Economic Crises and Reforming Karachi’s Informal Textile Industry

This post extracts the key points of an important impact assessment in relation to reforming Karachi’s informal textile sector.

It has recently been reported that Pakistan is the eighth largest exporter of textile and related products in Asia and that Pakistan’s textile industry accounts for 9.5 percent of the country’s GDP and provides employment to about 15 million people or roughly 30 percent of the country’s 49 million strong workforce. Arguably, Pakistan is the fourth largest producer of cotton in the world. Contributing 5 percent to global spinning capacity, Pakistan possesses the third largest spinning capacity in Asia after China and India. Equally, The textile industry in Pakistan accounts for more than 60 per cent (US$9.6 billion) of total exports. Indeed, the industry forms the spine of Pakistan’s economy. To date, no empirical research has examined the local impacts of economic crises and reform on cities in Pakistan, including Karachi.

This study by Arif Hasan, Mansoor Raza and IIED addresses this gap by examining how the textile industry – as one of Pakistan’s most productive economic sectors – has been impacted, with a focus on the informal power loom sub-sector. The factors that have contributed to the decline of the textile industry and the repercussions for this sub-sector, including one of the settlements in which it operates, are discussed. The conclusions contemplate the challenges of formulating urban policy responses to an economic problem that is shaped simultaneously by local, regional and global pressures. This study examines the local impacts of economic crises and reform on the textile industry in Karachi, with a focus on the informal power loom sub-sector and the low-income settlement (Dibba Colony) where it operates.