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India's Information Technology Sector Dwarfed by Textiles

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

With the Indian rupee soaring — up 9 percent against the dollar in the last 16 months, textile exports are down 6.4 percent from a year earlier in the $10 billion Indian clothing industry, according to a recent report in the New York Times.

About 23% of the India's workforce is part of the services sector which accounted for 55% of the GDP in 2007. Within the service sector, the fastest growing segment is business services, contributing about 7% of GDP. It includes information technology enabled services (ITES), information technology (IT), business process outsourcing (BPO) etc. In 2000, it was one third of the total output of services.

Agriculture in Pakistan accounts for 19.4% of GDP and 42% of labor force, followed by services providing 53.4% of GDP and 38% employment, with the remainder 27.2% of GDP and 20% workers in manufacturing sector. Over half of Pakistan's manufacturing jobs are in the textile sector, making it the second biggest employer after agriculture.

The dire situation in India's agriculture sector has been epitomized by over 200,000 farmers' suicides in the last decade. And the rising Indian rupee is now hurting India's textile sector by making its exports more expensive in the world market.

Pakistan's agriculture and textile sectors have also suffered in the last two years. Reduced water flows from India followed by recent floods have adversely affected large swathes of Pakistan's farmland. And the current energy crisis combined with the economic slowdown have hit the textile industry particularly hard. The European Commission, the EU's executive, has recently approved tariff waivers on 75 categories of imports from Pakistan for up to three years, according to a report in the Wall Street Journal. The gesture followed an order by EU leaders wanting to demonstrate they're helping some 10 million Pakistanis left without shelter in the wake of floods.

Pakistan shipped about $4.2 billion of exports to EU last year. About 75% of Pakistani exports to EU are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.

Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:

Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)

India........60%/16% ...........10%/4%.....7%/25%...........23%/55%

Pakistan......42%/20%...........12%/8%......8%/18%...........38%/54%

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion, nominal gdp $1.3 trillion) and Pakistan's $450 billion (population 175 million, nominal gdp $167 billion)), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)

Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)

Textiles: $1,242 ($433) vs. $1,714 ($636)

Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)

Services $7,246 ($2,590) vs $3,654 ($1356)

Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.

Agriculture Value Added Per Worker in Constant 2000 US$ (Source: World Bank


It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.

The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.

The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.

The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.

It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.

Related Links:

Haq's Musings

Pakistan Textile Industry Report

Pakistan's Farmland Controversy
Peepli Live and India's Farmers' Suicides

Floods in Pakistan
Pakistan's Textile Woes

Agricultural Growth in India, Pakistan and Bangladesh

KPMG Report on Pakistan Economy 2010

India and Pakistan Contrasted
Pakistan's Major Business Sectors
Labor Laws: To Create Good Jobs, Reform Labor Regulations

Foreign Investors Buying Pakistani Farm Land
Is Leasing Agricultural Land to Foreigners a Good Idea?

Pakistan's Sugar Crisis and Dietary Habits

Wheat Research and Development in Pakistan

Pakistan's Water Crisis

Wheat Productivity, Efficiency and Sustainability

Agrarian Reform in Pakistan
Urbanization in Pakistan

Water Scarcity in Pakistan

Pakistan Agribusiness Report 2009

Pakistan to Lease 700,000 Acres to Arab States

Pakistan's Total Arable Land

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Comment by Riaz Haq on May 9, 2012 at 10:45am

Here's Fiber2Fashion story on Pak textile manufacturers diversifying into retail brands: For long, several globally renowned apparel brands have been sourcing their fabric and clothing requirements from Pakistan. But, there have been very few Pakistani companies with brands of their own.

However, some companies that are engaged in export-oriented textile manufacturing are now diversifying into retailing through setting up their own apparel brands.

One such example is the Karachi-based ZK Industries, which ventured into retailing of its own branded garments four years ago.

