Sialkot is the capital of the country’s sports industry. About 98 percent of products manufactured in small and medium industries of the city are exported to various countries. These industries, particularly sports industry, have been an important source of the foreign exchange earnings for the country. More than 400,000 people are engaged directly or indirectly with export activities in Sialkot, which earns around $1 billion from exports annually. Sports goods sector is the main export sector of the city with total exports of $450 million per annum.
Soccer ball industry of Sialkot is famous for its unique production all over the world. Tango Ball produced in the local industry was for the first time used in FIFA Football World Cup in 1982. Ahead of the FIFA Football World Cup 2014, over 42 million soccer balls worth Rs17.473 million had been exported from Sialkot. Sialkot made soccer ball Brazuca was used in FIFA Football World Cup 2014 matches in Brazil. The ball was produced by Forward Sports Sialkot for Adidas. The Brazuca reflected unmatched skill and craftsmanship of local workers. The global brands like Nike, Puma, Adidas, Decathion, Select, Litto, Umbro, Mitre, Micassa, Wilsoms and Diadora have been sourcing their supply of footballs from Sialkot.
The industrial set-up in Sialkot is based on small and medium enterprises (SMEs). The SMEs are believed to be the driving force behind the growth in exports from Sialkot. Value-added products like musical instruments, badges, sports goods, surgical instruments, martial arts uniforms and, cutlery have brought Sialkot a name the world over. Sialkot’s strong production base has led to the completion of the Sialkot Export Processing Zone (SEPZ). The availability of special incentives, experts, cheap labor and complete infrastructure facilities in the zone has attracted foreign investors to establish joint ventures with local industrialists. The SEPZ has been developed on 238 acres of land and consists of 900 plots of four different categories. About 22 different industrial units have been accomplished at the SEPZ. Generations of local artisans and laborers have passed down the skills for crafting footballs that are used in international games including the World Cup. In 1985, a dry port was established in the private sector at Sambrial about 15 km from Sialkot for the speedy clearance of export and import consignments. The Sialkot dry port is successfully functioning and is located in the centre of the triangle of three districts — Sialkot, Gujranwala and Wazirabad. It caters to the needs of the entire Gujranwala district. The Sialkot dry port has also started up the container service for Peshawar in Khyber Pakhtunkhwa province for the speedy transportation of exportable cargo. Exportable consignments are transported from Sialkot to the Lahore, Islamabad, Karachi and Peshawar airports, Karachi Port Trust (KPT) and Port Qasim seaport.
Sialkot caters to around 70% of total world demand of hand stitched inflatable balls which translates into around 40 million balls annually worth $ 210 million. These balls are produced by a workforce of nearly 60,000 and exported to world markets by 1,000 plus entrepreneurs, majority of which fall under SME definition. Sialkot’s hand-stitched ball industry is a big business, which has been affected by the machine-made footballs. The penetration of machine-made footballs in the international market caused a serious dent to the country’s hand-stitched soccer industry. But unfortunately, Pakistani football lost market to China, as local manufacturers were facing rising cost of production due to rising POL prices and unreliable power supply. The local industry has made a shift from hand stitched balls to mechanically stitched balls bringing in use the advanced technology, as the industry cannot survive with outdated manufacturing techniques. Having a huge market, Chinese are interested in importing Pakistani machine-made footballs. China received large export orders of footballs from a number of countries ahead of the 2010 Football World Cup. Adidas, the German company and a major World Cup sponsor, had chosen China for producing the thermally bonded balls for the 2010 World Cup. But proudly Pakistani footballs had been the preferred choice for Adidas in the 2006 FIFA World Cup.
In February 1997, the Sialkot Chamber of Commerce and Industry (SCCI) had signed an agreement at Atlanta, Georgia, in the US, with ILO-IPEC and UNICEF to completely purge the soccer ball industry from child labor through the progressive implementation of a Sialkot project with special emphasis on social protection to children and their families. Manufacturers were invited to join the programme on a voluntary basis.
A number of units have started manufacturing mechanized footballs in Sialkot. Local manufactures have created a Sport Industry Development Trust (SIDT) with one hundred units pooling Rs100,000 each to raise the seed money of Rs10 million. With setting up of a Sports Industry Development Centre(SIDC) for the modernization of the soccer ball manufacturing units would enable the local manufacturers to cope with the new challenges of the global market. The CIDC is a project of Small and Medium Enterprise Development Authority (SMEDA) funded by Ministry of Industries and Production to help sports goods sector to adopt new technology of mechanized thermo laminated balls by providing the production facilities for SME’s, technical advisory services, mold making machinery services and training to manpower. The project has been completed and it is currently rendering services to the local sports goods industry.
Industry growth problem
Pakistan is the only country in the region where interest rate is still higher. The country lags behind its neighbors in economic growth and exports due to high interest rate and energy crisis. The other countries have already reduced the interest rate to the lowest level. Local industry is facing power shortages and squeezing local and international demand, while banks are not risking their money to support the private sector.
Critics say that while other countries of the world are cutting down their discount rates to boost the economic growth, interest rates in Pakistan are still higher despite the low growth in the industrial production. The analysts believe that the GDP growth will continue to decline due to economic slowdown following the tight monetary policy. The decline in growth rate and decreasing currency value has led people to expect more inflation and massive increase in the joblessness. The soaring power and gas tariffs are likely to put additional burden on the industry and squeeze the gross margins of the industry.