“TEXTILE POLICY 2009-14”

MINISTRY OF TEXTILE INDUSTRY (MINTEX),

GOVERNMENT OF PAKISTAN

1 of 40
 TABLE OF CONTENTS

1. EXECUTIVE SUMMARY

2. GOVERNMENTAL VISION,
MISSION & COMMITMENT

3. MINISTRY PROFILE

4. INDUSTRY PROFILE

5. TEXTILE POLICY 2009-14

6. CRITICAL EVALUATIONS

7. SUMMARY

8. BIBLO GRAPHY.

9. APPENDIX.

2 of 40
 EXECUTIVE SUMMARY
On August 13, 2009, Pakistani Government unveils first ever five year textile policy;

The Federal Textile Minister, Mr Rana Farooq Saeed Khan, announced the first ever
five-year Textile Policy 2009-14 that aims at taking the country’s textile exports from
the existing US $10 billion to $25 billion by the year 2015.

This policy has been framed in extensive consultations with all the stakeholders,
including industrialists, exporters, investors, State Bank of Pakistan and Ministries of
Finance, Industries, Commerce, Agriculture, Planning and Investment.

Since, inception, textiles have been the mainstay of the Pakistan economy and
exports. This sector provides livelihood to more than 10 million farming families. It
also accounts for 40% of the industrial employment.

Despite the recent downturn in the global demand, textiles and garments exports
accounted for more than 50 per cent of exports during the last fiscal year (2008-09)
and the country is the fourth largest producer and third largest user of cotton.

Yet, Pakistan is twelfth in terms of international trade, which means much of its
advantage is lost in low value added semi-manufactured exports. A variety of reasons
explain the poor state of the textiles sector.

Machinery and technology has not kept pace with world standards, infrastructure has
been lacking, especially power, gas and clean water, available skills are deficient and
high degree of fragmentation mars efficiencies.

Uneven growth of value-chain undermines balanced development of the sector,

external restrictions such as quota and restricted access provided limited opportunities
and absence of a well defined policy framework created uncertainties and promoted
haphazard development of the sector.

The textile policy, while addressing the above failings, has been prepared with the
over-riding objective to realize the true potential of this sector. Presently, the Pakistan
textile sector is converting one bale of cotton into $1000, whereas its competitors are
converting it to up to $4,000.

In the five years from 2009-14, the first textile policy targets that this rate of
conversion should be doubled from $1000 to $2000. This will require increasing the
level of exports to $25 billion by the end of the policy period.

The Textile Policy represents a new beginning for the textiles sector. Through this
policy, the government has not only set out a road map for the development of this
sector but has provided the necessary support without which rapid progress of this
sector is not possible.

3 of 40
 GOVERNMENTAL VISION
On August 12, 2009, Federal Cabinet approved textile policy in a meeting at Prime
Minister Secretariat here with Prime Minister Yousuf Raza Gilani in chair. The
cabinet in the five-year textile policy has set the textile exports target at 25 billion
dollars. The cabinet also decided to take steps to boost the production in textile sector.
Prime Minister Gilani also formed a ministerial committee to monitor the
enforcement of the textile policy. Prime Minister Syed Yousuf Raza Gilani
Wednesday said the Textile Policy aims at incorporating the strategies that are
essential to address the challenges confronting this sector on a sustainable basis
besides meeting the expectations of the industry. Addressing the Special Cabinet
meeting convened to consider the Textile Policy 2009-14 at the PM Secretariat, the
Prime Minister said for the first time in the history of the country, the government was
adopting a five-year Textile Policy, which would give the vision that was needed for
the textile sector.

MINISTRY’s MISSION
The Federal Textile Minister, Rana Muhammad Farooq Saeed Khan, who chaired the
1st meeting of Textile Policy Implementation Liaison Committee, informed that the
government has allocated Rs 10 billion for various initiatives under the textile policy
for the current fiscal year.

He added by saying that out of the Rs 10 billion, Rs 5 billion had already been
released to the State Bank of Pakistan and that he would ensure that the textile policy
would be implemented in its true spirit for the development of textile sector in the
country.

SECRETARIAL COMMITMENT
Dr. Waqar Masood apprised the participants, who represented all the sub-sectors of
the textile industry about the progress on implementation of the policy in detail and
that notifications regarding important initiatives of the policy have already been
issued.

