Introduction

Pakistani textile industry has about 50 large and 2500 small garment manufacturing units.
Moreover, it also houses around 600 knitwear-producing units and 400 towel-producing
units.The textile demand in the world increased massively in last few decades. The global share
of the textile increase about 18$ trillion and it is expected to increase 6.5% in future year. China
is known as the major exporter country of the textile goods in the world. The world wide textile
export is around 400$ billion. The Asian Countries have the major share in global textile
export .The share of the china is around 55$ billion, the share of the Hong Kong is around 38$
billion, the share of the Korea is around 35$ billion, the share of the Taiwan is around 16$ billion
and the share of the Indonesia is around 9$ billion, India also emerged as the major exporter of
textile goods. In case of Pakistan, Pakistan also emerged as the textile exporter in the world.
Pakistan emerged as the major exporter of the cotton and cotton yarn, Pakistan export the 30% of
textile cotton yarn and 8% cotton fabric to the world. The Pakistan textile industry contributes
more than 60 percent to the countrys total exports that sum around 5.2 billion US dollars. The
industry contributes approximately 46 percent to the total output produced in the country. In
Asia, Pakistan is the 8th largest exporter of textile products. The contribution of this industry to
the total GDP is 8.5 percent. Moreover, it provides employment to 38 percent of the work force
in the country, which amounts to a figure of 15 million.
Pakistan mostly exports the textile raw materials to the world and did not export the value added
items, this is the main problem of Pakistan textile sector. Pakistan should learn from Bangladesh
who imports the raw cotton from Pakistan and other countries and then made the value added
items and export it to the world. If we want to increase our textile revenue then we focus on the
value added items in future exports.
However, the textile industry currently faces massive challenges. The All Pakistan Textile Mills
Association (APTMA) needs to enhance the quality of its products, upgrade the technology
used, and encourage effective Research and Development (R&D) in order to compete
internationally. However, APTMA argues other factors such as high interest rates and cost of
inputs, non conducive government policies, and non-guaranteed energy supplies hinder their
competitiveness.

Political
Pakistans Textile industry provides 9% of the global textile needs and ranked at worlds number
10 textile producers. Pakistans textile industry, based on locally-grown cotton, produces cotton
yarn, cotton cloth, and made-up textiles and apparel. Market for imported textile machinery and
equipment in Pakistan is directly proportional to the overall strength of the local textile industry.
In order to revitalize this sector, the Government of Pakistan (GOP) has formulated Textile
Vision 2007. According to that vision, Government of Pakistan plans was to spend Pakistan
Rupees 331 billion (USD 1.00 equals Rs. 92 at the current exchange rate) in the textile industry
in order to attain fifth position as a leading Asian textile exporter and to increase the exports to
USD 13.815 billion by 2007. To achieve this goal, it is expected that new investment is more
than Pak. Rupees 333 billion will be required in different sub-sectors of textile industry. Pakistan
is the eighth largest textile exporter from Asia.
Pakistani Private SectorTextile manufacturing enterprises face the challenge of remaining
competitive in the context of the elimination of the Multi-Fiber Agreement (MFA) quotas on
textile and apparel trade under the World Trade Organization (WTO), the emergence of China as
a huge textile and apparel exporter, and new and potential intraregional trade agreements.
Implementation of the final WTO ruling against U.S. cotton subsidies, a new U.S. farm bill in
2008, and a possible agreement to multilaterally reduce cotton subsidies and tariffs across the
related textile and apparel sectors in the Doha Round WTO negotiations may also affect the
cotton and related processing industries of Pakistan.
Textile sector in Pakistan provides employment of 38 per cent of work force which amounts to
15 million. It includes both skilled and unskilled labour. Nearly, 8.5 per cent of Countrys GDP
share is from this sector. (Fibre2fashion, 2008)
There is tight monetary policy imposed on textile sector by government and increase the cost of
production. Withholding tax of 1% also impact badly on production and high interest rate
financing cost increases. All major financing institutions financing to the industry at high interest
rate also effect on production of textile. State Bank of Pakistan tightened the monetary policy for
this sector. There is no serious measurement on the government side to solve the problems.

Unlike India, China or Bangladesh there is no subsidy available for Pakistani textile industry at
all. During 2010-2011 reintroduction of 0.5% of minimum tax on domestic sales and 1% of
withholding tax on all textile import that is another shock to the industry. Local sales also
become unfavorable because of high mark-up rate that bound to the industry for increasing prices
and operate under limited resources leading to discourage textile business. Public and private
firms are between the lines and have no other options except shutting down or shifting business
across the border. Even federal government is well aware about the dilemma and never revised
the law
Bangladesh, India and China enjoy comparatively low interest rates than Pakistan. The
prevailing rates are as following, 8.5 to 9.0 per cent in Bangladesh, 5.25 per cent in India (market
rate is 10.25 per cent, however exemption of 5 percent is provided to the textile industry) and
5.58 per cent in China. Meanwhile, in Pakistan, the last three to four years has seen the interest
rates to have risen more than 150 percent, to 13.25 percent. The increase has essentially crippled
the small time textiles owner, while seriously hindering growth of the textile tycoons. This has
led to textile owners accusing the government and banks for maintaining detrimental policies. I
believe that it is imperative that the new government takes actions that have a positive impact on
the industry as textile provides employment to approx 38 per cent of our working class. A
coherent plan should be devised by the Pakistani government that allows some sort of
exemption/concession such as in India; the Export-Import Bank was set up for the purpose of
financing and facilitating the industries, especially textile.
Major export partner countries of Pakistani textile industry are EU, USA, Canada and Japan. All
these countries are import textile products from Pakistan at quota system (except Japan). Major
influence on industry is from USA as more than 60% of total export partner of country is US. As
an external factor, USA and EU policies related to Pakistani trade are tightened. There is no
single reason for policy making by these two super powers. Respondent highlighted few aspects
in connection with terrorism and war in Afghanistan. There are political pressures from NATO
and US about the support and co-operation for war against terror. In case of dispute among the
nation, that directly effect to the trade and commerce. A recent survey report showed more than
50% of textile export orders had been cancelled during 2009-2010 by USA voluntarily. The same
was happened if we talk about EU market. European firms prefer to buy textile product from

