Pakistan is the fourth largest cotton producer in the world, and is an important player in the global textile market. Its knitwear industry is the highest value-added textile sector in the country, and is distinguished by high quality of raw material and competitive value of the end product. Knitwear capacity in Pakistan is 125 million dozens of pieces. There are about 1,300 knitwear factories of various sizes in Pakistan. The capacity utilization is about 70%.

The knitwear industry is almost totally export oriented. It is highly value-added earn much more foreign exchange per kg by converting cotton into finished garments. Knitted garments are popular among all, especially in the developed countries, due to their inherent qualities like softness, coolness, sweats absorbent and durability. In 1999-2000, Pakistan exported $873 million worth of knitwear as compared to $1,751 million in 2005-06 This marks average increase of 30% per year in terms of value It further rose from $1,798 million in 2006-07 to $1,831 million in 2007-08. During the last few years, this segment of knitwear has shown an appreciable rising trend in exports. In the international market the USA is the major buyer, followed by UK, Germany, Netherlands, Italy and Spain.

Growth

Pakistan knitwear industry is comparatively quite young. In 1949 there were hardly two or three units, which were producing cotton vests and socks. The production of socks at the time was more than a cotton vest and the entire production was being consumed locally in the West Pakistan. In 1960, West Pakistan producers received their first order from East Pakistan (now Bangladesh). It was the first time that the socks and vests produced in this part left the shores for East Pakistan, now Bangladesh.

Later that decade, and in early 1970 some Americans visited Pakistan and placed orders for basic T-shirts. Till now only white vests were produced but the Americans ordered them in assorted colours. That was the beginning and the turning point for the knitwear producers. With these first orders from US the local manufacturers learned the basics of quality control at each and every step. Slowly and gradually Pakistani knitwear products became acceptable in the international market. In late 1970s and early 80s, European buyers also placed their orders with Pakistani manufacturers, At the same time the composition of local production also changed- from basic T-shirts to turtle-neck, polo shirts, long sleeves etc.

Meanwhile, a trend for knitwear in the international  markets had started and imported T-shirts was capturing the world. These imported T-shirts carried slogans, painting, animals, cartoons, scenes and sayings. American and European buyers sent required designs to the Pakistani manufacturers who accepted these challenges, and screen-printing became very common in Pakistani. Gaining experience and learning from the buyers some Pakistani manufacturers in mid-80s turned to their own designs by carefully incorporting existing international fashion trends. Manufacturers like Masood Textiles in Faisalabad are now proudly introducing their own fashion designs in the world market with a great sense of pride.

In 1990’s 2000’s several new investments in the knitwear sector were made especially in and around Lahore. Ammar, Klass textile, Ibex, Irfan, Style, Azam, Disco, Crescent Group, Regent and Saigol Groups, based in Lahore,  set up most modern production units for knitwear with state of the art technology. Some high quality machine manufacturers have also imported soft flow dyeing machines and tension-free dryers.

 According to estimates of Pakistan Hosiery Manufacturers Association there are about 1,300 knitwear units with 15,000 knitting machines are working in the country to manufacture 125 million dozen pieces of knitwear. The production of garments and made-ups in Pakistan is concerted mainly in Lahore, Faisalabad and Karachi. In Lahore all major units are vertically integrated and are involved in knitting, dyeing, finishing & stitching. Major reasons to set up vertically integrated units are the desire of the manufacturers to have full control over all the processes involved and to ensure that right products are delivered at the right time. Specialized and commercial units have not been successful to position themselves to cater to the needs of the export oriented garment industry.

Import of Machinery

The knitting technology is a unique and distinct part of the textile industry. In general, textile mills which manufacture knitted fabric, do not manufacture woven cloth. The distinctive feature of knitting industry it that it comprises highly specialized machinery and technical skills required to produce several of knits: for example machinery used to manufacture sweater bodies can not used to make hosiery, even though both are knitted products. The organization of the knitting industry ends to follow the lines of the specialized machinery used in specific kinds of production.

Now in knitwear limits of shrinkage have also been narrowed. These advancements together with availability and use of soft twisted spliced yarn have resulted in the upsurge of world-wide consumption of knitted fabrics. During the last five years more than $3.2 billion have been invested in the value-added sectors including in stitching, knitting, finishing and knitting processing. Pakistan imported large numbers of automatic flat and circular knitting machines of different brands. Import of various flat knitting machines into Pakistan decreased from 1,592 numbers valued Rs1,028 million in 2006-07 to only 684 numbers valued Rs479 million in 2007-2008, thus showing decline of 53% in terms of value. Import of flat knitting machines into Pakistan is given in Table-1 and country-wise imports of knitting machines are given in Table-2 and 3.

