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

3. The Study Area

The area chosen for the study is known as Dibba Colony in the Baldia Town of Karachi. Baldia is one of Karachi’s 18 towns (see Map – 3 in Appendix 1: Location of Baldia Town). Each town is an administrative unit. Baldia consists of 7,200 acres (292 hectares)¹ and is divided into union councils which are the lowest rung of local government (see Map – 4 in Appendix 1: Map identifying union councils). Baldia Town has 8 union councils of which Saeedabad is one, in which Dibba Colony is located. The population of Baldia Town, according to the 1998 census, is just over 400,000² while estimates today place it at one million. Baldia Town also contains the rapidly expanding informal settlements of Islam Nagar and Ittehad Town. Baldia Town is ethnically very mixed and contains all the major ethnic and linguistic groups of Pakistan. However, no group has a clear majority in the area.

Baldia Town began as a planned settlement in 1962. Refugees (1947 migrants from India) living in the inner city informal settlements or squatting in the open areas of Karachi were shifted to Mohajir (refugee) Camp and Saeedabad. Here, they were given 80 square yard plots and sewage and water related infrastructure. They built their own homes incrementally. The advantage of this location was that the Sindh Industrial Trading Estate (SITE), Karachi’s main industrial area was adjacent to these new planned settlements and at that time work was available at SITE. The shiftees were almost entirely Urdu speakers.

In official planning, there is no such thing as Dibba Colony. This name has been given by its inhabitants to an area comprising about 2,500 80 square yard residential plots and about 200 120 square yard commercial plots along the main Altaf Hussain Road. The settlement covers an area of 19 hectares and the “mill area” is 11 hectares. (See Map – 5 in Appendix 1: Location of Dibba Colony) The commercial plots were meant for businesses and not for establishing manufacturing units. However, manufacturing units, as described in the following section, were established on these 120 square yard plots and the area where they were located came to be known informally as the “mill area”³. The mill area has an area of about 11 hectares.

According to the building byelaws and zoning regulations, no industrial activity is permitted in the commercial and residential areas. However, the government has tolerated such activity because people living in the area can work in their neighbourhood. This brings benefits to them in terms of saving time and cost in travelling to work and back and helps the city in dealing with its traffic problems. City government officials feel that if the byelaws and zoning regulations were strictly followed, low income residents would have much more problems than they have today⁴. It is important to note however, that where “cottage industry” sites have been developed, it is permissible for the owners of the industry to reside on the site. A cottage industry site was also developed in Baldia Town but it remains unoccupied to this day while power looms have been established in residential and commercial areas. Local government planners feel that there is a need to rationalise existing byelaws and zoning regulations to make it easier for people to legally live and work in the same areas⁵.

4. Methodology

The methodology followed for the study is given below. First, Baldia Town was chosen since it was near the formal industrial area (SITE) and the Pakistan Institute of Labour Education and Research (an important national NGO) informed us that the majority of power looms were located in Baldia. During a general observational survey of Baldia we were informed by residents at various locations that the maximum density of power looms in Baldia Town are located in Saeedabad. The choice of Dibba Colony was made for two reasons. One, we had contacts in the Dibba Colony; and two, that the “mill area”, where the power looms began was adjacent to the residential area of Dibba Colony.

The study has relied on interviews and on secondary data. Persons interviewed include power loom workers and owners of loom units; brokers in the power loom sector; labourers; scrap dealers, recyclers of textile related waste; government officials and shopkeepers in the wholesale market; academics and corporate sector executives. A list of those interviewed is given in Appendix – 2: List of Persons Interviewed. Secondary date consulted has consisted of journals, research studies and press reports. A list of these is given in Appendix – 3: List of Literature Consulted.

5. History of the Evolution of Establishing Power Loom Units in Dibba Colony

The first settlers in Dibba Colony were the Urdu speaking refugees who were given 99-year leases for 80 square yard plots. The refugees were mainly shopkeepers and white-collar workers and not skilled labour so they could not take advantage of the fact that they were living so near to SITE. In addition, the major low income Urdu speaking localities had land values that were much lower than those of Dibba Colony. As a result, they began to sell their properties and move to Buffer Zone, New Karachi, Korangi Crossing or Shah Latif Colony where Urdu speakers are located⁶. Initially, their place was slowly taken over by people from Mianwali, who were initially camel/camel cart transporters (required by the SITE industry), who in the 1970’s converted to using trucks. Pushto speakers also established a presence in Dibba Colony to work in the rapidly expanding construction industry in SITE and Baldia and as transporters.  With the coming of the power loom sector to Dibba Colony in the mid-1970s, skilled Punjabi speaking migrants grew rapidly in number⁷. This is because Punjab has a long textile related tradition and a well-developed system of apprenticeship. The town of Faisalabad contains the first textile mills which were established before Independence and partition.