other countries at a cheaper rate instead to go to Pakistan. Meanwhile, USA imposed high tax on
import of Pakistani textile products that lead in a bad manner of Pakistani export to USA.
Preferences are giving to Bangladeshi products over Pakistan. The Pakistani government has
started taken initiatives to improve the current state of the textile industries but still these
initiatives are in the early stages.
The Ministry of Textile Industry was created in 2004, amalgamating all textiles related functions
of the Ministries of Commerce, National Food Security & Research (MINFAL) and Industries
and Production. However, some of the functions of the Ministry of Textile Industry are still
under the ambit of other ministries, such as trade negotiations on textiles are handled by the
Ministry of Commerce, while cotton seed production and regulation is with the Ministry of
NFS&R. These, in turn, are linked to other Ministries and Divisions like Climate Change and
Overseas Pakistanis & Human Resource Development (OPHRD).
The Textiles Policy 2009-14 provided a direction to the Ministry of Textiles Industry and
prepared a developmental agenda, along with identifying cross-cutting issues hindering the
growth of the textiles value chain. It also provided sub-sectoral analyses for specific intervention
schemes that were approved by the Cabinet. However, due to financial constraints much less
support was provided to the industry as against the ones envisaged in the Policy. The support
provided was in-sufficient to attract further investment in new machinery and technology
compared to the incentives provided by our regional competitors like India, Bangladesh,
Vietnam, China and Turkey.
The Policy introduced an online registration database system which helped to strengthen its
relationship with the stakeholders associations, and also enabled the creation of a complete
profile of the textiles value chain for identification of its strengths, weaknesses and the
technological gaps that exist on the supply side due to uneven development.
Ministry of Textile Industry collaborated with various international organizations like KOICA,
UN and ILO for initiating skill development programs for value added industry. It set up the Pak
Korea Garment Technology Institute with contribution of KOICA of US$ 1.28 million, with rest
of the funding from PSDP.

Economic
Pakistans Large sections of the population live in poverty and survive through subsistence
agriculture. Inefficient regulatory agencies inhibit business formation. Access to bank credit also
undermines entrepreneurship, and the financial sectors seclusion from the outside world has
slowed economic freedom score is 55.6, making its economy the 121st freest in the 2015 Index.
Its score has increased by 0.4 point since last year, reflecting improvements in investment
freedom and freedom from corruption that are largely counterbalanced by deteriorations in labor
freedom and business freedom. Pakistan is ranked 25th out of 42 countries in the AsiaPacific
region and its overall score is below the world and regional averages.
Pakistans economic freedom has advanced modestly in recent years. Since 2011, economic
freedom in Pakistan has increased by 0.5 point, led by advances in investment freedom,
monetary freedom, and freedom from corruption. However, gains have been outnumbered by
losses among economic freedoms.
Large sections of the population live in poverty and survive through subsistence agriculture.
Inefficient regulatory agencies inhibit business formation. Access to bank credit also undermines
entrepreneurship, and the financial sectors seclusion from the outside world has slowed
innovation and growth.
Inflation has direct impact on industrial sector especially during last couple of years, respondent
said while interview. Production cost increased because of high interest rate and devaluation of
Pakistani rupee. It makes more difficult for textile industry to compete in Asian textile region.
Inflation is considered a general rise in price level during a particular time period, and decreases
the value of money. Controlling the inflation is fundamental task of any government as it has
adverse effect on the economy growth. Textile sector is badly affected due to high production
cost and double the inflation rate within the country. Export of textile product has been decreased
since 2009. In Pakistan, demand-pull inflation exits when economy is demanded for more goods
and services then available. It is time period when sellers get a chance for increasing the prices of
goods and services. Prices of electricity and gas have three times since 2008 because of increase
demand within the country. In summer, more electricity require and during winter gas demand

