Industry

Pakistan is the fourth largest cotton producer in the world. Because of its plentiful, indigenous cotton supply, the textile industry is central to the Pakistani economy and is both a source of employment and a source of exports. Pakistan's industrialization began in the 1950s with the textile industry at its center. Today, textiles account for 38 percent of total manufacturing and 8 percent of GDP. The textile industry employs almost 40 percent of the industrial workforce. Despite the critical role textiles play in the economy, most textile manufacturers are cottage or small-scale industries. Pakistan relies on outside engineering and manufacturing expertise and must purchase most of its equipment abroad. Recognizing the importance of the textile industry to the nation's economy, the Pakistani government began taking steps in 2005 to rebuild the competitiveness of this critical industry. History The Pakistani textile industry depends on domestic agriculture to supply its raw materials, thus the success of the cotton crop is critical to thehealth of the textile industry. Cotton accounts for 14 percent of land under cultivation in Pakistan. Pakistan has suffered from a number of cotton failures over the years, beginning in the early 1990s. These crop failures drove up the price of cotton, and this coupled with a market recession and tightened finance regulations led to a weakened textile industry. Industry Sectors The spinning sector is where the majority of Pakistan's textile industry is concentrated. Over the years, spinning expanded while weaving declined. The rapid expansion of the spinning sector was hastened by access to cheap raw materials cotton and cheap labor. This sector's profitability was furthered by a protectionist fiscal policy and export subsidies. In keeping with increased spinning capacity, cotton production has increased tremendously. The textile industry's weaving sector is comprised of towels, bedding and hosiery and has been adversely affected by tariffs and inflation over the years. The garment sector has undergone considerable modernization and has developed great export potential. Government Initiatives In 2005, the Pakistani government created a special textile sub-committee in order to formulate a new textile strategies and policy in the hopes of revamping the textile industry. The sub-committee submitted a report entitled "Textiles Vision 2005" which included a number of recommendations including improved product quality, equipment upgrade, developing human resources, aggressive targeting of new markets and development of high-powered leadership for the textile sector. The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of the work force in the country, which amounts to a figure of 15 million. However, the proportion of skilled labor is very less as compared to that of unskilled labor.

Exports Cotton and yarn are Pakistan's primary textile exports. The textile industry accounts for over 60 percent of Pakistan's total exports. The All Pakistan Textile Mills Association is the organization that regulates the industry, which is currently facing a number of challenges, including the need to improve quality. According to recent figures, the Pakistan textile industry contributes more than 60% to the country's total exports, which amounts to around 5.2 billion US dollars. The industry contributes around 46% to the total output produced in the country.In Asia, Pakistan is the 8th largest exporter of textile products. Competition Pakistan must compete with other producers similar in conditions and comparative advantage. The Pakistani Textile industry's biggest competitors are China, India, Indonesia and Turkey. The cost of power in Pakistan is comparatively high.

Established capacity The textile industry of Pakistan has a total established spinning capacity of 1550 million kgs of yarn, weaving capacity of 4368 million square meters of fabric and finishing capacity of 4000 million square meters. The industry has a production capacity of 670 million units of garments, 400 million units of knitwear and 53 million kgs of towels. The industry has a total of 1221 units engaged in ginning and 442 units engaged in spinning. There are around 124 large units that undertake weaving and 425 small units. There are around 20600 power looms in operation in the industry. The industry also houses around 10 large finishing units and 625 small units. Pakistan's 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. According to AbidaMukhtar, a consultant currently based in Lahore, Pakistan, discusses the current scenario with the Pakistani textile industry: 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. Pakistan s textile sector earned US$5.77 billion during the 2003 year, compared with US$5.577billion OF 2000-2001 indicating a growth of 0.69%. The total exports of textile sector in 2004 wereUS 5.7 billion which shows 2.5% growth it increase to 4% growth in 2005 as compared to 2004.Thetextile sector shows

