The Pakistan Government has allowed the import of most of the textile machinery from India under a recently extended positive list of importable items - a longstanding demand of the local millers. The decision comes in the wake of falling imports of textile machinery during last few months and leaders of trade and industry now expect that Pakistan’s textile industry is bound to get a boost.

Currently the textile industry relied on the United States, Japan and the European countries, which were very much in terms of cost because of high cost of capital goods, freight and above all the consultants’ fee charged to install this machinery and equipment in Pakistan. Most of the Western countries companies–that supply textile machinery to Pakistan–have joint venture projects in India or have given franchise rights and licences to Indian companies.

Pakistan’s textile industry has been investing for the last six years in modernization and the improvement of the production base and at the same time skill development has increased at a greater pace. The textile industry has taken post-quota regime as an opportunity and has been preparing themselves to face the challenges. According to the Textile Commissioner’s Organisation this sector has invested $ 6 billion in modernization and higher value addition. Of the total investment of $6 billion made in the textile sector, 47% was on spinning and 26% in weaving, 5% on garments and remaining 12% on finishing and other sectors. Major textile machinery imported during the year 2005 to 2006 include textile winding machines, cone winding machines, looms, dyeing machines, machinery for preparing fabrics and bleaching and processing machines. The textile units are now in the process of replacement of obsolete machinery and importing the latest equipment from India, through which the industry may also produce first class products. 
The Indian textile industry, which has created a global market for itself with its competitive price and versatility, is now repositioning itself as a source of apparel design, textiles and manufacture to target the international client and increase exports manifold. According to a World Trade Organisation study, the competitiveness of Indian textile industry improved by adopting modern management practices like logistics and Supply Chain Management (SCM).

Textile millers have received disappointing response from Indian industry, after local manufacturers approached the neighbouring country for recently-allowed machinery imports, which may fail to cater to the need of Pakistan in the near future due to local expansion and demand.

Leading textile manufacturers welcome the Government’s decision but suggest its timing appears not suitable for the local industry, as the Indian textile industry is going through massive investment and expansion programme, which boosts machinery demand locally and serves as disincentive for export. Indian Industry sources informed that most of the leading textile Indian companies are planning to expand and a raise about Rs 10 billion through IPOs in the near future. The textile firms for IPOs are Oswal Woollen Mills Ltd (OWM), House of Pearl Fashions Ltd, Yogindera Worsted Ltd and Asahi Songwon Colors Ltd, while Orient Craft has announced its plans of to approach the capital market soon to raise between Rs 300 to 350 crore. The total capital expenditure, which these five companies have finalised add up to Rs 1217 crore, of which the major portion would come from the stock market.

Shafqat Elahi, Chairman, All Pakistan Textile Mills Association (APTMA), said some of the APTMA members were negotiating with the Indian textile machinery manufacturers to strike better deals but majority of the millers were waiting for the right time to take initiatives. There is no doubt that Indian machinery is competitive in prices and at the same time their delivery to the local industry would be much easier and quicker than the European products. However, the leading textile leaders doubt it may not bring in desired results, due to dull initial response from the Indian textile machinery manufacturing units as they have been minting good money on higher local demand of the expanding Indian textile industry. 

The basic textile industry, that is spinning and weaving in Pakistan is most competitive in the region and has an edge over the industry of other SAARC member states. According to Commonwealth Business Council (CBC), the South Asian region is inhabited by a population of 1.5 billion with a combined gross domestic (purchasing power parity). Despite immense potential, the people of South Asia are languishing at lowest average per capita income of US $470. Intra-regional trade has unfortunately not picked up in consonance with the potential and was trailing at 5% of total regional trade.

The actual potential of trade between Pakistan and India was US $1.09 billion during the year 2005-06, according to the State Bank of Pakistan. In an era of globalization of trade, the maximum of survival of the fittest would be the touchstone of trade promotion. The basic textile industry, that is spinning and weaving in Pakistan, is most competitive in the region and has an edge over the industry of other SAARC member states. But Pakistan needs to do a lot in value-added textile sector to the face challenge posed by the globalization of the textile trade.