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20 Crescent Bahuman (Garments) 40 AGI Casual Sports Pakistan had always strong textile industry due to historical reasons and an abundance of cotton Source: Pakistan Denim Manufacturers and Exporters Association fibre grown in the country. Denim is the mainstay of Thus denim fabric is not a final retail product. It is an intermethe Pakistani textile industry along with home textiles. Denim is diate product which requires another party to perform further more than just a cotton fabric; it inspires strong opinions within manufacturing tasks before it reaches the final consumer in the the hearts of historians, designers, teenagers, movie stars, this form of denim garments. diversity of the denim garments has made its demand increasing The denim component has been developing the fastest in the exponentially. last decade with Pakistan touching almost 600 million sq meters The denim fabric is an intermediate product in the supply of denim fabric production per annum. There are about 40 major chain of denim garments. It is not purchased by the final cusplayers in the denim industry of Pakistan, some of them like tomers. Instead the buyers of denim fabric are buying houses and Artistic Fabric Mills, Pak Denim Limited, Al-Ameen Denim Mills garment manufacturers. These manufacturers procure denim Limited, S.M Denim Mills Ltd, Denim International, Classic fabric from the denim manufacturers based upon their requireDenim, Rajby Industries etc producing about 50 million sq meters ments and specifications. This is then further processed and cut, of finished denim fabrics monthly. Pakistan major denim manusewn and finished into finished garments. These garments are factures and exporters are given in Table-1. then marketed to the final consumers. The weaving sector in Pakistan by and large is paying keen attention to the remarkable success of the denim sub sector. The Table 2: Facts about Pakistan cotton apparel industry of Pakistan directly benefits from the new develdenim industry opments in the denim adding much higher value to the textiles No. of major units 40 produced in Pakistan. The denim sector though much smaller in Denim fabrics production: 600 Million Sq. Meters terms of magnitude is leading the way for the entire industry. (Per annum) Cotton cloth production: (mill sector) Exports: (2009-10) Share of cloth production: Main export markets: (2009-10) (in terms of value) 1,009 Million sq Meters 22.9 Million sq. Meters 60% Bangladesh 31.2% Turkey 62.3% Egypt 7.7%
Presently in Pakistan, denim production is on top in textile sector due to export and garments industry Denim is now one of the key apparel sectors and the driving force behind the apparel exports of the country. In this scenario Pakistan has emerged as a key supplier of this highly demanded fabric due to the competitive prices. Price of denim fabrics are contracted at the beginning of the cotton season, with a volatility of 10%-15% taken in to account,
but this time the high volatility has taken everyone by surprise. Retailers, who are still facing tough times, are solidly resisting any increase in prices by the denim brands, leaving the brands to bear the increase. Facts about cotton denim facts is given in Table-2 Denim fabric is unique in its connection with one colour blue. One can use it as a casual wear as as well as a formal outfit. The warp yarn is traditionally dyed with the blue pigment obtained from indigo dye. In a twill weave (used in denim), the fabric is constructed by interlacing warp and filling yarns in a progressive alternation, which creates a diagonal effect on the face, or right side, of the fabric and has a surface of diagonal parallel ridges. About 56% denim fabrics are produced using projectile form and 29% in air-jet and 15% in rapier weaving to make the fabric is very strong and durable. As far as manufacturing process of denim is concerned, it is similar to that of grey fabric up to the process of weaving with the only difference that in case of denim fabric, it is dyed at the stage of sizing where as in case of grey fabric. In the 19th century, the denims and jeans were evolved into two different fabrics. Fine trousers were offered in fancy blue jeans, while overalls and trousers made for work were offered in blue. Mechanics, painters wore overalls made of denim; while those were not engaged in manual labour work had tailored trousers made of jeans. History of the denim fabrics and garments is given in Table -3
Year
2005-06 2006-07 2007-08 2008-09 2009-10
Table 4: Export of cotton Denim fabrics Quantity Value (000 Sq m) (Rs Million)
44,732 58,093 84,066 117,961 228,879 4,376 5,593 8,040 11,707 20,490
Denim fabrics have undergone a massive face lift, with distinguishable appearance, wash methods, and finishes combined with casual look. The global production of denim has crossed about 2.5 billion sq metres In Pakistan first denim industry was developed in Karachi in the year 1958 and now many leading companies are involved in fashion oriented denims, twills, drills and other apparel fabrics manufacturing in Pakistan.
Exports
Pakistan has progressively built a strong denim industry over the years. At present top global denim fabric exporting country was China, followed by Hong Kong, Turkey, Italy, Pakistan, the USA, India, Japan, Spain and Brazil. Together, these countries accounted for as much as 83% of world denim fabric exports. Almost all of these countries witnessed a decline in their denim fabric exports. The only exception was Pakistan, whose exports rose by a remarkable 75% during the year 2009-10. On the other hand export of cotton denim fabrics from Pakistan increased from 45 million sq meters worth Rs 4.37 billion in 2005-06 to 229 million sq meters worth Rs 20.49 billion in 2009-10, thus showing an average increase of 74% per annum in terms of value. Exports of denim fabrics from Pakistan are given in Table-4. Turkey, Bangladesh, Italy, Egypt and Hong Kong are the main markets for cotton denim fabrics. These markets demand high product standards and in return offer higher unit price realizations. Country wise export of cotton denim fabrics is given in Table-5.