8% negative growth in 2006.The negative growth continue in 2007 also with thevalue of 5%.The textile sector shows 15% growth in 2008. Now, as we have gone through Pakistan s textile industry, we will nowanalyze Pakistan s environment because it affects the textile industry as it lives in the environment. Pest analysis Political: In our recent past, the global economic recession, increase in the prices of oil and food and depletion in the value of local currency against dollar has sent its waves throughout the world. As is the case of Pakistan; the textile industry is Pakistan s major industry which includes exports on a large basis. So this international recession affected this sector badly. Electricity shortage due to bad policies of the governments resulted in excessive reliance on oil consumption which increased the total cost.Pakistan s national business environment is characterized by abundance of semi-skilled and low wage labor, moderate natural resources, poorinfrastructure, high rates of corruption, poor governance, moderatelevel of university-industry collaboration and low scientific research. Economic factors The textile industry has been the driving force behind themanufacturingsector growth of Pakistan. This sector accounts for nearly 60% of totalexports for Pakistan, 46% of total manufacturing produce and employs38%of the total manufacturing labor force. Textile trade is classified intotwobroad categories i.e textile which include yarn, fabric and madeupsandclothing which represents ready-made garments. According to Smeda.org out of a total market of US $ 18 billion, almost 50% of the exports are generated from Asia. China is the market leader in fabric exports with US$ 3 billion worth of exports, giving it a 17% share in the global exports. Pakistan has a decent position in the global export market of fabrics with a 7% share. The market share of Pakistan is slightly higher than that of India, which has 6% share. More than 25% of the textile and clothing exports from Pakistan comprise of woven fabrics which includes both the pure cotton and the blended fabrics. During 1997 Pakistan exported US$ 1.3 billion worth of fabric. This translates into an increase of 54% in the total value of exports from 1993. The average growth of export during this period was around 12%. Pakistan's Major Trade Partners Woven fabric including pure cotton, blended and the manmade woven fabric accounts for one third of total textiles and clothing exports from Pakistan. Total fabric exports from Pakistan were US$ 1.2 billion in 1997. Unprocessed fabric constitutes 40% of total fabric exports from Pakistan. Major importing countries of Pakistani woven fabric are Hong Kong, USA, U.K., Dubai, China, Australia andItaly.

Pakistan Exports of Cotton & Blended Fabrics Country Quantity Square Meters 215,634,428 201,288,235 81,252,570 57,386,697 53,005,564 46,750,617 53,708,976 55,395,335 32,572,513 28,760,627 25,241,432 21,260,991 17,987,208 11,301,521 453,619,079 1,355,165,793 US $ 000 221,324 171,840 61,058 57,942 53,610 49,116 46,989 43,291 28,968 27,473 26,684 17,059 14,686 9,377 387,394 1,216,810

HONG KONG USA UNITED KINGDOM DUBAI CHINA AUSTRALIA ITALY BANGLADESH SOUTH KOREA JAPAN GERMANY ARGENTINA CHILE FRANCE Other Total

Social factors Pakistan s main reliance on agriculture is minimizing day by day which is encouraging the contribution by wholesale and retail trade which contributes a significant percentage in the GDP.This sector is highly labor-intensive and this higher growth may havecontributed to the rise in employment and income levels of peopleatattachedto the sector. People are becoming more and more brand conscious. Reliance onforeignbrands is increasing. Therefore the Pakistani brands by portraying a highanda trendy image like the west can capture the interest of people. Due to media proliferation and exposure to the western culture theyounger generations in Pakistan is becoming more and morewesternized.This change in the society has worked in favor of fashion store likeChen Oneand Bareeze that sell trendy western and eastern outfits for both menandwomen but for Ideas by Gul Ahmed, this is a territory yet to enter. Technological factors According to Smeda.org the weaving industry in Pakistan can bebroadly classified into three main segments: 1. Composite Weaving Units 2. Independent Shuttle less Weaving Units 3. The Power Loom sector

