Pakistan is the fourth largest producer and the third largest consumer of cotton. But the country is still a supplier of raw material instead of value added products. The textile sector contributes 60 per cent to overall exports of the country. It contributes nearly one-fourth of industrial value-added, provides employment to about 40 per cent of the industrial labor force, and consumes more than 40 per cent of banking credit to the manufacturing sector and accounts for eight per cent of GDP.
Nearly 35 per cent of textile units in the country have already shut down for various reasons, including higher cost of doing business, becoming uncompetitive in international markets etc. At least 140 textile mills have shut down during the past four years. While machinery in the spinning sector is being sold in scrap. What has added to Pakistan’s fears is that China is building a cotton textile production base in Xinjiang. By 2023, this region will be China’s largest garment export processing base.
This huge investment in a textile park in the bordering region of China is posing a serious threat to Pakistani textile industry. In addition to funding textile industrial parks and clothing factories, Xinjiang will subsidise local cotton and electricity in qualified industrial parks.