Assignment # 03 (PROJECT)

Submitted By:
Hammad Shoukat

Registration no:
SP19-BBA-132

Submitted To:
Mam Wajiha Ilyas

Program & Section:

BBA-II C

Subject:
Pakistan Studies (HUM 111)

Due Date:
04/11/2019

Department of Management Sciences

COMSATS University Islamabad
Park Road, Tarlai Kalan, Islamabad
  Main Topic:

 Current Social, Economic and Political Challenges related to Industrial Sector of

Pakistan since Partition.

 My Topic:
 Challenges faced by Textile Industry of Pakistan:

 Introduction:

The Pakistan material industry all out fare is around 9.6 billion US dollars. The material business
contributes roughly 46 percent to the all out yield or 8.5 percent of the nation GDP. In Asia,
Pakistan is the eighth biggest exporter of material items giving work to 38 percent of the work
power in the nation. Be that as it may, the material business as of now faces huge difficulties.
The All Pakistan Textile Mills Association (APTMA) needs to improve the nature of its items.
Be that as it may, APTMA contends different factors, for example, high loan fees and cost of
sources of info, non favorable government arrangements, and non-ensured vitality supplies
prevent their aggressiveness [1]

 Findings and Discussion

Now we will discuss the main reasons of crisis in textile industry step by step in detail

1. Lack of Research & Development (R&D) in Cotton Sector

The absence of research and improvement (R&D) in the cotton part of Pakistan has brought
about low nature of cotton in contrast with rest of Asia. As a result of the ensuing low benefit in
cotton crops, ranchers are moving to other money crops, for example, sugar stick. It is the
absence of legitimate R&D that has prompted such a state. They further blame cartels,
particularly the pesticide area, for impeding legitimate R&D. The pesticide area stands to profit
by hindering nearby R&D as better return cotton is more pesticide safe [3].

2. Lack of ModernEquipment

Additionally, pundits contend that the material business has out of date gear and hardware. The
powerlessness to convenient modernize the hardware and apparatus has prompted the decrease of
Pakistani material aggressiveness. Because of out of date innovation the expense of generation is
higher in pakistan when contrasted with different nations like India, Bangladesh and china.

3. Finance Bill to Burden Industry Further

All Pakistan Textile Mills Association (APTMA) has informed that administration's activities are
not coordinating with its words for the material business. Alluding to the Prime Minister Yusuf
Raza Gilani discourse at the starting function of the Infrastructure Development of the Pakistan
Textile City at Port Qasim Industrial Area, where Prime Minister talked high of the material
business commitment towards the nation's economy, Chairman APTMA Tariq Mehmood said
the government spending plan 2009-10 is an all out nullification of the affirmation of the job of
material industry with respect to the Prime Minister. As per him, reintroduction of least expense
on household deals would welcome unavoidable liquidity issue, which is as of now come to the
disturbing level. He said the material business was confronting negative age of assets because of
unreasonably expensive increase rate from one perspective and intense deficiency of vitality
supply and unfathomable power duty for industry [1].

4. Increasing Cost of Production

The expense of generation of material ascents because of numerous reasons like expanding loan
fee, twofold digit expansion and diminishing estimation of Pakistani rupee. The over all
explanation expanded the expense of generation of material industry which make issue for a
material industry to contend in global market.

5. Internal issues Pose a Larger Threat for Pakistan’s Textile Industry

Pakistan's material industry is experiencing one of the hardest period in decades. The worldwide
recessionwhich has hit the worldwide material extremely hard isn't the main source for concern.
The significant expense of creation coming about because of a moment ascend in the vitality
expenses has been the essential driver of worry for the business. Deterioration of Pakistani rupee
during a year ago raised the expense of imported sources of info. What's more, twofold digit
swelling and significant expense of financing has truly influenced the development in the
material business. Pakistan's material fares have gone down during most recent three years as
exporters can't successfully advertise their items since purchasers are not visiting Pakistan
because of unfavorable tourism warning and it is getting increasingly more hard for the exporters
to travel abroad. Material exporters legitimately request decrease of Kibor rate to 8% to keep
away from a serious decrease in trades. A three-year extensive material strategy is required to be
declared before spending plan 2009-10. The material strategy has been intended to improve the
fares of material part to $ 25 billion in next three years. This was expressed by the Minister for
Textile Industry Rana Farooq Saeed Khan. Material Minister additionally educated that the
turning and weaving division would get its due offer from the Export Investment Support Fund,
worth Rs. 40 billion designated in the Federal Budget 2009-10. Rana Farooq called attention to
that he has upheld the instance of prompt help to material industry in the Parliament and
furthermore in the Cabinet gatherings since he is certain that lone material industry was skilled
enough to rescue Pakistan from the current financial emergency. He further said that despite the
fact that we are fourth biggest maker and third biggest customer of cotton yet sadly now we are
at number 12 in the global exchange of material items. Furthermore, he focused on that
administration should take prompt Measures to expel lull in the material part. He said that
significant expense of working together is a result of escalated increment in the pace of intrigue
which has expanded the issues of the business. He said that record increment in markup rates is
one of the significant reason for defaults in overhauling the credits benefited by the business,
thus, the volume of non-performing advances has come to a disturbing circumstance. He said
that power shut downs may bring about huge joblessness bringing about law and request
circumstance [4].