Composite Weaving Units (Mill Sector) The composite weaving units comprise of integrated textile mills having their ownspinning and dyeing facility. A total of fifty-three such units currently exist. Theinstalled capacity of these units is 14, 130 looms, which also includes the oldauto and power looms. The working number of looms in the sector is 6,211. Theproduction of cloth by these units is stuck at 380 million sq.m. Independent Shuttle less Weaving Units The number of such units in the country is more than 300. All of these units areequipped with shuttleless weaving technologies, dominated by the Sulzerprojectile looms, which constitutes almost 70% of the equipment installed in thesector. The working number of looms in the sector is approximately 14,500, outof which 5,500 looms are second hand. The rest of the 9,000 looms in the sectorinclude Sulzer projectile looms and rapier looms manufactured by the Sulzer andother Japanese manufacturers including Tsudakoma, Toyoda and Picanol. Modern units in the sector have also inducted new Air-jet looms. The totalnumber of Air-jet looms in both the mill sector and the shuttle less sector isaround 3,000. The total fabric production capacity of this industrial segment isaround 1.2 billion sqm, which is 28% of the total fabric produced in the country. Itcan be safely assumed that this sector accounts for more than 40% of the totalfabric exports, majority of which comprise of greige fabric. Power Loom Sector The power loom sector of Pakistan dominates the fabric production in thecountry. The manufacturers from this segment are clustered in the city ofFaisalabad. Number of looms in each firm varies from 4 to more than 50. Thepower loom sector accounts for 63% of the total production of fabric. Theinstalled capacity of the power looms is around 215,000. The estimated workingnumber of machines is not more than 180,000, which also includes 20,000 autolooms. The total fabric producing capacity of these looms is estimated to be 2.8billion sqm. This segment accounts for more than 50% of the fabric exports. Artificial and Synthetic Fabric Looms Another segment represents power looms, which produce synthetic and artificialfabric. Currently an estimated number of 80,000 looms are associated with theproduction of synthetic fabric. Out of these only 40,000 are operational. Morethan 800 million sq.m of fabric is produced annually by this sector. Instead ofcotton and blended yarns, these looms manufacture fabric by using artificialFilament yarn such as polyester, nylon, acrylic, etc. The technology that is in use in theindustryhas a lot of room to be improved. It is necessary that the industryundertakes an up-gradation in the technology being used. Also, there is lack of efficientR&D and training.The textile machinery used in Pakistan is imported mainly fromcountries likeJapan, Switzerland,

Germany, China and Belgium. On the global scenario the costs of inputs in Pakistanaremore than any of the competing countries like India and china. To facilitate the textile industry, government has granted 6 percentResearch and Development support to garment exports (both knits andwoven). Research and Development support to export of dyed/printedandWhite, Home Textile at 3 percent and dyed/printed textile at 5 percent of the FOB. The scheme has been discontinued from June 30, 2008. As pertheestimates provided by the State Bank of Pakistan, the government hasdoledout Rs 40 billion to textile exporters of the country. From the PEST analysis we have observed some opportunities and threats which are as follows; Opportunities Economies of scale Pakistan Textile City in Port Qasim, Karachi with an area of 1250 acres, will be completed in 2011 as a private public sector joint venture. The main purpose of the textile city is to provide the textile industry with the world class infrastructure to meet the global competitiveness and challenges and as to provide value added textile industrial zone. Its main features include one way window operation, constant supplies of gas and water, and uninterrupted power supply. Branding Targeting the unexplored export markets with the help of aggressive sales and marketing will pave the way for the textile growth. It s all about hunting your opportunities with the handful of colorful lollipops. Global ties By making partners with the foreign companies, companies will be able to learn a lot from them in terms system orientation, supply chain and it would be feasible to import latest technology. We can also reduce our costs, comply with the international standards, and add value to our products, easiness in marketing our products in different foreign regions, improved labor and thus catching up with our regional competitors. Re-engineering of production system and R&D Information technology has a crucial role in manufacturing sector. Acquiring state of the art machinery is though very much expensive, but a very fruitful and necessary measure to stay competitive in the long run. It is the level of trust the exporter builds with its customers by giving them flawless products, made on state of the art machinery. Once this trust is developed, there is no other way than any unforeseen exception that you may lose a customer to another competitor. Therefore, its highly recommended to produce with great efficiency, minimizing the wastage of the raw material, energy resources and thus reducing the cost of production.