become high and federal government of Pakistan charge high prices without any subsidy
regardless of domestic or industrial consumption. The same trend has been seen in petrolatum
products. Prices are reviewed and increased each month of crude oil in the country. At the end of
2011, price of petroleum products has been double as compare to 2007. More than 100% taxes
are included in the price of petroleum that has direct and indirect impact on textile sector. It is
shameful for the nation that no officials are interested to subsidy this unique sector. If there is no
employment opportunity available in the country, then surviving become harder and economy
starts facing new other challenges that lead to increase the crime rate in the society
Recession is term that is used by economist for explaining Gross Domestic product meaning that
reduction in GDP of a country in a specified time period. If we talk about the economy of
Pakistan, then country is considered highly industrial. Agriculture is become the basic reason for
industrial growth in the country. Textile sector is biggest as cotton crops is cultivated at large
area of the country and overall economy is dependent on it directly and indirectly.
Global recession started in 2008-2009 and every country of the world at macro level and almost
all industrial sectors were affected. Likewise, Pakistani textile was also affected during that
period and received international export orders at reduced rate. Unfortunately, there were
multiple reasons for slump inside the country. It is important to consider again the political
instability over the last few years. Government of Pakistan is playing childish role if we see
overall scenario within the country. There was no proper planning made at the right time even for
any sector including railways, airlines etc. of the country. Industry is discouraging even now a
day. Meanwhile, this caused very high rate of inflation in the country. In 2008, inflation rate was
jumped dramatically from 8% in 2006 to 24 in 2008. Within 22 months only, there were very
serious changes happened in the country and lead devaluation of Pakistani Rupee. Before 2006,
exchange rate was 1USD#60 PRs and in 2008, it was 1USD# 83PRs. Then prices of
commodities were really high during that time period and number of people living below the
poverty line was increased from sixty million to 82 million. Of course, whole system chain was
totally craped and prices of gas and electricity high enough and surviving was difficult for
society. All of above factors directly effected on the textile industry and demand of product was
decreased locally and internationally. International orders cut down as there was no surety of

political stability in the country. Unemployment was very high and standard of living dropped
down.
Social
Sustainability today has become a necessity driven by consumer awareness and preference for
sustainable products, compliance norms, and a realization that to secure the future it is important
to act today. Life cycle approach to sustainability in textile and apparel industry entails ensuring
the three facets of sustainability the country. A spurt in the man-made yarn exports and a decline
in the man-made fiber exports in the liberalization era is a welcoming trend as yarn is a higher
value added item which contributes more to export earnings. Still exports of cotton have emerged
as a major source of foreign exchange earnings for the country. The ratio between woven
clothing and knitwear shows an increasing trend in knitwear in the US market.
Having the means to buy clothes has historically been a symbol of status and it still remains one
area of people's lives where income differences and social status area readily perceivable.
The specifics of the past are very different to the present, where the average EU
household spends only 5.7% of income on clothing and footwear. In the US, where in 2009
citizens bought $326bn of clothing, people spend as little as 2.98% of their income on clothes.
This is down from 4.78% in 1988 and 9% in 1950, confirming a trend that has been apparent
since before the Second World War.
This goes hand in hand with a fall in price-per-item. In other words, we can buy the same, or
even larger, amount of clothing, but spend substantially less. The EU-27 consumer statistical
survey shows that since 1996 overall clothing prices have, on average, declined despite an
inflation of around 2.2% which would normally result in a price increase. In the UK, garment
prices fell by an average of 10% between 2003 and 2007, and in 2006 people bought a third
more clothes than in 2002. While the 2007 recession left the total sales volume in the UK
clothing retail market largely unaffected, the retail price of clothing deteriorated drastically.
Outsourcing to low-cost overseas locations, often lacking governmental enforcement of
minimum health and safety standards, accounts for an important aspect of the retail price

decreases in apparel. Since the 1974 Multi Fibre Agreement, an ever increasing percentage of
clothing is produced in low-cost countries and imported back into western consuming nations.
But, possibly even of more importance, the fast fashion "race to the bottom" is also accompanied
by lower product quality standards. In 2006, the average life span of a garment in London was
three years. However, Primark in Oxford Street did not open until 2007, and it is safe to
speculate that the life span may now be even shorter.
In 2008, about 80% of all donated clothing was in good enough condition to either be reused as
secondhand clothing, baled goods to developing countries, or sold to rag sorters. In 2011 this
percentage had fallen to between 60 to 70%. In the same period, the total amount of clothing
donated for recycling decreased by about 20%, while the total amount of clothing discarded
remained stable or grew.
Contemporary fashion consumption patterns, hence, have a direct correlation with lower garment
quality. A well finished pair of jeans for example, requires a certain amount of labor, and
therefore time, to sew. Making more items in a shorter period of time can only mean one thing:
less time per item, and therefore more mistakes and imperfections with the result being that the
product will fall apart quicker.
In combination with the prospects of impending raw material, water shortages and rising
salaries in principle manufacturing destinations such as China, it is plausible that changes in
sourcing and manufacturing patterns are imminent, and will affect brands of all types and price
levels.
An indicator of this is Chinese and Pakistani manufacturers relocating their whole production to
destinations such as the Philippines and Bangladesh in order to maintain their price
competitiveness which is primarily based on low cost man power.
The rise in costs of upstream manufacturing will affect consumers in the west, and could trigger
the first clothing price increase in nearly a century. The question is not if this will happen, but
when.