6. Energy Crisis
• Electricity Crisis

As an outcome of burden shedding the material generation limit of different sub-areas has been
diminished by up to 30 percent. The joint gathering of APTMA and other related association was
held at APTMA House to define a joint technique to address the disturbing power emergency
being looked by the material business. The gathering collectively chose to comprise a joint
working gathering of power the board for the material business in the bigger interests of the
worth chain of the material business. The joint working gathering will meet in the blink of an eye
to structure a point by point intend to seek after the accompanying objectives; Immediate
absolute exception from Electricity burden shedding for the material business worth chain;
Rationalization and decrease of power levy. The heap shedding of power cause a quick
diminishing underway which additionally decreased the fare request. The expense of creation has
additionally ascended because of moment increment in power levy. Because of burden shedding
some plant proprietor utilizes elective wellspring of vitality like generator which increment their
expense of creation further. Because of such sensational circumstance the capacity of intensity of
this industry in global market affected severely. [5].

• Gas Shortage

Gas load-shedding proceeds in Punjab and NWFP in spite of a critical increment in temperature.
A representative for the All Pakistan Textile Mills Association (APTMA) asserted that 60 to 70
percent of the business had been influenced and was not able acknowledge fare requests rolling
in from around the world. He said the material business had just suffered more than 45 days of
gas detachment over a time of four months, causing remarkable generation misfortunes and
gravely influencing ability of the business. In Punjab, he stated, vitality supply disturbance just
was causing an expected loss of Rs1 billion every day. In the bigger enthusiasm of the economy
and fares, he recommended, the administration should "guarantee service organizations give
smooth power and gas supply to the material business" [6].

7. Tight Monetary Policy

The congruity of tight fiscal strategy cause an escalated increment in cost of generation. Because
of high loan cost financing cost builds which cause an extreme impact on creation. The retention
expense of 1% additionally impacts the generation severely. The significant expense of working
together is a result of concentrated increment in the pace of intrigue which has expanded the
issues of the business. The administration should take prompt measures to expel lull in the
material part.

8. Removal of subsidy on Textile sector

The arrangements of Finance Bill 2009-10 are not material industry benevolent by any stretch of
the imagination. Arrangements like reintroduction of 0.5% least duty on residential deals, 1%
retaining assessment on import of material and articles and so forth., are only keep going strick
on industry's back. Reintroduction of least duty on local deals would welcome unavoidable
liquidity issue, which is as of now come to the disturbing level. The material business was
confronting negative age of assets because of exorbitant increase rate.

9.Lack of new investment

Pakistan material industry is confronting issue of Low efficiency because of its out of date
material apparatuses. To beat this issue and to remain in rivalry, Pakistan Textile Industry will
require high ventures. There is a consistent pattern of putting resources into turning since
numerous years. Pakistan's material industry gauges that around Rs1, 400 billion (US$32 billion)
of venture was required till 2010 so as to accomplish the administration's fare target." Pakistan is
confronting remotely just as inside issues which confines the new speculation [7].
The eccentric inner state of Pakistan causes a quick diminishing in remote speculation that
influenced all ventures yet particularly material industry.

10. United States & EU cuts imports of textile from Pakistan

US drop over half of material requests of Pakistan .US additionally force a high obligations on
the import of material of Pakistan which impact the fare in an awful way. US and EU are the
significant shipper of Pakistan material which make a colossal contrast in fare of Pakistan
material in the wake of forcing a confinement on import of Pakistani material products.

11. Raw material Prices

Costs of cotton and other crude material utilized in material industry vary quickly in Pakistan.
The fast increment in the value crude material impacts the expense of generation gravely. The
expansion in crude material costs changes quickly because of twofold digit swelling and instable
inner state of Pakistan. Because of increment in the expense of generation the interest for send
out and home also diminished which result as far as scaling back of a firm. Subsequently the
joblessness level will likewise increment. Govt should make genuine move to endure the
material business. So as to diminish the cost crude material for material we have to build our
creation capacity. At the same time, the administration should make course of action for
presenting universal arrangement of Cotton Standardization in Pakistan to upgrade quality and
estimation of Pakistan build up cotton by using the specialized administrations of Pakistan
Cotton Standard Institute.

