The textile industry in Pakistan is one of its most lucrative industries, accounting for more than 60% of the total exports from the nation. Famous for its raw cotton and finished textile products, Pakistan has a great potential of enhancing its economy with the help of its textiles industry. With rates increasing consistently, local suppliers have benefitted from the diversion with textile exports at an all-time high in the year 2021 with 36% increase in Y-O-Y growth of knitwear, 32 % in towel and 19% in readymade garments.
As the global demand for clothing and lifestyle products is expected to grow at a staggering 8 % CAGR from 2022-2026, Pakistan can play a role in becoming a key exporter of apparel. Globally, the country ranks amongst the top ten exporters of apparel, as well as the fourth largest producer and third largest consumer of cotton.
Local apparel brands like Khaadi, Saphhire, Junaid Jamshed, Bin Saeed, Charizma and more, have shown immense growth, having reached market reach overseas. Some of them have established apparel shops abroad while others choose to deliver internationally. Moreover, popular brands like Adidas, Zara, H&M, Next, Mango, Forever21 and more, have outsourced their clothes’ production to Pakistan.
What are the demand drivers, challenges and opportunities for growth for businesses within textile industry in Pakistan? Let’s explore these.
Growth in Demand for Apparel
Pakistan currently has the highest rate of urbanization in South Asia, with more than 35% of the population residing in its metropolitan cities. Rapid urbanization, better economic prosperity, and growth in e-commerce penetration are anticipated to improve the living standards and household incomes, thereby escalating the average spending on the consumption of apparels and lifestyle in the country.
In addition, the country has also growth in the consumer group with the inclusion of the younger generations like the rising millennial and Gen Z population. Their presence can be especially noted in the social media influence on marketing campaigns with companies promoting their products through these channels, reaching massive younger capable buyers. It is also very interesting to observe the local growth in the number of women in the workforce in Pakistan, that has subsequently added to the growth in the number of consumers in the country. Women make up more than half of the clothing purchases, which sheds a light on their purchasing power. With more women entering the workforce in the country, purchases of apparels are anticipated to increase in parallel.
With manufacturers in North America and Europe shifting their production from China to other South Asian countries, benefitting from lower government taxes and labour expenses, exports are also anticipated to grow in Pakistan, with China’s share in global apparel exports decreasing and moving towards a further downfall.
With a noted increase in demand of knitwear, towels and readymade garments, and a lower demand of raw cotton, yarn and cloth, Pakistan intends to shift its textile production to more value-added products. This shift will result in growth in scope for businesses allowing them to tap into better revenue, with a more diverse and sophisticated product range.
Overcoming Supply Chain Constraints
The anticipated growth of exports and domestic consumption of apparel and lifestyle products can be disrupted by weaknesses in your supply chain and its management. Lead times of apparel retail in Pakistan is often on a higher end, which can become a prominent issue as the country aims at growing its textile exports to a great degree by 2025 with investments and initiatives. Delays due to complicated tariff policies could add further the time of delivering shipments. Furthermore, Pakistan’s location of apparel production on inland instead of Export Processing Zones, combined with poor road and rail network facilities, with the lack of electrical supply, may also create delays in transporting shipments on time resulting in consumer dissatisfaction and an eventual loss in business.
In combination with the traditional approach of a fragmented supply chain, businesses have experienced higher complexities and inefficiencies in their supply chain, which in turn resulted in delays in delivery of their products as well as additional unanticipated costs. Therefore, the end-to-end cargo journey should be viewed as a singular unit and businesses should focus on improving agility, transparency and resilience of their supply chain in order to ensure their growth and success.
Government Initiatives for Industry Growth
The government has already initiated projects for the development of the textile industry which provides a large scope for growth for businesses within the sector. Focusing on enhancing production capabilities, producing higher value-added textile products, following global compliance standards, reducing wastage, streamlining the supply chain and leveraging better technology, the Textiles & Apparel Policy 2020-2025 seeks to drive Pakistan’s textile-based economy to a significant margin by 2025.
Focusing on increasing Pakistan’s textiles and apparel export numbers and addressing the current issues within the industry, the policy covers initiatives to:
- Eradicate electricity and logistics issues within the country.
- Construct new textile production facilities in Export Processing Zones
- Invest to build better connectivity and technologies to improve lead times
In summation, the growth in demand for apparel has presented a unique opportunity for businesses in Pakistan to cater to the resulting growth in global demand for raw materials, production and manufacturing of apparel goods. With its key objectives laid out, the Pakistani government is planning to attract foreign direct investment and modernising existing textile facilities as well as establishing new ones.
The availability of the enhanced energy capacity for manufacturing, as well as the ongoing currency devaluation, have made the country more appealing as a hub for textile operations and exports. In sum, empowering the industry’s overall productivity, as well as the logistics sector that remains central to catering to the demands of the local and global markets, can help you untap the potential of your business growth.