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1- ON ENHANCING INDUSTRIAL COMPETITIVENESS
2- CARPET INDUSTRY IN PAKISTAN
3- WTO: QUOTAS TO GO
4- INDUSTRIAL POLICY 2005-2015

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CARPET INDUSTRY IN PAKISTAN

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The activity employs around 1 to 1.5m and getting boost for their exquisite design globally

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By ROZINA SHAHEEN

Aug 09 - 15, 2004
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The origin of Pakistani handmade carpet industry can be traced back to the 11th century with the arrival of the first Muslim conquerors, the Ghaznavis and then Ghouris. Later the Muslim Mughal kings imported weavers and setup carpet making centers. Lahore, Multan, Hyderabad in Pakistan and Agra, Mirzapur and Jaipur in India became famous for their carpets. This profession has throughout been basically Muslim in character. These were Muslim kings who patronized it and these were Muslim weavers who move knots into designs and earned name and fame beyond their own country. Some of the most exclusive carpets were created specifically during the Mughal reign, each carpet was different from the other, but infused with a common magic of color and designs. Some of the fine pieces of art of those days can be seen today at the Victoria and Albert Museum, London and in other museums in Europe and the United States.

After independence, the craft of hand knotted carpets remained relatively neglected for more than two decades. No significant attempt was made to revive this traditional craft that is labour-intensive and export-oriented, involving low capital investment. The real breakthrough came about in the 70's when there was a decline in production of carpets in Iran. The late 70's and 80's were the boom period for the Pakistan carpet industry. As a result of this boom, hundreds of new carpet manufacturing units came into existence. The total numbers of looms in the country are estimated in the range of 300,000-350,000 scattered all over the country and employing around 1 million-1.5 million people. As the industry is labour-intensive, manpower constitutes for more than 50% of the total cost of production. The types available in carpet market are: Mats, Rugs, Wall to wall carpets, Wall carpets.

Pakistani carpet have become renowned the world over for their exquisite design, subtle elegance, attractive colors and workmanship. An important factor in this growth has no doubt been the carpet weaver who have gradually grown as an artist, a creator who could weave poetry into their design and every knot they tie, giving a touch of aesthetic beauty to their creations. The carpet weavers' skill are their own and the design they evolve are from their mind to be translated into beautiful form with the help of wool and silk.

The technique of carpet weaving in Pakistan is largely influenced by Persian style. The main raw materials use in Pakistan for making handmade carpet is wool, silk and synthetic fibers.

SALIENT FEATURES

* Pakistani handmade carpet industry is a rural-based cottage industry.
* It requires almost nil capital investment.
* The weaver community belonging to the weaker section of the society forms an integral part of the industry.
* It is highly labour-intensive.
* It is most 100% export-oriented.
* The value addition is highest.
* Average Share in Total Exports is 2.48%
* Pakistan ranks No.4 as a producer and exporters of carpets in terms of volume.
* Pakistan is facing stiff competition from China, Iran, Nepal and India
* Pakistan is having market of around 2% of total world import of flooring coverings.

The direction of export from Pakistan is as under: -

USA

28.37%

Germany

16.17 %

Japan

9.42%

Italy

6.53%

Rest of World

39.51%

 

 

MARKET POSITION

The fact that every fourth carpet used in the world is from Pakistan speaks volume about this industry of the country, which is the oldest in the world. There are six leading carpet suppliers in the world market viz.; Iran, China, India, Pakistan, Nepal and Turkey. Iran ranks number one followed by China. Pakistan ranks number four in terms of value and number two in terms of volume. Iran enjoys a 27 per cent market share followed by China with 18 per cent, then India with 17 per cent and Pakistan with 2 per cent.

Over the years the consumption of hand knotted carpets in the world has declined but Pakistan has been able to maintain its fourth position in the world market in terms of value. The consumption of carpets and floor covering has slightly shifted from hand knotted carpets to handmade floor covering such as hand tufted, hand woven, etc.