12. Export Performance of the Textile Sector

For the second year straight, the nation missed yearly material fare focus of 12 billion dollars by
20 percent because of significant expense of creation, control deficiency and hardened challenge
with territorial players. The central government imagining 15 percent development had set
material fare focus of 12 billion dollars for FY09 against 10.35 billion dollars for FY08. Be that
as it may, in FY09, the nation missed its material fare focus as well as enrolled a decay of
somewhere in the range of 6 percent when contrasted with FY08. "Indeed, the nation has missed
the mark concerning material fare focus by more than 2 billion dollars because of the worldwide
emergency and a few hindrances looked by material industry on the household front," said Mirza
Ikhtiar Baig, Prime Minister's Advisor on Textile. Ikhtiar said that significant expense of
working together, control deficiency, poor modern framework and moderate outside request are
some main considerations adding to the decrease in material fare. In any case, he is certain that
during the current financial year material division will show better execution as the legislature is
attempting to expel the levy hindrances, other than investigating new material fare markets. "I
am certain that the legislatures and the Ministry of Textile's endeavors will be useful in boosting
the nation's material fare and empowering it to contend with other territorial contenders like
India and China," Baig said [8].
Moreover, the official insights of the State Bank of Pakistan (SBP) show that the nation's
material fares is likewise some 2.36 percent lower than the fare of monetary year 2006-07, in
which by and large material fares according to receipts remained at 10.011 billion dollars. The
national bank has likewise uncovered that out of 12 significant material fare 9 enlisted negative
development and fare of just three things - crude cotton, bed wear and towels has posted some
expansion. With 18.34 percent decrease, readymade articles of clothing fares remained at 983
million dollars and knitwear trade at 2.054 billion dollars after a decay to 4 percent in FY09 [9].

13. The Effect of Global Recession on Textile Industry

In financial matters, the term 'downturn' signifies "The decrease of a nation's Gross Domestic
Product (Gross domestic product) for in any event two quarters; or in typical terms, it is a time of
decreased financial action."
Pakistan is 26th biggest economy on the planet, and 47th biggest regarding the dollar. It is pitiful
to see our economy like this now. Pakistan is really a financially various nation with bragging
ventures materials, agribusiness, and so forth. The primary explanation behind this droop has
generally been the political unsteadiness in the course of recent years; no appropriate monetary
arrangements were actualized; in any event none that succeeded. This caused a high pace of
expansion, which, in 2008, had expanded to an astounding 25% when contrasted with a 7.9% of
2006. What happened a short time later is the thing that we call the domino impact. The
estimation of the Rupee smashed from 60-1 USD to 80-1 USD in just a month, the costs of items
took off through the rooftop, the quantity of individuals living beneath destitution line expanded
from 60 million to 77 million, and thusly, the regular workers layman turned out to be for all
intents and purposes denied from fundamental necessities like water, wheat, power, flammable
gas, and cooking oil; add to this, the incredible measures of burden shedding, and what we get is
a country in shambles[10].
The over all circumstance of the economy severely influenced the material business too. The
interest for material item chop down locally and universally also. The fare request decreased
because of capricious states of Pakistan and political insecurity. The chop down in the creation of
material reason further joblessness level which abatement the expectation for everyday comforts
of people groups

14. Effect of Inflation

Swelling rate is estimated as the adjustment in shopper value list (CPI).Inflation is essentially a
general ascent in the value level. It is decrease in the genuine estimation of cash. Swelling can
have unfriendly impact on economy. Pakistan is one of prey of expansion. Despite everything it
faces high twofold digit expansion. The expansion in swelling causes the increment in the
expense of creation of material great which return in cutting back. The twofold digit swelling
causes decrease in fares of material.

15. Unemployment Caused by Textile

Joblessness happens when an individual is accessible to work and looking for work yet at present
without work. The joblessness rate in 2006 was 6.6 percent which diminishes 0.1 percent in
2007. The joblessness rate ranges to 7.5 percent in 2008 because of worldwide crisis. As the
LSM decline the generation that is the reason the joblessness level crisis very rapidly. The
ascend in joblessness level is 11 percent in 2009. The joblessness rate in material industry was
high during the current monetary years in view of downturn and expanding cost of data sources
and fluctuating circumstances of nation.