For many consumers price acts as an indicator of quality with a higher price suggesting better
quality. As a consequence of rising manufacturing costs, the price of fast fashion will go up,
leaving consumers with the expectation that quality will also improve accordingly.
Beyond quality however, higher prices are prone to more scrutiny by the consumers overall. Low
environmental and social standards may be just about acceptable for low quality and low price
products, but not for something of a supposedly higher standard, as luxury brands such as
Gucci have experienced.
All costs accounted for, producing geographically closer to home suddenly becomes financially
more attractive. This increases the ability to exercise tighter control over product manufacturing
and at the high end of the apparel and foot wear market this is already happening.
It goes without saying that this comes with challenges. First, textile manufacturing skills and
qualified production units have largely disappeared over the past 30 years, and resuscitating or
rebuilding such skill is a painstaking, slow, expensive and difficult process. Producing closer to
home also means that long forgotten about legal and social issues related to textile manufacturing
such as waste, environmental impact, fair wages and labour conditions will demand a local
solutions.
Fast fashion has democratized style over past decades, specifically in the west. This is a
contribution that cannot be ignored. Historically, buying clothes was in essence and for the vast
majority of people, equivalent to spending on something practical to cover up ones' nudity, and
survive under given climatic conditions. Dressing up in order to look good was an exclusive
privilege of the better off. Fast fashion changed the rules of this game fundamentally.
The social gap these days is not any more between those that can, or cannot, afford to look
stylish, but rather between those that can, or not, afford to look "classily" fashionable. For a
fashion business and brand, this means that quality in production as well as design will
increasingly be considered a basic prerequisite.
In general, companies in the Italian clothing industry have positioned themselves in the middle
and high-quality markets on the basis of high-quality materials, skilled craft and unique design.

Company investment in the product design and development phases has brought about a
significant expansion of the range of high-quality products offered. At the same time, the demand
for high-quality products has increased, making it profitable to focus on this market segment. In
fact, companies which have implemented strategies aiming to shift the competitive front onto
variables such as quality, innovation and product diversification rather than cost have tended to
achieve excellent results in foreign markets. The market for small lots of high-quality products is
currently growing, and this development is to the benefit of the local companies which are not
able to compete with foreign clothing companies on price.
The fashion industry is one of those industries that may be most affected by the impact of sociocultural trends (Curtis, Watson & Sephton, 2007). For instance, it has been witnessed for decades
that the world population is aging (OECD, 2013a). Such a demographic change may result in a
threat for solely teenage-oriented apparel firms because the competition for their shrinking
segment becomes more intense. However, an opportunity can open up for new or more flexible
incumbent fashion retailers. They may differentiate in the future by additionally focusing on
more mature customers and offer appropriate sizes and simpler designs with more qualitative and
durable materials. Moreover, there is an increased demand for a more convenient shopping
experience, especially in times when people become more career-seeking and have less time left
that can be dedicated for leisure and shopping (Chaturvedi, Martich, Ruwadi & Ulker, 2013).
Another social trend is that customers are more and more concerned about their health, which
can be confirmed by a steady increase in individual health expenditure over the last decade
(OECD, 2011). This may lead to a greater customer interest in the materials used, their origin
and their processing methods, demanding more transparency and accountability on behalf of the
fashion firms. In this respect, more and more customers have gone green and support
sustainable and ethical activities of companies (Johansson, 2010; Pookulangara & Shephard,
2013). Besides this, fashion tastes and trends of teenagers and young adults are very diverse and
volatile nowadays and are influenced by celebrities and the media (Rinnebach & Richter, 2014).
The hipster trend is a recent example and companies may have to decide if they follow such
temporary fads or if their business is stable enough to sustain within their usual channels. The
media, however, does not only spread trends to customers but also makes aware of scandals and
negative publicity about bad Corporate Social Responsibility (CSR) practices like child labour,

sweat shops or inhumane working conditions as a consequence of outsourcing companies. One

example was the incident at the Rana Plaza in Bangladesh in 2013, a factory which makes
garments for chains like Primark, where more than 1,100 workers died when the bedraggled
building collapsed above their heads (The Guardian, 2013). Subsequent changes in customer
behaviour and attitudes towards fashion companies are increasing the demand to more reporting
activities and auditing processes on labour conditions and wages to ensure a fairer treatment of
workers.
Technological
The fashion industry has always been subject to technological changes and has influenced the
way in which apparel products are produced, supplied and delivered to customers. The
emergence of the Internet and improvements in communication technologies have facilitated and
accelerated the information flow of new trends and brands from the customer to the retailer,
which enables companies to respond more quickly to the latest market impulses (Nenni,
Giustiniano & Pirolo, 2013). In turn has this advancement increased customer demands since the
media continuously updates them about the newest fashion styles (Rinnebach & Richter, 2014).
A similar improvement in knowledge transfer and interaction can be witnessed between retailers,
wholesalers and manufacturers, which are able to benefit from more efficient distribution and
communication channels (Bruce, Daly & Towers, 2004). Besides, a rise of multi-channel
customers (Rinnebach & Richter, 2014) has opened up low-cost advertisement and marketing
options for retailers through social media platforms or a corporate website and new ways of
buying fashion products for consumers. Innovations like matrix coding, the co-creation of
products and online shopping has made the decision and purchase of fashion easier and more
convenient for customers (Lester, Forman & Loyd, 2005; Stout, 2013). Despite the technological
enhancements that could be detected in the last decades and years, the apparel industry remains
rather labour-intensive with limited automation because of frequent design, textile and demand
changes (Sura, 2004).
Critics argue that the indolent attitude of the industrialist in the 1990s has led up to the current
crisis. If the textile industrialist had worked with the government towards implementing policies
that prepared for the current international scenario, Pakistan textile industry would have

