70% of textile exports at

favourable tariff rates. Despite securing the GSP plus status the Pakistani textile Industry is still

in shambles.

The government has not done enough to foster a good textile environment. Pakistan’s

share in the export market in textile went from 2.2% in 2006 to 1.8% in 2013 while at the same
time Bangladesh’s share increased from 1.9% in 2006 to 3.3%. India’s share increased from

3.4% to 4.7% in the same time period. Foreign competition has been a great obstacle in

Pakistan’s textile exports. Total exports of Pakistan in 2014-2015 were $23.6 billion while in

2010-2011 they were $24.8 billion which is a reduction of 4.8 % not factoring in inflation.

Positive macroeconomic policies from countries such as Bangladesh, Vietnam, and India

have helped prompt up their respective Industries. While simultaneously the government has

not been taking tangible action in Pakistan to foster the same type of policies to help the

Pakistani Industry.

Even while global consumers have reduced the amount of textile they buy Pakistan has

been worse hit by all countries because Pakistan faces numerous internal challenges as well.

Even the gas price of Pakistan is not preferable, The cost of gas is $6.7 per million British

thermal units while it is $4.2 in India, $3.1 in Bangladesh, and $4.2 in Vietnam. Electricity tariffs

are also very high in Pakistan, they are 14.5 cents per unit in Pakistan and 6-9 cents in terms of

the regional average.

Another factor to analyze is the rupee value. A devaluation of the rupee relative to the

dollar is positive for the textile industry. The reason that is because a weaker rupee makes

textile imports more attractive for importing nations such as the United States. The Rupee to

the dollar value has stayed relatively stable over the past year or so.

Lack of subsidies also play a role. The government over the past few years has largely

been subsidizing other industries particularly the gas and fertilizer industry, leaving the textile

industry in greater shambles.

 Analysis

The Pakistani textile industry is facing an interesting dilemma currently. A variety of

factors have lead the textile industry to die almost. An analysis of why this is the case and what

factors lead to Pakistan’s downturn in the global scheme of things will be interesting to write.

What would make this an interesting paper is that there is not only one factor

associated with the decline of the Pakistani textile Industry. Regional competition, high input

prices, and lack of positive policies have all contributed to the death of the Pakistani export

textile industry. Analyzing all these factors and what has their repercussions would make this

for a great paper.

 Sources to Use

https://tribune.com.pk/story/1000706/textile-industry-in-its-worst-patch-in-history/

https://www.statista.com/statistics/236397/value-of-the-leading-global-textile-

exporters-by-country/

https://www.dawn.com/news/1072051

https://www.bloomberg.com/news/articles/2016-09-20/a-deserted-karachi-factory-

signals-pakistan-s-textile-crisis

http://www.academia.edu/24669691/Pestel_analysis_of_Textile_industry_of_Pakistan