Producing high value products It s better to export yarn than raw cotton. Similarly it s better to export finished fabric than to export grey fabric (raw fabric). Furthermore it s very much feasible to export readymade garments than to only fabrics. What makes the latter better is the value added and subsequent increase in per unit price. Therefore, the textile industry should focus on the finished products so as to create more value in their products and reap larger margin of profits. The industry should also diversify into other areas such as technical textiles and nonwovens in order decrease its dependence on conventional and commodity textiles, which is highly sensitive to per unit price and volume for the profit margin. Image building of Pakistan to attract foreign investments Security measures should be taken to facilitate the buyers and investors to visit Pakistan for investments. Secure business environment must be needed to attract golden sparrows to facilitate business dealings and building positive image of Pakistan that they can rely upon. Reducing the cost of business China and India are much cheaper in labor, raw material and utilities as compared with Pakistan. Rising inflation also increases the costs of production. Companies have to control these unnecessary costs if they have to survive in the middle of the two giants of the textile sector in the world. Threats Increasing Cost of Production The cost of production of textile rises due to many reasons like increasing interest rate, double digitinflation & decreasing value of Pakistani rupee. The above all reason increased the cost of productionof textile industry which create problem for a textile industry to compete in international market. Internal issues pose a Larger Threat for Pakistan s Textile Industry Pakistan s textile industry is going through one of the toughest period in decades. The global recessionwhich has hit the global textile really hard is not the only cause for concern. The high cost ofproduction resulting from an instant rise in the energy costs has been the primary cause of concern forthe industry. Depreciation of Pakistani rupee during last year raised the cost of imported inputs. Inaddition, double digit inflation and high cost of financing has seriously affected the growth in thetextile industry. Pakistan's textile exports have gone down during last three years as exporters cannoteffectively market their products since buyers are not visiting Pakistan due to adverse travel advisoryand it is getting more and more difficult for the exporters to travel abroad. Textile exporters rightfully demand reduction of Kibor rate to 8% to avoid a severe decline inexports. A three-year comprehensive textile policy is expected to be announced before budget 2009-10.

The textile policy has been designed to enhance the exports of textile sector to $ 25 billion in next threeyears. This was stated by the Minister for Textile Industry RanaFarooqSaeed Khan. Textile Ministerfurther informed that the spinning and weaving sector would get its due share from the ExportInvestment Support Fund, worth Rs. 40 billion allocated in the Federal Budget 2009-10. RanaFarooqpointed out that he has advocated the case of immediate support to textile industry in the Parliamentand also in the Cabinet meetings because he is confident that only textile industry was capable enoughto bail out Pakistan from the current economic crisis. He further said that although we are 4th largestproducer and 3rd largest consumer of cotton but unfortunately now we are at number 12 in theinternational trade of textile products. Additionally, he stressed that government should take immediatemeasures to remove slowdown in the textile sector. He said that high cost of doing business is becauseof intensive increase in the rate of interest which has increased the problems of the industry. He saidthat record increase in markup rates is one of the major cause of defaults in servicing the loans availedby the industry, hence, the volume of non-performing loans has reached to an alarming situation. Hesaid that power shut downs may result in massive unemployment resulting in law & order situation. Energy Crisis Electricity Crisis As a consequence of load-shedding the textile production capacity of various sub-sectors has beenreduced by up to 30 per cent. The joint meeting of APTMA & other related organization was held atAPTMA House to formulate a joint strategy to address the alarming electricity crisis being faced by the textile industry. The meeting unanimously decided to constitute a joint working group of electricitymanagement for the textile industry in the larger interests of the value chain of the textile industry. Thejoint working group will meet shortly to design a detailed plan to pursue the following goals;immediate total exemption from Electricity load shedding for the textile industry value chain;Rationalization and reduction of electricity tariff.

The load-shedding of electricity cause a rapid decrease in production which also reduced theexport order. The cost of production has also risen due to instant increase in electricity tariff. Due toload shedding some mill owner uses alternative source of energy like generator which increase theircost of production further. Due to such dramatic situation the capability of competitiveness of thisindustry in international market effected badly. Gas Shortage Gas load-shedding continues in Punjab and NWFP despite a significant increase in temperature. Aspokesman for the All Pakistan Textile Mills Association (APTMA) claimed that 60 to 70 per cent ofthe industry had been affected and was unable to accept export orders coming in from around theglobe. He said the textile industry had already endured over 45 days of gas disconnection over a periodof four months, causing extraordinary production losses and badly affecting capability of the industry.In Punjab, he said, energy supply disruption only was causing an estimated loss of Rs1 billion per day.In the larger interest of the economy and exports, he suggested, the government should ensure utilitycompanies provide smooth electricity and gas supply to the textile industry . Tight Monetary Policy The continuity of tight monetary policy causes an intensive increase in cost of production. Due to highinterest rate financing cost increases which cause a severe effect on production. The withholdingtax of1% also effects the production badly. The high cost of doing business is because of intensive increase inthe rate of interest which has increased the problems of the industry. The government should takeimmediate measures to remove slowdown in the textile sector. Removal of subsidy on Textile sector The provisions of Finance Bill 2009-10 are not textile industry friendly at all. Provisions likereintroduction of 0.5% minimum tax on domestic sales, 1% withholding tax on import of textile andarticles etc., are nothing but last stick on industry s back. Reintroduction of minimum tax on domesticsales would invite unavoidable liquidity problem, which is already reached to the alarming level. Thetextile industry was facing negative generation of funds due to unaffordable markup rate. Lack of new investment Pakistan textile industry is facing problem of Low productivity due to its obsolete textile machineries.To overcome this problem and to stand in competition, Pakistan Textile Industry will require highinvestments. There is a continuous trend of investing in spinning since many years. Pakistan s textileindustry estimates that around Rs1, 400 billion (US$32 billion) of investment was required till 2010 inorder to achieve the government's export target." Pakistan is facing externally as well as internally problems which restricts the new investment. The unpredictable internal conditions of Pakistan cause a rapid decrease in foreign investment that affected all industries but especially textile industry.