boomed. Instead, the industry suffers from severe technological obsolescence, insufficient
R&D, falling cotton crop, and an unclear path forward.
The negligible local production of textile machinery mainly comprises of spindles and ring cups
for the spinning industry, power looms for the weaving industry, simple dyeing and finishing
equipment, knitting and sewing machines and accessories such as rubber cots plastic bobbins and
wire for carding machines. In other words, the local industry desperately requires more modern
machinery and techniques to compete in an increasingly competitive industry. In additional to the
basic problems, the textile industry is also extremely affected by the national instability due to
the recent judicial, political, economic, energy and security issues.
The lack of R&D in the cotton sector of Pakistan has resulted in low quality of cotton in
comparison to rest of Asia. Because of the subsequent low profitability in cotton crops, farmers
are shifting to other cash crops, such as sugar cane. In Punjab alone, the cotton area sown this
season was less by 1.14 percent as compared to the last year. Textile owners argue that although
the Cotton Vision 2015 targets 20 million bales till 2015, it is an ambitious target as in reality
cotton production is decreasing each year. It is the lack of proper R&D that has led to such a
state. They further accuse cartels, especially the pesticide sector, for hindering proper R&D. The
pesticide sector stands to benefit from stunting local R&D as higher yield cotton is more
pesticide resistant.
Moreover, critics argue that the textile industry has obsolete equipment and machinery. The
inability to timely modernize the equipment and machinery has led to the decline of Pakistani
textile competitiveness. APTMA has highlighted that the Pakistan textile industry faces tough
competition from the Indian, Bangladeshi and Chinese textile industries and local policies have
resulted in Pakistani textiles facing a critical condition.
Other
1. Industrialists also argue that the non-guaranteed supply of power by WAPDA (Water and
Power Development Authority) is another problem that negatively affects the textile
industry. Although, some textile units have built their own energy generating plants to cut
cost (these units run on gas), small units production depends entirely on the electricity

supply of WAPDA. The textile industry suffered heavy financial losses in Dec, Jan and
Feb quarter, because of the inconsistent electricity supplies. The lack of production
subsequently resulted in the industry not meeting its target for the quarter, massive
financial losses were borne by textile owners and sadly, it hit the most vulnerable:
workers on daily wages. Their frustration was observed recently, when the WAPDA and
MEPCO (Multan Electricity Power Company) offices in Multan, were torched by daily
wage workers, [see related post]. Textile owners as well as workers passionately assert
that the inconsistent supplies have and are destroying business across Pakistan. They also
highlight that the high cost of the utilities has making Pakistani textile uneconomical in
the international market.
Being a developing country, it is hard to overcome the energy problems but it does not
mean that whole year load shedding is acceptable at all. While interviewing with Mr
Pehlaj, owner of textile mill, energy related facts were discussed. He said that during the
last three years, the largest export sector of the country is facing critical challenge that is
out of control for management. Almost every part of the country load shedding is
common phenomena. Textile production capacity, because of this reason has reduced by
25-30 per cent. Being a major export sector of the country, economic growth is heavily
dependent on it. In term of foreign exchange textile sector contribution is almost 10
million US dollar every year but in the last year, thirty per cent loss in the production of
textile products caused by energy shortage in Pakistan. Textile mills operate twenty four
hours in three shifts if electricity is available according to requirement, but current
situation is less than eight hours electricity supply is providing to the sector. As a
consequence, international trade and export orders have been reduced gradually.
Respondent further added the comments that during his eleven years textile career, it is
first time when alternative energy resource like natural gas is also short in the country.
International competition is effected badly because of high production cost of textile
garments, as entrepreneurs are trying to use alternate energy resource in the form of
generators that lead to double the cost of productions. While interviewing, he showed the
documents about 17 per cent export decrease in November 2011 as compared to last year
following month. He further added that government subsidy is not for industrial sector in
form of special tariff of electricity. Few small scale industrialists tried to use alternate

