Apparel manufacture is an important value-added sector of the textile industry of Pakistan. This sector manufactures and exports ready-made garments, woven as well as knitted, of all types such as trousers, ladies suits, jeans, Children garments, maxies, blouses, skirts etc. Exports from ready-made garments and knitwear sectors crossed $1.0 billion mark each for the first time in the history of Pakistan in 2002-03, contributing about 30.27% to total textile and clothing exports and 52.78% to total value-added exports. The jump in apparel (ready- made garments and knitwear) exports from $ 1,723 million in 2001-02 to $2.24 billion in 2002-03 was mainly due to the concessions allowed by the E.U, mainly increase of quota by 15% with effect from 01.12.2001 and abolition of import duty with effect from 01.01.2002.

However, with effect from March, 2004, the E.U. re-imposed import duty @ 12%. Currently, textile and clothing exports from Pakistan to E.U. are subject to an import duty of 9.6% because these are more than 1% of the E.U. market for textile and clothing. Consequently, these exports being ineligible for GSP concessions have remained almost stagnant in 2003-04 and 2004-05 at about $2.47 and           $2.74 billion. In fact, textile and clothing exports from Pakistan are under severe strain after the commencement of WTO, the World Trade Organisation, with effect from 01.01.2005. In contrast, Bangladesh and Sri-Lanka enjoy better access to the E.U. market. The textile and clothing exports from these countries are subject to Zero and 50% of import duty respectively as compared to Pakistan’s textile and clothing exports.

 The woven garment units in Pakistan are presently estimated at about 5000. The total installed capacity of these units is about 600,000 machines and annual production is about 700 million pieces. About 700 units are operating in the knitwear sector. The installed capacity is 21,000 knitting machines and annual production is approximately 550 million pieces. About 80% of these units operate on small scale as cottage industry. Most of these units lack modernization. Under the Textile Vision 2005 policy  of the Government of Pakistan (GoP), announced in 2000, garment and knitwear sectors were allocated a sum of Rs 39 and Rs 29 billion respectively for the import of stitching, sewing and knitting machines for Balancing. Modernization and Replacement (BMR) and expansion. The utilization of the allocations was only 15.39% and 35.79% respectively up-till the end of 2003.

Furthermore, the textile industry, including the garment and knitting sectors, have lost competitive edge on account of higher cost of inputs in comparison with other regional textile producers e.g., India, China, Bangladesh, Sri-Lanka, Korea, Malaysia, Indonesia and Thailand. Relevant data on comparative costs of some of the inputs is reported as under:

      On top of it WAPDA is considering a further increase in power rates on account of rise in prices of furnace oil.

The data reported above clearly demonstrate that charges for utilities are much higher in Pakistan than those in India, Bangladesh and China. More-over Bangladesh, China and India subsidise their textile exporters.

In Bangladesh, export earnings from knit-wear and ready- made garments are taxed at 0.25% only as final settlement of tax liability. Local procurement of yarns and fabrics is subsidised upto 5%. Chinese government subsidises its textile industry by means of 10% export rebate. The Indian textile industry benefits from 5% interest reimbursement under the Technology Up-gradation Fund Scheme (TUFS). The export earnings in India were exempted from tax to the extent of 30% in 2004-05.

Because of the lower input costs and subsidies textiles, garments, knitwear and clothing manufactured in Bangladesh, China and India are cheaper than those of Pakistan by about 20 to 30%.  Korean, Malaysian and Indonesian garments are also reported to be more competitive in price and quality-wise. The loss of competitive edge by the textile industry in general and apparel sector of Pakistan in particular is mainly due to higher cost of inputs, lack of modernization and non-availability of suitable subsidies from the government of Pakistan.

The garment and knitting sectors of Pakistan are in general not fully prepared to face the challenges of the modern trend towards fast changing fashion apparel following changes in the life style of men and women all over the world, especially in the young generation. Some of these challenges are Shorter lead times, Shorter development times, Small quantity of production and quick sales, Just-in-time deliveries and Production of the required quality at competitive prices.