United States & EU cuts imports of textile from Pakistan United States cancel more than 50% of textile orders of Pakistan .US also impose a high duties on theimport of textile of Pakistan which effect the export in a bad manner. US & EU are the major importerof Pakistan textile which creates a huge difference in export of Pakistan textile after imposing arestriction on import of Pakistani textile goods. Raw material Prices Prices of cotton & other raw material used in textile industry fluctuate rapidly in Pakistan. The rapidincrease in the price raw material affects the cost of production badly. The increase in raw material prices fluctuates rapidly to double digit inflation & instable internal condition of Pakistan. Due toincrease in the cost of production the demand for export & home as well decreased which result interms of downsizing of a firm. Hence the unemployment level will also increase. Government should takeserious step to survive the textile industry. In order to decrease the price raw material for textile weneed to increase our production capability. Simultaneously, the government should make arrangementfor introducing international system of Cotton Standardization in Pakistan to enhance quality and valueof Pakistan lint cotton by utilizing the technical services of Pakistan Cotton Standard Institute. Export Performance of the Textile Sector For the second year in a row, the country missed annual textile export target of 12 billion dollars by 20percent due to high cost of production, power shortage and stiff competition with regional players. Thefederal government envisaging 15 percent growth had set textile export target of 12 billion dollars forFY09 against 10.35 billion dollars for FY08. However, in FY09, the country not onlymissed its textileexport target but also registered a decline of some 6 percent as compared to FY08. "Yes, the countryhas fallen short of textile export target by over 2 billion dollars due to the global meltdown and severalbarriers faced by textile industry on the domestic front," said MirzaIkhtiarBaig, Prime Minister'sAdvisor on Textile. Ikhtiar said that high cost of doing business, power shortage; poor industrialinfrastructure and slow external demand are some major factors contributing to the decline in textileexport. However, he was confident that during the current fiscal year textile sector will show betterperformance as the government is trying to remove the tariff barriers, besides exploring new textileexport markets. "I am confident that the governments and the Ministry of Textile's efforts will behelpfulin boosting the country's textile export and enabling it to compete with other regionalcompetitors like India and China," Baig said.Additionally, the official statistics of the State Bank of Pakistan (SBP) show that the country'stextile exports is also some 2.36 percent lower than the export of fiscal year 2006-07, in which overalltextile exports as per receipts stood at 10.011 billion dollars. The central bank has also revealed thatout of 12 major textile export 9 registered negative growth and export of only three items - raw cotton,bed wear and towels has posted some increase. With 18.34 percent decline, readymade garmentsexports stood at 983 million dollars and knitwear export at 2.054 billion dollars after a decline to 4percent in FY09. Diagram shows comparison of Pakistan Textile Exports in (US$bn) for differentfiscal years.