Explaining the reason for his company’s diversification into retail segment, Mr. Younus Muhammad Bashir, Managing Director of ZK Industries, told fibre2fashion, “When we manufactured for others, we were just vendors. As time passed, competition increased and we thought that when we can manufacture for other brands we can have our own brand as well.”

“Till 2008, we were just vendors and we entered into the retail business in January 2009 by opening our first outlet in Karachi. Today, we have seven outlets – six in Pakistan and one in Dubai – and there are few more stores coming up soon,” he informs.

ZK Industries’ retail business is doing well and the company plans to launch more new products. Although the firm’s main business is fabrics, it is venturing into retailing of ready-to-wear garments.

Comparing manufacturing with retail, Mr. Bashir says, “Manufacturing business has a big volume while retail does not have such a volume. Manufacturing has a limited market and you meet limited set of people, and there is no direct interaction with the end consumers.”

“On the other hand, retail has its own charm. Whatever you sell in retail, you are paid immediately in cash for it. Moreover, being in the market and meeting new people everyday aids better idea generation. Being in direct touch with the consumers gives a better understanding of the consumer choices and preferences. The emergence of social media has made retailing even more interesting,” he concludes.

http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?new...

Comment by Riaz Haq on August 14, 2013 at 8:31pm

Cereal yield, measured as kilograms per hectare of harvested land (including wheat, rice, maize, barley, oats, rye, millet, sorghum, buckwheat, and mixed grains) for India and Pakistan are about the same...India is slightly ahead with 2800 Kg vs Pakistan's 2700 Kg, according to World Bank 

http://data.worldbank.org/indicator/AG.YLD.CREL.KG

India stands at the bottom in terms of maize and pulses productivity compared to China, Pakistan, Bangladesh, Nepal, Sri Lanka and Myanmar.

Bangladesh leads the tally in terms of maize yields with 5,837 kg per hectare, followed by China at 5,459 kg a hectare, Myanmar 3,636 kg/hectare, Pakistan 3,558 kg per hectare, Nepal 2,118 kg every hectare, Sri Lanka 2,806 kg a hectare and in India it is 1,958 kg/hectare.

In pulses, China tops the list with 1,567 kg per hectare followed by Myanmar at 1,114 kg a hectare, Bangladesh at 871 kg/hectare, Nepal 791 kg per hectare, Pakistan 762 kg every hectare, while in India it stands at 694 kg per hectare.

 http://zeenews.india.com/business/news/economy/major-crop-productiv...

Comment by Riaz Haq on June 5, 2018 at 7:57am

Textile industry in Pakistan an open example of resistance economy


https://nation.com.pk/03-Jun-2018/textile-industry-in-pakistan-an-o...

The textile industry in Pakistan is the largest manufacturing industry in the country and no doubt it is an explicit example of resistance economy.

For years, the textile sector has been the country’s backbone as it provides employment and export revenues.

The textile sector in Pakistan contributes 57% to the country’s exports. The textile industry is the second largest employment sector in Pakistan.

Pakistan is the 8th largest exporter of textile commodities in Asia and textile sector contributes 8.5% to the GDP of Pakistan.

It is pertinent to mention that the exports of textile products posted a growth of 12.8 per cent year-on-year to $4.4 billion in 2017-18.

The total textile sector exports reached $7.72bn value-wise in July-January 2018 versus $7.2bn in the corresponding period of last year, reflecting an increase of 7.18 pc

In the 1950s, textile manufacturing emerged as a central part of Pakistan's industrialization, shortly following independence from the British rule in South Asia. In 1974, the Pakistan government established the Cotton Export Corporation of Pakistan (CEC).

Between 1947 and 2000, the number of textile mills in Pakistan increased from 3 to 600. In the same time spindles increased from 177,000 to 805 million.

Cotton spinning is perhaps the most important segment in the Pakistan textile industry with 521 units installed and operational, says a report by IRNA news agency.

Synthetic fibers prepared with nylon, polyester, acrylic, and polyolefin dominate the market.

Three types of filament yarn are also produced in Pakistan. These are acetate rayon yarn, polyester filament yarn, and nylon filament yarn.