energy resource for industry and installed captive power plants (CPP) for production of
electricity by using natural gas as cheap fuel but desired results were not achieved by
spinning industry and project has failed in spring 2011. June and July are considered peak
season for textile industry, because of raw cotton ready is available for processing. In the
year 2011, Sue North Gas Pipe Lines (SNGPL) has cut off the supply for almost 100 days
to all textile mills because of shortage, and consumption of natural gas during summer is
considered less at private sector as temperature is high enough in Pakistan. It has
happened first time in the history of Pakistan. As we all are well aware that Pakistan has
significant mineral resources like natural gas, crude oil and petroleum, according to Mr.
X. We have no excuse to say about shortage of gas and even it can be available at cheaper
price as compared to neighbouring countries like Bangladesh, India and Iran. India is
given most favoured nation and opens its borders for trade and investment all over the
world because of proper government policies for enhancing international trade. We on the
other side live in the past two hundred years era and try to overcome at basic
infrastructure. Our quality product and professional know how is at risk because of losing
image at international level. Growth rate is about 2% in the last three years as compared
to last decades when it was above 9% annually. During the last four months estimated
loss is 882 million dollars in the Punjab province industry and cancelled many foreign
orders.
2. Unskilled or poorly trained Human Resources. Also extensive training is required to
refine the skill level of workers in accordance with the latest techniques and requirements
to compete with the local as well as international standards. One of the major reasons for
these losses is unskilled workers. It has also been observed that if the industry has
managed to attain advance technology then the semi-skilled or even the skilled workers
sometimes struggle to match their expertise to required level of technological advances as
sometimes the new equipments require more specialized skill levels. Hence, the industrial
training management resists training their workers, keeping in view the highly fluid and
short lived nature of market in comparison with the high training costs.
3. Risk of Shifting Industry to Bangladesh According to MR. Saqib, during interview he
explained that as a major export sector of Pakistan, it is shocking news for economy of
the country about the shifting textile business to foreign region. There are many factors
that are encouraging the businessmen to move their business from Pakistan to

Bangladesh. Shortage of electricity and gas are not the only reasons for moving out but
many other factors are involved in the scenario. Bangladesh is among the least developed
nations according to US and EU and it is considered privileged nation. Many super
powers are assisting to the country for building up infrastructure and decreasing the
unemployment rate. Bangladeshi textile sector has been sponsored by United States and
European Union. Every year, millions of euro are provided by EU for enhancing the
textile sector in the country and supported in the form of modern machinery and know
how. Country has preferential treatment in the EU and US as that said by finance minister
of Pakistan. Textile industrialist is trying to get the advantages of more profit while
shifting their business in Bangladesh. Industrial investment is considered backbone for
any economy and plays prominent role for employment and development of the country.
Pakistan is agricultural base country and more than 70percant is population is engaged in
this sector. According to the survey reports, more than 40 per cent of textile industry and
200,000 powers looms have already shifting to Bangladesh during the last five years that
are alarming situation within the country. Unemployment rate become very high during
that period, and Punjab province that is so called biggest textile region of the country is
affected in term of unemployment. Almost .2 million families are affected directly and
indirectly in the Punjab after shifting the industry said by Mr Pehlaj. Respondent
highlighted some other facts about the moment of industry to the Bangladesh. In
Bangladesh, cheap labour force of both sexes is available as compare to Pakistan and
captive power generation using gas as fuel is cheaper than other Asian countries. In the
preceding paragraph, it has been highlighted that EU and US already declared
Bangladesh as preferential country so general system of preference (GSP) will remain
until 2015. Besides all of these, Bangladeshi Government is encouraging foreign
investment because of privatization and supported many cash incentives for the investors
in this sector. Opportunity is available for Bangladeshi industry to expand its market
share to EU and US markets because of GSP and many other incentives at the moment.
But Pakistani industry is unable to get these types of benefits and discouraging present
and new investors to invest in the country.
Textiles Policy 2014-19

Vision To become a leading country in the field of export of value-added textile products. 5
Mission To develop and implement a textiles policy which ensures consistency, predictability
and transparency in Government actions and programs, while building the reputation of the
country as a reliable source of high quality textile goods. Goals To double value-addition from
$1billion per million bales to $2 billion per million bales in five years. To double textiles
exports from $13 billion per annum to $26 billion per annum in next five years.

To facilitate additional investment of $5 billion in machinery and technology.

To improve fibers mix in favor of non-cotton i.e. 14% to 30%. To improve product mix

especially in the garment sector from 28% to 45%.

To strengthen existing textile firms and establish new ones.
SME sector will be main focus of attention to enhance growth in value-added products

through support and incentives schemes.

Schemes and initiatives will be launched for increasing usage of ICT. The textiles sector
will be made domestically and internationally compliant especially with respect to labour

and environment rules and conventions.

Textiles units will be encouraged to use modern management practices for improving
efficiency and reducing wastages. Clusters would be systematically developed and

existing clusters will be strengthened.

Vocational training of workers for capacity building, internships and different
programmes for enhancement of skills and higher per capita productivity would be

introduced. Facilitate the creation of 3 million new jobs.

Promotion of speciality skills training for professionals and supervisory levels.
Adopt measures to increase ease of doing business and reducing cost of doing business.

Strategic Framework
The Textiles Policy 2014-19 is based on actionable plans to make the textiles sector competitive
and sustainable. The Government will make sure that the benefits of Textiles Policy 2014-19 are
spread at the national level and have a positive impact on small and medium enterprises through
various measures including development of clusters.
The main theme of the current Policy is to increase dependence on special factors which give
comparative advantage and to increase the use of new technologies especially ICT options, for

