Two major Chinese companies have announced plans to establish plants in Pakistan, focusing on producing raw materials for the textile industry, with support from the Special Investment Facilitation Council (SIFC).
Rainbow Industries Ltd. from China is partnering with Shaoxing Chemical Industry in a joint venture designed to revitalize Pakistan’s textile sector. This investment is expected to bring millions of dollars into the local economy and provide affordable raw materials for textile manufacturers across the country.
Despite this promising development, the Pakistani textile industry faces ongoing challenges, including high energy tariffs and external investment hurdles. The government is actively working on measures to address these issues. Recently, the significance of the textile sector was underscored at the “Nine Color & Chem Expo,” organized by Rainbow Group and the Punjab Dyes and Chemical Merchants Association. The two-day event, which attracted over 300 exhibitors from China, Malaysia, Türkiye, and Iran, served as a platform for key industry stakeholders to discuss sector improvements.
In response to these challenges, the federal government has introduced a 10-year duty-free machinery import scheme and established special economic zones for foreign investors. These measures are aimed at fostering foreign investment and enhancing the growth of Pakistan’s textile industry.
The All Pakistan Textile Mills Association (Aptma) recently presented a charter of demands to ensure smooth industry operations. Aptma Central Vice Chairman Naveed Ahmed has called for a reduction in interest rates from 19.5% to 6-7%, a decrease in electricity tariffs from 14 cents to 8-9 cents per kilowatt-hour (kWh), and the removal of unreasonable taxes on imports, exports, and earnings. These steps are crucial for the industry’s sustained performance and competitiveness.
Aptma Chairman Southern Zone Zahid Mazhar highlighted the severe problems faced by export-oriented textile industries in Sindh and Balochistan due to inconsistent gas and electricity supplies.
The textile sector is pivotal to Pakistan’s economy, contributing around 55% to export earnings and employing approximately 45% of the manufacturing sector’s labor force. With textiles constituting 60% of exports and energy making up 30% of imports, the sector’s performance is critical to economic stability.
Studies project the potential for textile exports to reach $50 billion annually by 2030, compared to $16.5 billion in FY 2022-23, with a historical high of $22.1 billion in FY22. Realizing this potential could significantly alleviate Pakistan’s balance of payments deficit, a major contributor to the country’s economic challenges.
However, the industry faces persistent issues with cotton production. The yield per hectare has stagnated from 615 kg in 1990 to 617 kg in 2020, in stark contrast to China’s yield, which has increased by more than 150% to reach 2027 kg per hectare over the same period. This disparity highlights ongoing challenges in the cotton sector, crucial for the textile industry’s performance and the broader economy.
