Pakistan grants relief packages to textile sector to make exports competitive

Now, the size of cotton crop 2006-2007 has come very close to the target of 12.5 million local weight bales and what matters is the size of unsold stocks which was at 1.2 million bales on 1st. March, 07 as new crop may not be available before next August.
It means local mills will have to wait for about five months to get new cotton crop. Other source of supply is the import of cotton. Pakistan has reportedly received shipments of some 1.2 million bales of cotton and another half a million bales may be awaiting shipment instructions from the buyers. By the end of this season, Pakistan's total imports may touch the level of 2.5 million bales.
In the coming months, some buying pressure may further push lint cotton prices by another Rs 50 to Rs 100 per month depending upon the improvement in yarn market. Cotton growers feel encouraged in cotton production next season. However, weather factor would be very instrumental in determining the size of the next crop. The government also appears quite serious in increasing cotton production.
In the last weak, local lint market showed improvement of Rs 50 a maund of 37.324 Kg ex-gin tp touch the level of Rs 2,700 a maund for better grade cotton. The prices of other grades of cotton also registered corresponding increase. Local reports indicate that yarn / cloth market is not picking up and unsold stocks are accumulating, making the spinning operation difficult. There are reports of closure of some of the financially weak spinning units particularly the Open-end spinning units and some looms in the weaving sector.
In the last some months, the export of Pakistan textile products did not perform well and the Government of Pakistan and the All Pakistan Textile Mills' Association (Aptma) have shown great concern on performance of the textile sector.
With a view to provide necessary relief to the textile sector for making export prices viable and competitive, the Government of Pakistan allowed a relief package of some Rs 35 billion to compensate them the loss incurred by the textile sector on high rate of interest/ Last week, the Textile Ministry of Pakistan also allowed relief in some taxes, duties and payment of service utilities for an amount of Rs 29.67 billions to further make the textile sector competitive and viable on export front.
The new idea of free trade under World Trade Organisation (WTO) is reshaping, restructuring and redefining the volume of foreign trade and its direction in almost all economies of the world. In pre-WTO period the West was supplying garments and textile products to the east with complete dominance on textile trade.
Now, the scenario is changing fast. The USA and European countries cannot afford high cost of labour wages in textile mills and cannot compete with the low cost of production in textile and garment sectors. As such, spinning, weaving and finishing capacity of US and European countries is reducing drastically and is increasing fast in some of the Asian countries like China, India, Pakistan, Bangladesh, Sri Lanka and Vietnam. Some of these countries have their own cotton production while most of them have comparatively cheap labour.
USA a prominent cotton producer and textile manufacturer of the west producing 13.77 million bales some ten years ago has maintained its cotton production level around 20 million 480-lb bales in last many years but its level of domestic cotton consumption has been drastically reduced from around 11.0 million bales in 1998-99 to only 5.0 million bales in 2006-2007 and now is estimated around 4.5 million bales in 2007-2008 - some 58 percent decrease in ten years.
THE FOLLOWING FIGURES WOULD TELL YOU THE STORY:
The study of the cotton production and consumption figures of the last five years reveal that Chin and India has made tremendous progress in increasing its productivity, production and spinning capacity. China has also increased its spinning capacity largely as is evident from the reports of International Textile Manufacturers Association in Zurich. These reports tell that in the last six years 2000-2005, China has imported 51 percent of the world total cotton-type spindles shipments, India 13 percent and Pakistan 10 percent while balance 26 percent share goes to rest of the countries of the world.
Almost 3/4th share of the world shipments of spindles went to three Asian countries ie China, India and Pakistan. Cotton / textile business is shifting from USA and other European countries to Asian countries specially China, India, Pakistan, Bangladesh, Sri Lanka and Vietnam.
These Asian countries would be manufacturers and exporters of textile goods and garments and USA and European countries would be importers. Asia has a share of about 62 percent in world cotton production and has 76 percent share in world total cotton consumption. India and Pakistan jointly produce 26.5 percent of world cotton and consume 27.6 percent of world's total consumption. China alone produces 26.8 percent of world cotton and its mills consume around 41 percent of world total consumption. This trend of shifting of cotton / textile industries is expected to continue in the years to come till saturation stage. Pakistan should make all-out efforts to increase its share in textile and apparel exports specially to US and EU countries.
10-YEAR STORY OF COTTON PRODUCTION AND CONSUMPTION OF TOP FOUR COUNTRIES.

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Name of country     Production     Consumption     Yield (Kg/Hectare)

                                               (Million 480-lb bales)

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1.China

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1998-1999             22.04          22.50                       1050

2007-2008 (Est.)      30.00          50.50                     1200"

Difference (%age) (+) 67.18       (+)48.13                  (+) 14.28

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2. USA

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1998-1999             13.77          10.70                        720

2007-2008 (Est.)      21.00           4.50                        921

Difference (%age) (+) 52.50      (-) 57.94                  (+) 27.91

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3. India

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1998-1999             12.84          13.00                        270

2007-2008 (Est.)      21.50          19.25                        514

Difference (%age) (+) 67.45      (+) 48.08                  (+) 90.37

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4. Pakistan

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1998-1999              6.20           7.15                        560

2007-2008             10.00          12.50                        700

Difference (%age) (+) 61.29      (+) 75.56                  (+) 25.00

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