improving competitiveness of the entire textiles value chain. 8 Budgetary supports: Following
schemes have been approved in The Finance Bill 2014-15.The Ministry will endure that these
schemes may continue during the Policy period i.e. 2014- 19:
Draw-back for local taxes and levies would be given to exporters of textiles products on FOB
values of their enhanced exports on an incremental basis if increased beyond 10% over previous
years exports at the following rates: Garments 4%, Made ups 2%; and Processed fabric 1%.
The incentives will be provided to the exports made in 2013-14 (calendar year 2014) compared
to exports made in 2012-13 (calendar year 2013) in the year 2014-15. The support will continue
for the rest of Policy period, however, eligibility criteria for the above support will be properly
aligned with all Policy goals from budget period 2015-16 onwards.
Mark up rate for Export Refinance Scheme of State Bank of Pakistan is being reduced from
9.4% to 7.5% from 1st of July 2014. Textiles industry units in the value added sector would be
provided Long Term Financing Facility (LTFF) for up gradation of technology from State Bank
of Pakistan at the rate of 9% for 3-10 years duration. The Schemes may continue during the
Policy period. In case there would be further decrease in the policy rates then subsequently EFS
and LTFF rates would be revised accordingly.
An expeditious refund system is being introduced and a fast track channel for manufacturerscum-exporters is being created, whereby FBR would dispose of all their pending sales tax refund
claims within 3 months, if not earlier.
Textiles sector enjoyed duty free import of machinery under Textiles Policy 2009-14. This
facility (SRO 809) has been extended for another two years.
A new vocation training program will be launched through PSDP to train sufficient men and
women over five years period for skills required in the value added sector such as garments and
made ups. The project will be completed in two phases while vocational training institutes as
well as factory spaces will be utilized for training purpose.
Policy Interventions:

The tariff structure for entire supply chain will be reviewed in line with effective protection rates.
Higher tariffs provide excessive protection and increased margin for domestic sales. This
situation does not provide any encouragement for exports. In such scenario tariff rates for entire
supply chain need to be rationalized while providing adequate protection. This would increase
the competitiveness of the domestic industry while ensuring increased exports and reduce
smuggling of finished products such as manmade finished fabrics and garments.
The textiles sector value chain will be given protection as per the study carried out by The
National Tariff Commission (NTC). This will provide a predictable tariff regime for the
foreseeable future. In order to encourage use of manmade fibers, Deemed Imports Basis scheme
would be introduced so that the domestic PSF industry is also protected. An authentic and
accredited testing system will be established to determine the manmade fiber content in the
exporting products. The drawback rates for various manmade based exporting products will be
determined by the Input-Output Coefficient Organization (IOCO). Criteria will be developed
with the consultation of stakeholders and disbursements would be made by the State Bank of
Pakistan. Drawback on deemed import basis will only be available to the mmf based garment
products initially. Work is in progress with the FBR to simplify Temporary Import Schemes such
as DTRE in consultation with stakeholders to facilitate the value-added sectors. A GSP+
Committee has been constituted to study the export trends for which FBR is providing data from
PRAL.
Measures will be taken to curb smuggling and protect the domestic manufacturing sector. 9.2
Product diversification: Pakistan exports limited range of garments and made ups. Efforts would
be made to widen the production base to include value-added products such as children wear,
lingerie, beachwear, leisure wear, technical textiles, geo textiles and medical textiles. For this
purpose, collaborations with foreign experts, donor agencies and international universities would
be sought and the existing bases at National Textile University, Faisalabad, and Textile Institute
of Pakistan, Karachi, would be strengthened.
The Government will establish a Product Development & Innovation Fund to develop new
products, along with costing, identification of supply chains, raw materials, and dissemination of

information to the SME sector. Awareness seminars and training on textiles entrepreneurship in
new products will be carried out for new business development and product diversification.
Technology Up-gradation Fund Support Scheme
Technology Up-gradation Fund including for SMEs will be extended for this Policy Period as
well. Main aim of the scheme is to improve overall technological configuration of the sector,
remove critical imbalances in the value chain and achieve compliance with international
standards.
SME Development
One of the weakest links in textiles value chain is unorganized power loom sector which consists
of mostly 4 to 32 power looms, classified as cottage industry with unskilled labour force.
Similarly, other SME sub sectors also have unorganized structures. The Ministry of Textile
Industry would adopt three pronged strategy to address this issue. a. Mapping, surveys and
diagnostic studies of existing clusters for various subsectors including wool, silk, hand looms,
embroidery, weaving, knitting and stitching. The Government will earmark funds for diagnostic
studies and approach foreign donors for the development of clusters. The clusters will be
provided with various facilities, such as marketing cooperatives, testing laboratories, training
centers, international and domestic certifications, combined effluent treatments plants, etc.
Option of opening engineering campuses of recognized universities and/or new universities in
mega clusters will also be explored.
A Business Portal would be launched to facilitate sales and business partnerships on the internet.
This would also enable the SME sector to increase usage of ICT and modern management
practices in their units. Top fifty SMEs each year in exports would be identified and would be
facilitated for organizational restructuring, business development, export marketing, IT usage
and infrastructure etc for their growth in exports and to become listed companies.
Neglected Sectors:

