The Impact of Globalisation and Regional Conflict on the Loom Units in Dibba Colony, Karachi

1. Reason for the Study

The textile industry is considered to be the backbone of Pakistan’s economy¹. Much of its weaving sector looms operate informally out of low income settlements. This informal loom sector has been facing a number of problems due to which land-use changes, migration patterns and a search for new forms of livelihood have emerged. This study is an initial exploration in trying to understand the causes behind these changes and their repercussions on a small settlement of about 25,000 persons in Karachi. But first, let us look at the textile industry and how it operates.

2. Pakistan’s Textile Industry

Pakistan is the world’s fourth largest producer of cotton and also the third largest consumer in the world. It is a major contributor to the economy in terms of exports being among the ten top textile exporters of the world. In the past decade the industry has gone through difficult times. This is evident from Figure – 1: Growth of textile sector 2002-11 and Table – 1: Trends in textile sector during last 10 years in Appendix – 1. The reason for its problems are attributed to power outages, rising power tariff, unavailability of raw material and due to these factors large amount of losses in businesses². The Karachi law and order situation, regional conflicts and neo-liberal reforms have also contributed to the crisis with many units shifting to other parts of Pakistan and also to other countries. (See Box – 1: Shifting to Bangladesh) It is important to note that according to the All Pakistan Textile Mills Association (APTMA), energy shortages have reduced the capacity of the textile industry by 30 per cent³. Again, it is has been estimated that due to strikes Sindh businesses alone suffer a loss of Rs 21 billion (US$ 21 million) a day, and a major sufferer is the textile industry because of it large size⁴.

Box – 1: Shifting to Bangladesh 

It is claimed that because of severe gas and electricity shortages, the textile industry in Pakistan is shifting their activities to Bangladesh. But, there are severe power outages in Bangladesh as well. The main reasons for shifting are: one, the law and order situation in Karachi; and two, that Bangladesh has given tax-free access to 37 countries including the European Union, Canada and Australia. This second is the key reason why a large number of Pakistan textile units have relocated since 2012. Some estimates claim that 40 per cent of Pakistan textile industry and 200,000 power looms have been shifted to Bangladesh since 2007 as a result of which some 200,000 families in the Punjab alone have been directly or indirectly affected.

Labour costs in Bangladesh are also much lower than in Pakistan even though in 2011 Bangladesh doubled the minimum monthly wage in the garment industry to 25 pounds (US$ 42). This is still low compared with competitors in China, India, Viet Nam, Thailand and Cambodia. Pakistan’s minimum wage is high at 70 US dollars per month. Bangladesh’s low wage is also an incentive to shift.

There is no official data illustrating the business migration but the media and representatives of the industry continue to report on industry closing down and shifting not only to other countries but also from Karachi to the Punjab where the law and order is better. Press reports tell us that 30,000 businesses have shifted from Karachi to the Punjab due to the better law and order situation over there. However, representatives of the industry point out that it is small traders and not industrialists that have moved to the Punjab. It is claimed that the industrialists have moved to other countries such as Sri Lanka and are exploring possibilities of establishing businesses in Viet Nam, Cambodia and African countries. Representatives of the industry also claim that other countries are luring them to establish their industries in their countries and offering incentives. They claim that between 15,000 to 20,000 small to large units in Karachi and some 5 to 10 per cent of big units of exporters of textiles have shifted to foreign destination. This migration of businesses has been made possible by the global neo-liberal order.

Source: Dawn: From Pakistan to Bangladesh, Dawn: Businesses Shifting Amid Poor Security

The weaving sector is the most important sector of the textile industry. It is divided into three sub-sectors: integrated, independent weaving units and power loom units. The integrated and independent weaving units operate in the organised “mill sector” whereas the power looms fall in the informal non-mill sector. A loom can be installed in a house and one or two workers or a family can operate it. It is estimated that there are 360,000 power looms in Pakistan of which over 30,000 small or medium size power loom units are located in Karachi⁵. The small units normally comprise of 6 to 8 looms manned by 10 to 12 workers while the medium units comprise of up to 50 looms worked by 60 to 80 workers. All loom workers are male⁶.  However, these are just estimates because unlike the organised mill sector, the non-mill sector does not maintain production statistics and much of it is not in the tax net either. In addition to various Karachi low income settlements (see Map – 1 in Appendix – 1: Karachi settlements with loom clusters), the major power loom clusters in Pakistan are in Faisalabad, Multan, Kasur and Jhang (see Map – 2 in Appendix – 1: Loom clusters in Pakistan).

The organised mill sector uses what are known as shuttle less looms⁷ or air jet looms. These are used for the production of cotton textiles which are the main textile produce of Pakistan. The power loom sector uses shuttle looms⁸, which manufacture both cotton and silk. It is to be noted that silk is produced almost exclusively on shuttle looms in the power loom sector.

The importance of the power loom sector can be gauged from the fact that in 2009-10 it supplied 8.5 billion square metres of total export fabric which amounts to 65 per cent of the total supply by the weaving sector⁹. However, due to the problems mentioned above, it is estimated that between 2008 and 2012, 40,000 power looms were converted to scrap and 10,000 were partially closed due to which 100,000 workers became unemployed¹⁰. Another factor that should be emphasised is that the fabric manufactured on power looms is of inferior quality and does not fetch high value in the international market¹¹.