Textile products manufactured from wool are also famous across the country and they include woolen yarn, acrylic yarn, fabrics, shawls, blankets, and carpets.

Artificial silk is also produced in Pakistan. This fiber resembles silk but costs less to produce. There are about 90,000 looms in the country.

There are many famous clothing brands in Pakistan who use locally produced fabrics due to its high quality.

According to consumers the fabric produced in Pakistan is high in quality as compared to fabric produced in other countries.

In recent years, Pakistan has faced competition from regional players including Bangladesh, India and Vietnam.

Pakistan is currently facing a large-scale energy crisis. The government manages the deficit through daily power cuts (or blackouts). These power cuts have significantly impacted manufacturing industries in Pakistan.

Comment by Riaz Haq on September 21, 2019 at 11:09am

From Underwear to Cars, #Modi's #India’s #Economy Is Fraying. Underwear sales are down 50 percent, car sales are down 32%. #BJP #Hindutva

https://www.nytimes.com/2019/09/21/business/economy/india-economy-t...

When Alan Greenspan ran a consulting firm and wanted to know where the economy was headed, he would often look at sales of men’s underwear as a guide.

Mr. Greenspan, who later served as chairman of the Federal Reserve, believed that when times were tough, men would stop replacing worn-out underwear, which no one could see, before cutting other purchases.

By that measure, India is in a serious slump.

“Sales are down 50 percent,” said Jeffrin Moses, gesturing toward the boxes of cotton briefs and tank tops bulging from the shelves of the Tantex undergarment emporium in Tirupur, the southern city where most of the country’s knitwear is made.

It’s not just underwear. Car sales plunged 32 percent in August, the largest drop in two decades, and carmakers are warning of one million layoffs as shoppers balk at rising prices and struggle to get loans from skittish lenders. Macrotech, a big real estate developer that has teamed up with President Trump on a residential tower in Mumbai, just laid off 400 employees as demand for new housing sinks.

--------------------

The textile industry, which employs about 45 million people and is India’s second-largest employer after agriculture, is emblematic of the country’s distress.

On an afternoon in early September, Tirupur’s market for wholesale, overstock and slightly defective clothing was deserted. Mr. Moses said that store owners and distributors typically traveled across India to place bulk orders for shirts, pants, dresses and fabric before the country’s September-to-November festival season.

“Now, people do not come,” he said.

The region’s spinning mills, which twirl cotton into yarn, are cutting production. Although the world price of cotton has plunged because of the increased American tariffs on Chinese textiles, owners say that yarn prices have also fallen, making it difficult for mills to profit.

“I haven’t seen a slowdown like this,” said Gaurav Gupta, a son of one of Dollar’s founders, as he walked through the company’s plants. “For a customer who used to buy six pairs of garments, now he has come down to probably four.”

Still, Dollar’s Italian-made cutting machines continue to slice colorful sheets of fabric for undershirts and underpants, six days a week. About 100 workers sort the pieces and tie them into bales, ready for contractors who will sew them into finished garments.

Dollar has not laid off anyone yet, although it has cut work hours — and paychecks — by 10 to 20 percent. Mr. Gupta said his factories were switching to making thermal underwear for northern India’s chilly winters, and he hoped that the festival season would mark the beginning of a turnaround in sales.

Sambhu Karwar, a 22-year-old employee who smooths the fabric before it is cut, said the job was better than working in his family’s bakery in eastern India. Dollar pays him a monthly salary of 12,000 rupees, or about $167, and provides lodging and some subsidized food.

“It’s good living here,” said Mr. Karwar, whose brother also works at the factory.

The outlook is bleaker at Siva Exports, a contractor that stitches some of Dollar’s underwear.

Most of the sewing machines in the two-story factory sit idle. Siva’s owner, V. Murugesan, said he had to lay off about three-quarters of his tailors over the last six months after he lost his two biggest clients — clothing brands in Italy and France. He said he could not match the prices they could get in Bangladesh, where wages are far lower.

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