Pakistan Textile Exports in (US$bn) for different fiscal years

The Effect of Global Recession on Textile Industry In economics, the term recession means The reduction of a country s Gross Domestic Product(GDP) for at least two quarters; or in normal terms, it is a period of reduced economic activity. Pakistan is 26th largest economy in the world, and 47th largest in terms of the dollar. It is sad to seeour economy like this now. Pakistan is actually a very economically diverse country with boastingindustries of textiles, agriculture, etc.The main reason for this slump has largely been the political instability over the past few years;no proper economic policies were implemented; at least none that succeeded. This caused a very highrate of inflation, which, in 2008, had increased to a whopping 25% as compared to a 7.9% of 2006.What occurred afterwards is what we call the domino effect. The value of the Rupee crashed from 60-1USD to 80-1 USD in only a month, the prices of commodities soared through the roof, the number ofpeople living below poverty line increased from 60 million to 77 million, and consequently, theworking class layman became virtually deprived from basic necessities like water, wheat, electricity,natural gas, and cooking oil; add to all this, the preposterous amounts of load-shedding, and what weget is a nation in shambles.The above all situation of the economy badly affected the textile industry also. The demand fortextile product cut down locally & internationally as well. The export order reduced due tounpredictable conditions of Pakistan & political instability. The cut down in the production of textilecause further unemployment level which decrease the living standard of peoples. Effect of Inflation Inflation rate is measured as the change in consumer price index (CPI).Inflation is basically a generalrise in the price level. It is decline in the real value of money. Inflation can have adverse effect oneconomy. Pakistan is one of prey of inflation. It still faces high double digit inflation. The increase ininflation causes

the increase in the cost of production of textile good which return in downsizing. Thedouble digit inflation causes reduction in exports of textile. Unemployment Caused by Textile Unemployment occurs when a person is available to work and seeking work but currently withoutwork. The unemployment rate in 2006 was 6.6 per cent which decreases 0.1 percent in 2007. Theunemployment rate reaches to 7.5 per cent in 2008 due to global crisis.As the LSM decrease theproduction that s why the unemployment level rises very rapidly.The rise in unemployment level is 11per cent in 2009. The unemployment rate in textile industry was very high during the current fiscalyears because of recession & increasing cost of inputs & fluctuating situations of country. Year wisecomparison of inflation and unemployment with the time can be seen in diagram and table.

Year

Inflation rate (consumer prices)

Unemployment Rate %

Date of Information

2000 2001 2002 2003

6% 5.20% 4% 3.90%

7% 6% 6.80% 7.80%

1999 est 2000 est 2001 est 2002 est.

2004 2005 2006 2007 2008 2009

2.90% 4.80% 9.10% 7.90% 23.00% 17.20%

7.70% 8.30% 6.60% 6.50% 7.50% 11%

2003 est. FY03/04 est. 2005 est. 2006 est. 2007 est. 2008 est

Upcoming years of textile sector in Pakistan Pakistan s textile industry is going through one of the toughest periods in decades. The globalrecession which has hit the global textile really hard is not the only cause for concern. Serious internalissues also effected Pakistan s textile industry very badly. The high cost of production resulting froman instant rise in the energy costs has been the primary cause of concern for the industry. Depreciationof Pakistani rupee during last year which has significantly raised the cost of imported inputs.Furthermore, double digit inflation and high cost of financing has seriously affected the growth in thetextile industry. Pakistan's textile exports in turn have gone down during last three years as exporterscannot effectively market their produce since buyers are not visiting Pakistan due to adverse travelconditions and it is getting more and more difficult for the exporters to travel abroad. Pakistan s textileindustry is lacking in research & development (R & D).The production capability is very low due toobsolete machinery & technology. Pakistan is facing high cost of production due to several factors like the hike in electricity tariff,the increase in interest rate, energy crisis, devaluation of Pakistani rupee, increasing cost of inputs,political instability, removal of subsidy & internal dispute. The above all factor increase the cost ofproduction which decreases the exports. Exports receipts decrease from $ 10.2 B to $ 9.6 B. The globalrecession also hit badly the textile industry. Double digit inflation also caused decrease in production intextile sector which cause the increase in unemployment level.By the removal of subsidy the industry s production get higher effected which prove as a laststrike on industry s back.Govt. should provide subsidy to the textile industry for the survival of thisindustry. Continuity of 1pc controversial withholding tax on import of essential raw material (cotton &polyester staple fibre) for industry should be withdrawn immediately. This withdrawal would enablethe industry to procure some 3m cotton bales annually from outside world in order to meet the shortageand to compete with regional competitors in international market to earn foreign exchange for thecountry.On imposition of 16% FED on banking and insurance services such advance taxes would playhavoc with the growth of the industry in already existing adverse circumstances and needed to bewithdrawn immediately. The government should not withdraw sales tax and withholding taxexemption on machinery and parts, as it would add cost besides liquidity problem for the industry. 1. 2. 3. 4. Prices of fop Quality of yarn Technology R&D

5. Marketing 6.

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