4 of 40
FEDERAL MINISTRY
OF
TEXTILE INDUSTRY
(MINTEX),
GOVERNMENT
OF PAKISTAN

5 of 40
 THE MINISTRY

Rana Muhammad Farooq Saeed Khan

Federal Minister for Textile Industry

Secretary “MINTEX”
• Dr. Waqar Masood Khan
Secretary, Ministry of Textile Industry

Senate Standing Committee On Ministry Of Textile Industry

1. Senator Waqar Ahmed Khan Member
2. Senator Sardar Mehmud Khan Member
3. Senator Muhammad Ali Durrani Member
4. Senator Asif Jatoi Member
5. Senator Ahmed Ali Member
6. Senator Muhammad Akram Member
7. Senator Hafiz Abdul Malik Qadri Member
8. Senator Prof. Sajid Mir Member
9. Senator Farooq Hamid Naek Member
10. Senator Muhammad Azam Khan Swati Member
11. Senator Dr. Muhammad Ismail Buledi Member

6 of 40
History
The need to establish a separate ministry for textiles had been on the cards for several
years as this sector contributes 8.50% of the national income, constitutes more
than 60 % of to the export earning of the country, employs 38% of the industrial
labor force, generates half of the production of manufacturing sector and shares
9% in GDP and also has the potential to meet the challenges of the highly
competitive global market especially after the removal of trade barriers under
W.T.O regime.

It however, goes to the credit of the previous government that they established the
Ministry of Textile Industry on 2nd September, 2004 and appointed Mr. Mushtaq
Ali Cheema, Minister for Textile Industry, who is also a leading industrialist of
the country.

Functions

The functions allocated to Ministry of Textile Industry in terms of Rule 3(3) of Rules
of Business 1973, are:

1. Formulation of Textile policy;

2. Coordination and liaison with Federal agencies/institutions, provincial
Govts and Local Governments entities for facilitation and promotion of the
textile sector;
3. Liaison, dialogs, negotiations, except trade negotiations, and
cooperation with international donor agencies and multilateral regulatory and
development organizations with regard to textile sector;
4. Setting of standards and monitoring and maintaining vigilance for
strict compliance of the standards throughout production and value chain;
5. Textile related statistics, surveys, commercial intelligence, analysis and
dissemination of information and reports on international demand patterns,
market access etc;
6. Linkages with cotton and textile producing countries;
7. Training, skill development, research for quality improvement and
productivity enhancement throughout the production/value chain;
8. Management of Textile Quotas; and,
9. Administrative control of:

• Federal Textile Board

• Textile Commissioner s Organization
• Synthetic Fiber Development and Application Center, Karachi
• Textile City Projects, Karachi/Faisalabad
• National Textile University, Faisalabad
• Directorate General of Textiles & Quota Supervisory Council
• All textiles related EPB/EDF funded institutes concerned with skill
development in various sub-sectors of textile industry
• Textile Testing Laboratory, Faisalabad
• Garment City Projects at Lahore, Faisalabad and Karachi
• Pakistan Cotton Standards Institute, Karachi

7 of 40
The Rules of Business also provide that:

• Ministry of Commerce will consult Ministry of Textile Industry on

textile trade negotiations and also associate it with Textile Sector Trade
Promotion.
• Ministry of Food, Agriculture & Livestock will have the administrative
control of Pakistan Central Cotton Committee with participation and inputs of
Textile Industry Division.

The Ministry is working with a skeleton staff of 58 persons since February 2005. A
budget of Rs.28 million was provided in the first year of its existence i.e. financial
year 2004-05. In the current year 2005-06 Rs 20.9 million has been provided.

Organization Chart

8 of 40
Incentives to the Industrialists
Government of Pakistan has taken various initiatives/steps to boost the textile sector
and to make it compatible with the other global competitors in the end of quota
regime. Establishment of Federal Textile Board to take decisions for the development
of textile industry.

1. Establishment of Textile City at Karachi and Garment Cities at

Karachi, Lahore & Faisalabad is in progress.
2. Gradual reduction of import duty on textile machinery and parts to 5%.
3. 6% R & D Support to garment exports.
4. Weaving sector has been included in the long term financing for export
oriented projects, (LFT-EOP) scheme vide SBP, Circular letter No 19 dated
2nd June 2005.
5. Import duty on ginning presses has been reduced to 5%.
6. Turn over tax has been reduced to 1% on retailers of specified textile
fabrics and articles of apparel including readymade garments or fashion wear.
The 15% Sale Tax levied earlier on retailers has been reduced to 2%. Both
these taxes will be their final tax liability.
7. The ECC of the Cabinet in its meeting held on 15th July, 2006
approved a textile package to give boost to the Textile Industry which has the
following salient features:

• State Bank of Pakistan will provide long-term financing for export

oriented projects at reduced mark up of 7% and 6% for 7½ year and 3 year
period respectively. It has also simplified the procedure.
• The re-financing rate has been reduced to 7.5% from 9%.
• R&D support @ 6% shall be continued to be given to Ready Made
Garments and Knitwear exports. In addition, R&D support will also be
available for exports of the following:

a. Dyed/Printed Fabrics and white-Home Textile @ 3%

b. Dyed/Printed Home Textiles @ 5%

• A committee is being formed to explore the possibility of re-inclusion

of “Fabrics” in SRO-410. The said committee shall report by August 1, 2006.
• A committee is being formed to consider Zero duty on import of
weaving machines and spare parts.
• A committee is being formed to examine actual zero rating of all
textiles & clothing exports.

9 of 40
 DEPARTMENTS UNDER MINISTRY
Textile Skill Development Board

Textile Skill Development Board was set up in the Ministry of Textile Industry in
pursuance of the Trade Policy 2005-06 initiatives for support to the textile garment
sector wherein garment manufacturing units were to be declared as skill development
training institutes. The composition of the Board and its tasks are as under:

Composition
• Secretary, Ministry of Textile Industry Chairman
• Secretary, Ministry of Commerce
• Vice Chairman, Export Promotion Bureau
• Chairman of major garment manufacturing associations, i.e. PRGMEA,
PAKSEA, PCFMEA, PHMA as members
• Representative from TEVTA, and,
• Representative from TUSDEC

The Board, amongst other tasks, was to chalk out modalities for selection of such
units to be declared as training institutes and to determine the fees/expenses of
students/trainees, approval of curriculum, syllabus of training institutes and
examinations, teaching, monitoring and certification activities, seeking affiliation
from international organizations specializing in this field and element of subsidy to be
provided by the Government.

In its first meeting held on 26th October 2006 the Board had asked the member
garments associations to furnish to the Board with lists of units, who would be willing
to offer their units as training institutes on cost sharing basis.

In a meeting presided over by the Prime Minister on 1st February 2006, the Prime
Minister was pleased to direct the Ministry of Textile Industry that the skill
development programme for workers should start in the garment units within 8-10
weeks, funding for which will be made through the EDF. In pursuance of the Prime
Minister s decision, several meetings were held with the garments sector on 7th, 15th
and 16th of February 2006 in Karachi & Lahore followed by a meeting of Textile
Garments Skill Development Board on 21st February 2006 to put the scheme on
ground.

10 of 40
The Board in its meeting held on 21st February 2006 decided that the training
programme of workers (machine operators) should be started immediately with the
aim to train a critical mass of 20,000 to 22,500 workers in one year, averaging 7500
each from Karachi, Lahore & Faisalabad, to create an impact and bring in a visible
change. It was also decided that Government would bear the cost of stipend of a
trainee (Rs.2500/per month) and the cost of trainer to the extent of Rs. 1000/- per
trainee/per month i.e. a total of Rs.3500/- per trainee per month.

For imparting training to a maximum of 150 trainees in 05 batches in each of 60 units

over a period of 12 months i.e. a total of 9000 trainees the cost worked out to Rs. 95.5
million. A further 1.5 million was required for advertising the scheme in the print
media. The EDF Board in its meeting held on 22-03-2006 sanctioned an amount of
Rs.96 million and out of which it has released Rs.19.4 million to the Skill
Development Board for the first batch s training.

The Textile Skill Development Board in its meeting held on 25th May 2006 has
finalized administrative and other details relating to curriculum, duration of training,
number of machines which will be dedicated by each participating unit for training
program (@ one machine per trainee). 44 Units, which had conveyed their willingness
to join the program through their associations, were asked by the Board to
communicate their willingness in writing on a prescribed format so that the scheme is
advertised for launching. 31 Units have expressed their willingness.

The Textile Garments Skill Development Board has advertised the scheme in the print
media, inviting the candidates to apply for training. Each unit is required to carry out
a training of a minimum of 15 to a maximum of 40 candidates in one batch in such a
way that each trainee will be assigned a separate machine for training. The
programme is set to be launched from 1st week of July 2006.

One of the main features of the scheme is that lady candidate who fulfill eligibility
requirement will be given preference and 75% of the seats in each unit will be
reserved for then. Secondly the scheme is targeting fresh trained hands and will not be
available to those who are already working as machine operators.