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Problems
The poor quality lint has such a substantial impact on denim fabric production that the lint-to-yarn conversion ratio of locally ginned lint is only 83% compared to 90 %for imported lint. The cost of business operations in Pakistan is considerably higher than in the competing countries such as India and China. Denim fabric requires cotton as a major raw material. The denim fabric comprises of about 95% of cotton. So, the major part of the cost is the cost of cotton yarn. Cost of other materials includes cost of dyes, finishes and chemicals etc. In general, if the price or cost of raw materials increases, the overall cost of the denim fabric would increase. Political stability is of great importance. Foreign buyer look for consistency in dead line which is only possible if the manufacturing country is politically stable. Changes in policies hinder the buyers prospects.
Challenges
Currently, the denim producers are not focusing on research and development. Traditional method of design and production are being employed. New finishing and coloring tech-
Source: D. Saravanan - Denim: Creating Blue Magic, The Indian Textile Journal, July 2006.
niques should be developed to bring innovation. Developments in poly urethane (PU) finishes are one area of focus. Regional competition from China, Bangladesh and India is another threat to the denim prospects. China has competitive advantage on cost and price due to subsidized power and economies of scale. On the other hand, Bangladesh has advantage due to various trade agreements and tariff relaxations. The world buyers and markets demand compliance to certain standards and regulations. The firms considering these standards and certifications are at a competitive advantage. The world buyers and markets have transformed themselves as eco friendly and concerned organizations. It is imperative for the denim industry to ensure compliance with environmental standards and labor standards agreed under international codes and agreements.
Table 5: Country-wise Export of Cotton Denim Fabrics Quantity: (000 Sq. Meters) Value (Rs Million) Country
Bangladesh Egypt Turkey Hong Kong India Italy Jordan Cambodia Lesotho Madagascar Nicaragua Peru Spain Sri Lanka
2009-2010 Quantity
71,474 7,222 61,361 4,306 4,084 9,098 551 2,575 2,457 557 1,199 2,523 2,556 1,094
2008-2009 Quantity
31,395 11,043 25,168 2,396 1,980 7,754 1,858 2,292 2,292 2,019 1,301 2,116 1,183 4,207
Value
6,402 1,587 5,385 381 338 812 51 236 244 50 116 240 236 934
Value
3,137 1,163 2,399 228 195 848 187 276 215 134 207 88 125 409
Value
1,874 758 2,425 150 117 233 64 119 118 51 4 163 99 304
The government of Turkey will enforce U.S.A 1,469 148 1,318 126 3,44 30 protective safeguard measures on imports All others 149,647 9,732 20,881 1,970 10,821 1,531 of Pakistani textiles with effect from July 24, 2011. As per the decision, Turkey will 22,879 20,490 117,960 11,707 84,066 8,040 Total impose an additional 18% customs duty on Source: Federal Bureau of Statistics, Government of Pakistan. imports of denim fabrics from Pakistan, taking the total duty to 24.5%. Pakistan 24.5% on denim fabric and 24.4% on woven fabrics, which will has progressively built a strong denim industry over the years. seriously affect Pakistani exports. The Turkish textile and clothing industry is one of the engines Pakistans overall textile export to Turkey were around $350 of the Turkish economy, with combined exports together accounting for 18% of the country's total exports in 2009. million with a major chunk of cotton fabrics and Turkey was the Clothing industry shipments were worth US$12.9 billion in 2009. third largest customer of Pakistani textile products after the US Turkey is also ranked the 7th largest of the world's 70 cotton and EU.. Rise in import duty would definitely be a very big loss for growing countries, with a capacity of 370,000 tonnes of annual the fabric industry which was having excellent growth and many production. According to WTO statistics, in 2008 the Turkish suppliers have established their offices. clothing industry was ranked fourth in world trade, with a share Pakistans economy was heavily dependent on textile sector, of 3.8%. It was also ranked the second biggest supplier to the EU, which was not only the largest job providing industrial sector but with a share of 12%. The EU countries (EU-27) account for nearly was also contributing maximum share in the export. The Turkish 80% of Turkey's textile and clothing exports. Some major marmove would exacerbate troubles of the textile industry that has kets for Turkish clothing exports are Germany, the USA, England, already been affected by power cuts. France, the Netherlands and the Russian Federation. The Pakistan Textile Exporters Association (PTEA) has The Pakistan apparel segment is the highest value added link expressed concern over increase in custom tariff on Pakistani texin the entire textile value chain. The trade in the sector accounts for 53% of the total value of global textiles trade and is consis- tiles by the Turkish government. PTEA Chairman Wasim Latif said tently growing since the last two decades. Denim has now well that increased custom duties would jeopardize exports of garestablished as a high fashion fabric contrary to its traditional ments, home textiles and fabrics to Turkey. image of a fabric suitable for rough and functional usage. Pakistan is a major Asian player in the garment export market. The importance of the apparel sector in the overall economic perspective is two folds. On the one hand the sector has the potential to be the engine of Pakistan textile export growth, while on the other the sector is the largest source of creating low cost employment in the country at all levels. Pakistan would suffer major loss in terms of lower textile exports consequent to Turkey's decision to impose 18% additional custom duty on imports from Pakistan, The Turkish government has enhanced custom duties of 52% on Pakistani garments, On the other hand Muhsin Ayub, a former Chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA said that the anti-dumping duty is imposed on textile export by Turkish government will directly hit the overall export growth. Presently the country needs huge foreign exchange and these steps will result in decline in exports. It may be noted that the government in August last year had unveiled the first-ever five-year National Textile Policy, setting the export target of $25 billion and envisaging comprehensive measures to boost production besides incorporating strategies to address the challenges confronting the sector on sustainable basis.
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