 Conclusion and Recommendations

Recommendations:

The legislature is thinking about corrective measures on the suggestions of partners to address
the issues and issues looked by the material business of the nation for upgrading its generation
and fares. The legislature is probably going to declare material arrangement likewise called
National Textile Strategy in the mid of current month to help advance the material segment of
the nation, sources told APP. With the end goal of this, the Textile Ministry has counseled all
material segment affiliations and the councils of business and industry. The service got
suggestions for zero rating on import of material hardware, zero rating trades, tax decrease, and
unremitting vitality supply to material units. Issues identifying with the market access and
quality items with auspicious conveyance and single digit increase and exceptional power tax for
the material business have additionally been suggested. It has been recommended that material
arrangement may incorporate the issue like obligation free market access to European Union and
United States as Pakistan is the biggest shipper of USA long staple cotton as much as $400
million to $500 million consistently. What's more, the financial watches accept that the material
area was going through a troublesome stage because of vitality deficiency in the nation and
required therapeudic measures for advancement [13].

Some other Specific Recommendations from me are given as under:

• Remedy however Foreign Direct Investment (FDI)

• Image Building of Pakistan to Attract Foreign Direct Investment (FDI)

• Focus on Value Addition

• Technology Up-degree and Capacity Building

• Human Resources Development

• Reducing the expense of working together in Pakistan

• Need for Improving Textile Production

• Improvement in efficiency

• Awareness of International Quality Standards

• Introducing idea of at work preparing

• Introducing productive administration methods

• Subsidy evacuation ought to be taken a back

• Interest rate ought to be wicked good so as to endure this industry

• Electricity and gas tax

• Removal of Energy Crisis

• Exploration of new Export Markets

Conclusions:

Pakistan's material industry is experiencing perhaps the hardest period in decades. The
worldwide Downturn which has hit the worldwide material extremely hard isn't the main source
for concern. Genuine inner issues likewise influenced Pakistan's material industry gravely. The
significant expense of creation coming about because of a moment ascend in the vitality
expenses has been the essential driver of worry for the business. Deterioration of Pakistani rupee
during a year ago which has altogether raised the expense of imported information sources.
Moreover, twofold digit expansion and significant expense of financing has genuinely influenced
the development in the material business. Pakistan's material fares thus have gone down during
most recent three years as exporters can't successfully advertise their produce since purchasers
are not visiting Pakistan because of antagonistic travel conditions and it is getting increasingly
more hard for the exporters to travel abroad. Pakistan's material industry is inadequate in inquire
about and improvement (R and D).The creation capacity is low because of old apparatus and
innovation. Pakistan is confronting significant expense of creation because of a few elements like
the climb in power tax, the expansion in loan fee, vitality emergency, cheapening of Pakistani
rupee, expanding cost of sources of info, political unsteadiness, evacuation of sponsorship and
inside question. The over all factor increment the expense of generation which diminishes the
fares. Fares receipts decline from $ 10.2 B to $ 9.6 B. The worldwide downturn additionally hit
seriously the material business. Twofold digit expansion likewise caused abatement underway in
material area which cause the expansion in joblessness level. By the evacuation of sponsorship
the business' creation get higher affected which demonstrate as a keep going strike on industry's
back.Govt ought to give endowment to the material business for the endurance of this industry.
Congruity of 1pc disputable retention charge on import of basic crude material (cotton and
polyester staple fiber) for industry ought to be pulled back right away. This withdrawal would
empower the business to acquire some 3m cotton bundles every year from outside world so as to
meet the lack and to rival provincial rivals in universal market to procure remote trade for the
nation. On inconvenience of 16% FED on banking and protection administrations such advance
charges would play devastation with the development of the business in previously existing
antagonistic conditions and should have been pulled back right away. The legislature ought not
pull back deals assessment and retaining charge Exemption on hardware and parts, as it would
include cost other than liquidity issue for the business.
 References:

[1] All Pakistan Textile Mills Association (APTMA) (Various Issues) Annual Report.
[2] Challenges for Pakistan. Asian Development Review Pakistan Textile Journal (2009).
[3] Pakistan, Government of (2008-09) Pakistan Economic Survey. Islamabad: Ministry of
Finance.
[4] Textile Industry— Special Report (2009).
[5] Business Recorder Pakistan –Special report (2009).
[6] Pakistan Observer-Business Survey (2008).
[7] Economic Review- NBP (2009)
[8] Pakistan and Gulf Economist.
[9] Faisalabad Chamber of Commerce and Industries Punjab Pakistan
[10] http://www.epb.gov.pk
[11] http://www.fpcci.com.pk
[12] PAKISTAN CLOTH MERCHANT ASSOCIATION (PCMA)
[13] http://www.pakboi.gov.pk