Importance of the Readymade Garments Sector in Pakistan
The readymade garments industry is essential to Pakistan’s economy and society. It is a crucial driver for many key factors, such as:
- Contribution to GDP: The sector significantly impacts Pakistan’s GDP, contributing over 8.5% in 2021. This demonstrates its significant contribution to economic growth and development as a whole.
- Employment Generation: In Pakistan, the readymade garments industry is a significant source of employment, employing roughly 40 percent of the industrial labor force. It provides opportunities for skilled and unskilled employees, sustaining livelihoods and decreasing unemployment rates.
- Export Revenue Earner: Among textile products, garments have the highest value addition and are Pakistan’s primary export earner. In 2021-2022, Pakistan exported nearly $19.329 billion worth of apparel, demonstrating its significance in international trade and foreign exchange earnings.
- Industrial Value Addition: The readymade garments sector contributes considerably to industrial value addition in Pakistan, accounting for 25 percent of the textile industry’s total value added. This demonstrates its function in enhancing the manufacturing sector’s competitiveness and productivity.
- Sectoral Growth and Development, The growth and development of the manufactured garments sector has a ripple effect on related industries and sectors. It drives demand for basic materials, machinery, and services, generating business opportunities and fostering economic growth.
- Social Impact: The sector’s development has social benefits, such as a reduction in poverty, an improvement in living standards, and an expansion of gender equality. It creates employment opportunities for women, empowering them economically and socially.
By recognizing the significance of the readymade garments industry, Pakistan can strategically concentrate on addressing its current challenges.
Challenges Hindering Growth
- Limited Export Market: t: Pakistan’s readymade clothing industry has significant challenges due to its limited export market, mostly comprised of uncomplicated and low-value-added products. This restricts the sector from competing with other nations and winning a sizable global market.
- Lack of Diversification: Pakistan’s garment exports primarily go to the US and the EU, with negligible destination diversification. As a result, the sector is susceptible to shifts in demand and market circumstances in these areas.
- High Production Costs: Pakistan’s production costs are higher than its rivals because of import taxes on man-made and cotton fibers, high energy tariffs, and minimum wage laws. These elements limit the sector’s capacity to draw larger export orders and impede cost competitiveness.
- Limited Adoption of Technology: Pakistan’s readymade clothing industry lags in technology adoption. The sector’s overall competitiveness is hampered by low technology use and insufficient innovation, which impede productivity and efficiency gains.