It is not possible for the garment sector to adequately cope up with the fore-mentioned challenges without the input of educated and trained man-power of high caliber. The task of producing graduates and diploma holders of the standard required by the garment sector must be handled by the textile institutes and universities. In order to discharge this responsibility efficiently the institutes and universities must develop curriculum very carefully. In addition to the theoretical subjects, required skills must be made a part of the curriculum usually designated as “Apparel Manufacturing and Merchandising”.

In order to develop these skills the prospective graduates must be assigned hands-on exercises. This technique will enhance the practical capabilities of the graduates for the prospective employers and the need for lengthy training and orientation periods will be reduced. Some of the important skills to be incorporated in the curriculum are listed below:

• Knowledge of the fabrics and other raw-materials.
• Production planning and control.
• Implementation of total quality management system as envisaged in ISO 9001/2000, JC Penny System etc.
• Knowledge of basic tools used in apparel manufacture.
• Training of common software and equipment.
• Cross-departmental training to gain knowledge of the complete processes.

For producing skilled workers for the apparel sectors, the Textile Ministry has constituted a Textile Garments Skill Development Board. At present 450 workers are being trained in 15 big apparel units of Karachi, Lahore and Faisalabad.

This is a common technique used in the education system of the U.S.A. for imparting training for skill development in the students. Six-month credit-earning practicals are conducted for the students under the supervision of the faculty of the concerned institute or university at the factories of the prospective employers. A similar system can be adopted by the institutes and universities in Pakistan with the cooperation of the apparel industry to provide hands-on-training to our students:

In order to motivate the educated and trained graduates and to progress and better performance, the garment units should implement incentives and rewards systems. Such systems are usually based on performance evaluation involving assessment of the employee efficiency and contribution to product quality and output rate. The incentives and rewards should be in the form of increment in salary, bonus, promotion to higher designation and special allowances.

The speed with which the fast fashion apparel reaches the market is extremely important because the consumer requirements can change quickly. In order to meet the challenge of just-in-time delivery, the garment units should develop an efficient supply chain net work with the participation of whole sellers and retailers. Feed back from the market will be more efficient and the apparel units will be in a position to plan production of smaller quantities to meet the requirements of the consumers quality and cost of production.

The case of the textile industry was recently represented by its leasers before the National credit consultative council (NCCC) of the State Bank of Pakistan (SBP). They argued that the textile industry has made an investment of $5.0 billion on modernization and technological up-gradation of its production facilities as well as on expansion during the last five years. Inspite of the implementation of balancing, modernization and replacement programs (BMR), the textile industry has lost its competitiveness in the international export market in comparison to other regional textile exporters such as China, India, and Bangladesh, mainly due to higher cost of inputs. They emphasised that the competitiveness of the textile industry can be restored by implementing the incentive package of Rs.50 billion as recommended by the special committee of the Textile Ministry. Salient features of this package are a cut in mark-up rates, devaluation of the rupee and reduced gas tariff for the textile industry, identical to the tariff allowed to the fertilizer industry. However, the Government of Pakistan has approved a revised package of about Rs.25 billion only comprising of the following incentives:

• Cash subsidy for research and development (R&D) has been extended for one year at the rate of 6% for garment and knitwear sector, 3% on fabric exports and 5% on home textiles.  The R&D work includes market research, design and brand development, innovation and special quality products.
• Exemption from payment of ESSI and EOBI contributions.
• Reduction in export finance rate from 9% to 7.5%.
• Merger of the machinery imports under Long Term Financing (LTF) with LMM scheme of the SBP and fixing the mark-up on such financing at 7%.

The package announced by the GOP has received mixed reaction from the textile industry. Some of the associations of trade and industry are of the view that it is too little and too late. Nevertheless, the relief package of the GOP is expected to facilitate the textile industry in general and the apparel sector in particular to regain competitiveness in the international export market to some extent.