The Government will establish state of the art Product Development Centre along with
machinery, equipment and training facilities for vulnerable subsectors such as carpets and
handlooms. The Ministry would also set up dedicated fibre development centres for silk, wool,
jute, linen, bamboo and other natural fibres in collaboration with relevant Ministries and
provincial governments. The Ministry will approach the concerned quarters for allocation of
funds for dedicated training for the hand-knotted carpets, which is one of the most value added
sub-sector of this industry.
Productivity and OHS Audits and Trainings
The Ministry will carry out productivity analyses on processes and energy conservation.
Trainings would be provided to improve per capita productivity on cost sharing basis. To attain
international compliance in Occupational Health and Safety, trainings would also be provided to
the SME sector in partnership with provincial governments, ILO and other agencies, especially
for initiating Better Work Programme. The Government will provide necessary funds for
productivity and OHS audits. In addition, Business Alliances and Buyers Forums would be
created to assist valueadded sectors in meeting international standards of sourcing.
Joint ventures, mergers and relocation of international manufacturers
As suggested by the Board of Investment, a comprehensive plan would be launched in
consultations with trade associations and BOI to facilitate buyers presence through joint
ventures and relocation of foreign manufacturing units in Pakistan.
Strengthening of textiles firms
Initiatives will be taken to strengthen the strategic and competitive capacities of textiles value
chain and allied industry firms, promote growth, sustainability, innovation, value addition,
diversification and internationalization. Under performing firms and units will be supported
through management capacity building BDS support, facilitating mergers and acquisitions and
any other viable options.
Electricity and Gas

The Ministry will take measures to give priority to textiles sector for availability of energy to
fully utilize the GSP+ status. For this purpose, a joint committee comprising senior officers of
the Ministries of Textile Industry, Petroleum & Natural Gas, Water & Power and Finance
Division will be constituted to work out solutions on a regular basis to reduce the energy gap in
the textiles sector. In order to conserve energy, textiles associations would be facilitated to carry
out energy audits within their member units, so that energy consumption is reduced through
specific interventions, such as replacement of old machinery and plugging leakages.
Awareness and Information Dissemination
Market intelligence including fiber and product mix, information on different countries specific
standards and compliance requirements, along with tariffs and preferential tariffs of competitor
countries would be disseminated both through the Ministrys web portal and in regular meetings
with stakeholders. The information about best international practices in value added chain will be
made available to the stakeholders. 9.10.2 The Ministry of Textile Industry will regularly publish
domestic and international imports and exports data. Such information will also be available on
the Ministrys website. Further, the Ministry of Textile Industry will hold technical seminars and
workshops for SME sectors. For such purpose international technologists, marketing and
compliance experts would also be invited. The associations and manufacturing units will provide
space where practical demonstrations would be given. Tele-centers and PTA ICT infrastructure
will be leveraged for the benefit of entire textiles supply chain including farmer community.

GSP PLUS FROM DAWN NEWSPAPER

LAHORE: Textile exports to the European Union (EU) are expected to surge by up to $1bn a
year as the 27-nation bloc granted the much sough-after Generalised System of Preferences
(GSP) Plus status to the country, effective from Jan 1, 2014.

Though the brighter prospects of raising exports to the EU market after the grant of duty-free and
preferential duty rate access on 3,500 products have buoyed the businesspeople particularly the
textile and clothing exporters in Punjab growing energy shortages remain a major impediment.
There will be no gas for the captive power plants (CPPs) of the province all through the winter.
The EU trade concessions can push our textile exports and generate significant economic
activity, said Sheikh Mohammad Ilyas, the chairman of Faisalabad-based Pakistan Textile
Exporters Association (PTEA), on Wednesday.
But much will depend on regular availability of regular supply of gas and electricity to operate
factories, he said.
At least 40pc of the installed textile capacity in Punjab, where 75-80pc of total manufacturing
capacity is located, remains inoperative because of energy shortages, according to the industry.
Pakistans textile exports to EU markets draw 11pc duty at present. This makes it difficult for the
country to compete countries like Bangladesh, which has pushed its textile exports to over $25bn
after getting GSP Plus status from the EU.
All Pakistan Textile Mills Association (Aptma) Punjab chairman S.M. Tanveer hailed the EU
trade concessions, saying the textile industry could maximise benefits of the scheme. But, he
said, the government would have to fulfil the energy needs of the textile industry to ensure levelplaying field against competitors.
He said the Aptma hoped to double the textile exports to $26bn in four years.
Textile exports of $13.1bn in the last fiscal year were 53pc of the countrys total exports of
$24.6bn. The EU imported almost 27-30pc of Pakistans total exports during the period.
Bilal Qamar, an analyst at JS Research in Karachi, said that under the new trade concessions,
almost 20pc of Pakistani exports would be allowed to enter the EU at zero tariff and 70pc at
preferential rates.
He noted that textile made-ups, home textiles, etc which lead other textile products imported
by the EU from Pakistan will be the immediate beneficiaries of the concessions.
According to the PTEA, the country exports $5bn worth of yarn, plain and dyed fabric to
different countries which, in turn, add value and re-export to the EU.
The domestic textile industry is likely to take the benefit of adding value itself and increase
direct exports to the EU after GSP Plus status, said the analyst.

He projected the textile exports to rise by 3pc above the target of $14.2bn for the current fiscal
year to $14.6bn and by 5pc to $16.3bn during the next financial year.
The Lahore Chamber of Commerce and Industry said the GSP Plus concessions would help
boost the countrys exports and create around one million jobs for Pakistani youth.
In a statement, LCCI President Sohail Lashari said exporters from various industries were
anxiously hoping to access the European markets, which promised huge potential for multiplying
the countrys exports.