Exports

The analysis of global trade in clothing sector is a complex affair as there is a broad range of apparel produced traded. Classification is based on the structure of the fabric used i.e. knit and woven garments and within these classification, there are further classifications like men’s wear, women-wear, sportswear, babies wear and hosiery items.

Knitwear goods exported from Pakistan are known for their fine quality in European and American markets. It is highly value-added, earning much valuable foreign exchange per kg cotton converted into finished garments. A series of new finishing processes have been incorporated with improved shades, texture and lustre. Some of the bulk export items, which have gained popularity, are 100% cotton T-shirts, vests, slips, children's pajama suits, sports shirts, undergarments, bathing suits, knitted garments and knitted tabulator or flat fabrics.

Export of Knitwear (Hosiery) increased from 40 million dozens worth $911 million in 2000-01 to 97 million dozens worth $1,831 million in 2007-08. Export of knitwear is given in Table-3.

Terry bathrobes are the major export item from Pakistan getting 29% of total exports. USA, UK, Germany and Netherlands are the top four trade partners for Pakistan.  Pakistan primarily exports bathrobes made of cotton that constitutes 70% of total quantity exported in the category. The remaining 30% exports of Pakistan are in bathrobes made of synthetic material. Country-wise export of knitwear is given in Table-5 on the next page.

Future Challenges

Country will have to undertake aggressive tariff reforms, seek more market access and diversify knitwear export base for reaching the export target of $ 2.5 billion by the year 2009-00.

Pakistan textile industry is loosing its competitiveness in international market. Knitwear exports suffered double jeopardy of gas and electricity rate hikes as well as supply shortage during the year. Resultant effect of this severity was productivity cut and increases in cost of production rendering Pakistani knitwear uncompetitive in international markets. On the other hand Pakistan's textile sector is being hit hard by negative advisories from across the western world for travel to Pakistan. It may be noted that a political and economic crisis has brought a negative impact on the textile sector.

China, India, Sri Lanka, Vietnam, Bangladesh, Korea, Bangladesh, Jordan and Kenya are among the country’s major competitors in the industry. Small unit owners would be in hot water, as they get no facilities with regards to electricity services, financing and WTO compliance issues, so that these units would not be able to compete due to high costs. Pakistan, which has a strong textiles industry failed to take advantage of the post 2005 quota free regime, China and India aided by their respective countries had their plans in place and have developed greatly.

The government also acted late in providing the incentives needed to prop up the sector. Secondly, the textile industry which was smug in the belief of having an advantage in technology and quality was humbled by the modernization drive adopted by the neighboring countries. Textile industry failed to take advantage, and instead was looking for more incentives from the Government which seems unlikely at present.

Jawed Bilwani, Chairman Pakistan Hosiery Manufacturers Association (PHMA) warned that its competitors are taking various measures to boost their knitwear exports and stimulate their economy, but the government of Pakistan has yet failed to take any serious step to boost its exports and nor decided to extend R&D support subsidy, which was being given in the previous years.

He said that China has raised tax rebates for certain exports to help producers cope with smaller profit margins as a result of slacking market demand and rising production costs. The tax rebate on textile including knitwear and garments would now be 14% after this increase. This increase of 1% comes after a similar measure in August 2008 where China increased its rebate on textiles and garments from 11% to 13%.

According to a study undertaken by National Council of Textile Organizations (NTCO), Chinese exporters have given export subsidies by Central government increased from $19 billion to $29 billion. Moreover, China has slashed benchmark rates for one-year loans and deposits by 108 basis points, the fourth rate cut in only three months. The current rate is now 5.58% on a one-year loan. It also reduced the reserve requirements of banks, giving them more money to lend to businesses.

Besides the above measures, textile industry will benefit by $2.36 billion by value added tax reform as VAT is reduced from 6% to 4%. The long discussed VAT reform was officially announced early November, 2 2008 together with other nine measures to boost domestic demand.

The Indian government announced in first week of December 2008 a provision for an additional Rs1,400 crore for modernization of the textile mills, enhanced Duty Entitlement Pass Book and duty drawback rates, reduced ECGC premium, subvention on credit rates, refund of service tax paid by exporters on various services etc.

The two major challenges are low level of technology and modernization in textiles and clothing of Pakistan, which includes the knitwear sector. Pakistan does not have resources like research centres and enough fashion training schools that help the exporters understand or compete with the rapidly changing fashions in different regions and cultures of the world.

Most of all, the Pakistani exporters are not financially strong enough to invest a huge amount to store their products in big warehouses and sell them after putting it on display in the shopping malls and shopping plazas etc  abroad.  In this regard the Trade Development Authority should play its role to effectively help market Pakistani textile and knitwear exports.