In 1973, the then Bhutto government nationalised a lot of industries but the textile industry was exempted from nationalisation. Small loom units (up to 8 looms) were also exempted from taxation. To save on taxes and out of fear of nationalisation, entrepreneurs, commonly known as seths, decentralised their production to smaller units. Many of them sold their properties in SITE and in the other officially designated industrial estates at higher prices and invested in low income settlements which they believed were more secure because of the populist politics of the then government. There were other advantages in working out of the formal industrial sector. The seths could employ contract labour (which was cheaper) due to an absence of centralised trade unionism and sack and hire labour at will. It was in this period that the commercial plots in Dibba Colony were purchased or rented from local residents by the seths and converted into loom units⁸. This change attracted more skilled labour from the Punjab. The process of converting yarn into fabric and wholesale is given in Figure – 2: The process of production in Appendix 1.

The seths who set up the loom units managed the whole process. They acquired the yarn, did the coning, warping, sizing, finishing and transferred the finished product to their warehouses in Boulton Market. They estimated the amount of material that was required by the market and produced it. There were no other players in the process except for the producers of imported and locally produced yarn and the transporters who serviced the needs of this process.

Problems for the industry in Dibba Colony began in 1992-93 when due to liberalisation, Chinese and Indian silk flooded the market. However, in spite of this, the industry continued to function and make acceptable profits. The second blow took place after 2003. Due to regional conflicts export to Iran and Central Asia (which were big clients of the industry) became problematic because of border controls with Iran and difficulty of transit trade through Afghanistan. With Central Asia trade acquired a new dimension. Hordes of Central Asians visited Karachi as tourists and purchased silk and leather goods in bulk and took it back with them by air. For revenue purposes, the government of Pakistan promoted this process. With the anti-Talibaan war and war in Afghanistan and terrorist attacks within Pakistan, a strict visa regime was introduced between Pakistan and Central Asian states as a result of which the Central Asians stopped coming⁹. Export to India continued since Pakistani product though more expensive, was of better quality and there was a demand for it in India. However, because of the erratic nature of India-Pakistan relations, borders were often closed, trade suspended and in many cases orders though produced, could not be delivered causing losses to the manufacturers and traders¹⁰. Ethnic politics and their related extortion of money from businesses also took its toll and there was growing insecurity among the Dibba Colony power loom owners, many of whom received purchis (notes) demanding money and giving threats if payment was not made¹¹. However, there is general consensus among the persons interviewed that extortion was very limited in Dibba Colony as compared to other locations in Karachi, because no one political party dominated the area as it had a mixed ethnic composition. There is also a perception that labour was attracted to Dibba Colony because of an absence of control of the area by any one political party¹².

The final blow to the industry in Dibba Colony came with the growing power outages during 2004 and subsequently increasing to about six to seven hours a day. Since the looms work 24 hours a day, the outages meant a loss in production by at least 30 per cent. Beginning with 2004, energy costs also increased and within six years they almost doubled. There are no power outages to formal sector industry in SITE and other formal sector industrial areas as a policy of the state. This advantage could not benefit the Dibba Colony industry since it was informal and not in an officially designated industrial area.

As a result of the problems faced by the industry, the seths put up their looms for sale. These were bought by the more enterprising of the skilled labour of the loom units who often sought financial support from their families in the Punjab. Their families were willing to invest in Karachi because of better profits than in the Punjab. These better profits are there because yarn is imported through Karachi and its price increases by the time it gets to the Punjab¹³.

The new owners shifted the looms from the mill area to the residential areas, often to the ground floor of their residential accommodation or to space rented from other residents. This brought about a change in the land and real estate market in Dibba Colony which will be discussed later. Since 90 per cent of the new owners were from the Punjab, they encouraged further migration of Punjabi skilled labour which has had an affect on the ethnic composition of the area¹⁴. Moving to the residential area had two other advantages. Rents were lower and electricity charges were charged at residential rates which are much lower than the commercial rates paid by the seths in the commercial area. Also, plots of residential 80 square yards or less are exempted from property tax and the residential plots in Dibba Colony are 80 square yards.

There were two other repercussions of the crisis and the change in ownership of the power loom units. One, that some (no figures available) of the Dibba Colony entrepreneurs have returned to SITE and set up shuttleless loom units producing cotton instead of silk. Here they do not have to put up with power outages and unlike in the 70’s and 80’s, the trade unions are there “only in name”¹⁵. The labour from Dibba Colony cannot work in these enterprises since they are not trained/accustomed to work on shuttleless or air jet machines¹⁶. Second, that the new owners did not have the financial and managerial capacity and/or capability of managing the entire system. As a result, a new system which involved a very important role for a middle man, known locally as the “broker” emerged. The new system, which operates today, is explained in the section below and its socio-economic, physical and land-use related repercussions in the subsequent sections.