In the last seven years, Pakistan's Carpet Industry has gone into a new design mode. This has involved conversion of production from the traditional designs to the new classical and tribal design carpets preferred by consumers in the West. This shift has brought production and employment problems. Over 50% of our carpet exports now comprise of tribal classic design carpets. This means that production of our traditional single knot and double knot carpets has declined by more than 50%. As a result, the looms, which were producing these carpets, are now closed down. The production has sifted from Punjab to Afghan refugee weavers most concentrated in NWFP. This has rendered the traditional Pakistani weaver's jobless. The carpet industry in Pakistan employees more than 500000 of workers, it is a labor-intensive industry. But due to upcoming new training and enhancing skill advancements it is adopting an attitude towards technology, to some extent. The carpet & its related products industry are concentrated mainly in the northern areas of Pakistan. The reasons for clustering in these areas are:

- Nearness to raw materials e.g. hides skins
- Availability of water supply
- Nearness to markets
- Ease of attracting labor force
- Laws regarding land use in local areas

PRODUCTION: The production trend during the last 8 years is depicted in the table-1.

TABLE -1

YEAR

EXPORTS (000 SQ. METERS)

1994-95

3,127

1995-96

2,956

1996 -97

2,848

1997 -98

3,375

1998 -99

4,885

1999-2000

5,300

2000-2001

5,964

2001-2002

6,711

EXPORTS

The magnificence of Pakistani carpet weaving and the intricate patterns that emerged from it have substantially increase Pakistan's carpet exports and placed it prominently in the international carpet map. Pakistan exports 90% of hand knotted carpet production. The export of carpets for the period 1991-92 to 2001-2002 shown in table-2.

TABLE-2

YEAR

EXPORTS (MILLION $)

1994-95

195.4

1995-96

205.3

1996 -97

195.9

1997 -98

197.4

1998 -99

202.7

1999-2000

250

2000-2001

288.8

2001-2002

249.6

 

 

There is a steady growth in the carpets exported both in terms of value and quantity, except for the year 2001-2002 which is attributed to so many factors including a fall in the total exports and a general recession world over. The sector's individual performance as compared to the rest of the sectors has been quite well, as its contribution to total exports has increased even for the last year see in table-3.

TABLE-3

YEAR

SHARE IN TOTAL EXPORTS

1994-95

2.4

1995-96

2.4

1996 -97

0

1997 -98

2.3

1998 -99

2.6

1999-2000

3

2000-2001

3.3

2001-2002

3.4

The Pakistani carpet industry is export oriented with the largest imported being USA and Germany followed by Japan and Italy. In order to increase export, the Pakistani carpet industry is now targeting the upmarket segment in established markets and at the same time plans to enter new markets like Africa and Latin America.

ISSUE AND PROBLEMS

1. INFRASTRUCTURE:

The carpet industry is a rural based industry facing infrastructural problems, such as poor roads, lack of telecommunication facilities, power shortage and direct linkage with metros or ports by rail.

2. LACK OF RESOURCES:

Majority of the manufacturers and exporters are very small not having enough resources to venture out on export promotion effort or R&D and even to go for production of ordered goods.

 

 

3. NON-AVAILABILITY OF MARKET INTELLIGENCE:

The carpet industry in the decentralized sector is not properly equipped with market intelligence and non-exposure to e-commerce. Carpets are still in demand in the world market, but most of the people attached to the local industry do not have any work because they are not producing the designs which were in demand. Some manufacturers and exporters have made great progress, but overall the industry is in crisis due to lack of understanding of market and human recourses.

4 . UNATTRACTIVE TARIFF STRUCTURE:

Hand-made carpet in most of the countries are still considered as a luxury items having a very high duty structure.

5. NEGATIVE PUBLICITY:

The industry attracted a negative publicity launched by some vested interest and NGOs over the issue of child labor. Allegations for child labor and failure to understand the efficiency and quality parameters have also contributed towards the low export performance of carpet industry

6. NON-RECOGNITION OF CARPET INDUSTRY BY THE POLICY FRAMER:

The Pakistani carpet industry is very important because it is not only earning foreign exchange but providing gainful employment as well, particularly in the rural areas but no recognition has been given to this industry for safeguarding the interest for its proper growth.

