Pakistan's textile industry accounts for more than half of the country's exports and employs millions of people. But energy prices, competition, and trade policy are making life hard for the country's biggest industry.
00:00From the fields of Pakistan to international markets, the country is one of the largest
00:07cotton producers in the world.
00:09But behind the fabrics and fashion, there's a complex story of resilience and challenges.
00:16From energy crises to safety and security issues.
00:21And we're trying to understand it.
00:23The textile industry is the backbone of Pakistan's economy.
00:27It is so vast that it accounts for more than half of Pakistan's total exports.
00:32According to the latest report by the Pakistan Bureau of Statistics, textile manufacturing
00:38makes up 53% of the country's exports, followed by agriculture and food at 23%.
00:45Beyond that, the share of other sectors, as you can see, is not comparable.
00:50Knitwear, bed linens, cotton garments, fabrics and yarn.
00:55Many textiles are exported all over the world.
01:05This significant share of exports reflects the sheer size of the industry.
01:09But the total export value has seen fluctuations in recent years.
01:14The maximum the industry has been able to achieve was about $20 billion worth of exports.
01:20But now the number has dropped to $17 billion this year.
01:23And the reduction in the export figure from 20 to 17 is a mix of the lower value of cotton.
01:36And when we achieved the $20 billion, the value of cotton was well over a dollar today.
01:42It's well under a dollar per pound.
01:45But even if the export value is dwindling, Pakistan is fighting to maintain its place in global cotton production.
01:53The country generates around 4% of global cotton production.
01:58That number might not seem large, especially in comparison to big players like China, India, Brazil and the US.
02:06But the competition for fifth place between Pakistan and Australia is fierce.
02:11About 20% of Pakistan's textile companies are vertically integrated and manage the entire textile process.
02:19From the cotton cultivation to the finished products.
02:23And the rest specialize in spinning, weaving, knitting and other areas.
02:29Under the export facilitation scheme, manufacturers could import or purchase local inputs for their businesses tax-free.
02:36But that exemption for local suppliers is now gone.
02:39So now, if I import, I don't have to pay any sales tax or any duties.
02:45If I buy the same thing locally, then I have to pay 18% sales tax.
02:49The sales tax, it's refundable in principle.
02:51But again, there's so many delays and administrative and time costs involved with that.
02:56That there's a huge incentives for exporters to basically buy imported inputs.
03:02And they're not sourcing those locally.
03:05The challenge here is not limited to the taxation system.
03:08Another major burden is energy costs.
03:11Electricity prices for Pakistani industries are far higher than those of regional competitors.
03:18In Pakistan, electricity prices for industrial consumers, they're around 12 cents per kilowatt hour right now.
03:26Especially in upstream segments of the textile industry, like spinning or weaving energy, it accounts for 35% to 55% of the conversion costs.
03:38So when you have such a huge input cost differential, that makes you uncompetitive on the international stage.
03:43This industry is the lifeline for millions.
03:47It's difficult to find an official number, but it's estimated that around 30 million people work in textiles.
03:54Many of them, especially in rural areas, endure low wages and informal labor.
03:59Cotton production is basically carried out by small scale farmers.
04:07We don't have big farms and these farmers then employ a lot of women for the cotton picking because we don't have mechanical picking.
04:18Women contribute at every stage of production, not only in cotton picking, and they face even harsher conditions.
04:25We, as a women worker, we face double and triple exploitation as cultural, as women, gender discrimination and the gap within the wages and long working hours, no health and safety and no recognition.
04:45In 2012, a Karachi factory fire killed over 250 workers who were trapped by bolted windows and locked exits.
04:57Supported by the European Center for Constitutional and Human Rights, victims' families sued the factory's main client in Germany.
05:04Though unsuccessful, the lawsuit drew global attention.
05:08We can definitely see a link between that case against KICC and then the introduction of the German Supply Chain Act in Germany, which provides a legal basis for companies to carry out human rights due diligence.
05:27That's why we say that the role of buyers are very important. They can force our industrialists to implement their code of conduct and make sure that workers get that proper wages, health and safety, social protection.
05:44While the responsibility for change lies heavily with companies and manufacturers, is there anything we, as consumers, can do to help improve the situation for workers?
05:57Consumers can obviously, you know, make more informed purchasing choices. They can not purchase fast fashion, for example. But I don't think that the emphasis should be made on individual consumer action. I think it really should go towards, yeah, companies and also governments.
06:22To stay competitive in global markets, Pakistani manufacturers must now comply with emerging regulations, not just for labor rights, but also for sustainability and environmental responsibility.
06:35However, meeting these regulations is no easy task.
06:39The challenge is that Pakistan currently does not have a centralized database which records all this information. It does not have a centralized traceable system making compliance with these regulations extremely difficult.
06:56With combined efforts from both businesses and governments, Pakistan's textile industry can overcome all of the challenges and grow more as a competitive force on the global stage. The future of millions of workers depends on this industry.