7. REVIVAL OF AFGHAN CARPET INDUSTRY

Most of the carpets being exported from the country are produced in Afghanistan. The revival of Afghan domestics carpet industry will affect the export capacity of Pakistani carpet industry.

REMEDIAL MEASURES

1. The carpet industry can survive by developing new products and infrastructure for on-time production, delivery and aggressive marketing rather than subsidies and rebates. Carpet exporters are also required to establish weaving centers, comprising 15-20 looms in the rural areas, to ensure timely production and delivery of their products. The old practice of getting the carpets woven by rural women in their homes should be given up.

2. The manufacturing sector in Pakistan also required to be activated as it is exporting only the carpets being produced in Afghanistan at present.

3. Visual effect and designs of the carpets are most important for marketing because these are a fashion item. Thus they need to be carefully monitored and modified according to the changing trends. Carpets of variety of designs in vibrant colors should be manufactured according to customers taste and preferences in order to capture a large market

4. Delegations of carpet exporters should be regularly sent to various markets in order to collect first hand information from importers, wholesalers as well as retailers and consumers about their needs & requirements.

5. A large-scale publicity-cum-advertisement campaign should be launched urgently in the international market by Pakistan Carpet Exporters Association, Export Promotion Bureau and Pakistani missions abroad. This campaign should include advertisement on TV and the press as well as distribution of information literature.

6. Modern technology and equipment should be used in order to excel in the international carpet market.

7. The export promotion measures are considered to be very expensive and still beyond the reach of small exporters of carpets such as participation in fair and exhibition abroad, export promotion tours, publicity effort in overseas media etc. There is, therefore, a need for making available fund for export promotion effort i.e. encouraging exporters to participate in overseas fairs by subsidizing the cost of freights, exports publicity etc.

8. It has been experienced that the importers squeeze small exporters by refusal of shipment because they are unable to find an alternate buyer. It is, therefore, suggested that warehouse facilities should be provided to small exporters. The cost of setting up of ware house for the first 3 years may be 100% subsidized and thereafter it should be run on self-funding basis.

9. To introduce Pakistani Carpets at different international venues, the facility of free/subsidized air passage may be allowed as was previously done by EPB.

10. The International Labor Organization has signed an agreement with several big carpet manufacturers in Pakistan, to phase out gradually the use of child labor. The deal aims to withdraw some eight thousand children in thirty villages from the carpet industry and provide educational opportunities for them instead

Hand knotted carpets are much in demand in the United States, European Union, Middle East and in some Far eastern countries. The entire production is exported every year. Keeping in view the export potential of this industry, the financial institutions specially recently formed SME Bank and Khushahli Bank can play a leading role in developing a strong base for carpet industry. The poor skilled workers have nothing to offer as collateral to get the bank advances. The banks involved in micro financing can lend small amount of loans on personal guarantee to promote this export-oriented cottage industry. An amount of Rs. 1-2 lac is usually required to setup a unit of 4 handlooms, which offers employment to 15-20 persons.

The micro financing without collateral initiated by the First Women Bank in the rural areas has already bee proved a great success with 100% rate of recovery. In order to give a chance to be self-employed, the skilled workers in the hand knotted carpet industry also deserve to be trusted by the finance providing companies. These workers may not prove to be the bank defaulters like our textile tycoons.

Holding exhibitions, which has helped boost exports, should not merely serve as a venue for showcasing the products. The carpet traders are reluctant to participate in such exhibitions. Consequently, the organizers should make precise planning and clear the way for materialization of the mentioned goals. It is hoped that by taking certain measures like facilitation of the exports regulations, propagation and marketing, improving the quality of the carpets, etc., we would be able to restore the lost credit of the Pakistani carpet and give rise to renewed quantitative and qualitative growth in the carpet industry. Although the technology is running to outstrip the hand-woven carpets, there exists a general trend toward hand-woven carpets. Hand-woven carpet industry can play a significant role in improving our economy if proper planning is made.

*(Faculty in Economics at Commecs Institute of Business Education-Karachi, Ph.D. Student at IBA)