National Textile Strategy Committee

A Committee under the Chairmanship of Minister for Textile Industry was
constituted in July, 2007. The TORs of the committee are as under:-

• The Committee will review the Textile Vision 2005 and formulate a National
Textile Strategy upto the year 2005.
• The Committee to submit its report to the government within a period of three
months of its first meeting.

Subsequently, a Sub-Committee headed by Mr. Tariq Saigal was formed who

submitted its recommendations to the Prime Minister.

Federal Textile Board (FTB)

Federal Textile Board (FTB) is functioning under the Ministry of Textile Industry
with the following terms of reference:-

11 of 40
The Board would facilitate the implementation of the recommendations contained in
Textile Vision for:

1. Production of Contamination-free cotton;

2. Project financing for small and medium entrepreneurs in high value
added textile sectarian;
3. Review of domestic and international prices of cotton, to ensure a fair
return to growers and maintain stability in domestic prices; and,
4. Liaison with all stakeholders from cotton growers to textile exporters
for removing any bottlenecks / problems in implementation of the
recommendations.
5. The Board would meet at least once in a month to review progress and
take decisions to remove, if any, difficulties in implementation of the
recommendations.
6. The Board would take such steps as necessary to provide inputs, for
example certified seed, fertilizer, machine tools (ginning saws) and other raw
materials etc to ensure movement of the textile sector towards value addition.
7. The Board would liaise with the Provincial Government approach to
achieve the objective of value addition in the textile sector, from production
of contamination-free cotton onwards.
8. Human Resource Development for Textile Industry.
9. Measures to make the textile products internationally competitive in
respect of prices & quality.
10. Any other task that the Board may decide for itself to attain the overall
objectives.

Research, Development and Advisory Cell

Ministry of Textile Industry has established a Research, Development and Advisory
Cell in the Ministry, which is focusing on devising policy guidelines for the
government to boost the textile sector on the prospective trade figures for future
exports in different textile product categories, quality issues in our exportable goods,
the cost of doing business, skill development in the textile sector and on the export led
growth in certain sub sectors of the textile trade.

The R&D and Advisory Cell is responsible for the study and analysis of existing
textile policy guide-lines and their alignment for the future drive of the industry,
establishing bench marking of textile policies with regional and intra-regional textile
players of the world, analysis of export figures in different sub-sectors of the textile
trade, devising policies to encourage exporting units to commit more funds in certain
sectors/products, matters relating to WTO, antidumping and countervailing duties etc,
devising measures to improve skill development of the Pakistani labour force,
establishment of a data bank of national and international textile related figures
including trade, capacities, trends, investments and competitors performance etc and
analysis of this database to draw results on monthly or quarterly basis, interpret and
analyze competitors data vs. Pakistan export data and infer findings, which will help
Ministry of Textile Industry to take better quality decisions to help export led growth,
and analysis of various SROs in order to rationalize them and to make them textile
industry friendly. The under mentioned positions have been approved by the Prime
Minister of Pakistan on contract basis for a period of two years.

12 of 40
 • DG/Head of Research Cell (MP-I)
• Director (R&D) (MP-II)
• Director (Textile Technology/ Productivity/Skill Development) (MP-
II)
• Manager (R&D) (MP-III)
• Manager (Financial Analysis) (MP-III)
• Manager Information Technology (MP-III)
• Information Technology Officer

These posts were advertised in the National press medium as well as on the Ministry’s
website and a special selection board headed by the Minister of Textile Industry
completed recruitment process. The summary for the appointment of MP Scale posts
had been sent to the Prime Minister through the Establishment Division for approval.
The Prime Minister has been pleased to approve the appointment of the following
candidates:

1. Mr. Nasim Qureshi, Additional Secretary (BS-21) has been re-

employed against the post of Director General
2. Mr Arsalan Ghani, Director (Textile Technology/ Productivity/Skill
Development) (MP-II)
3. Mr Kanwar Usman Director R&D (MP-II)
4. Mr Abbas Mahdi, Manager Financial Analysis (MP-III)
5. Mr Adil Majeed, Manager Information Technology (MP-III)
6. Mr Zia-ul-Haq Farani, Information Technology Officer

The Finance Division has sanctioned a supporting staff of 25 persons who have also
been hired. In order to accommodate the RD&A Cell, a house has been hired in sector
I-8/4, Islamabad with the approval of the Prime Minister.

Textile Commissioners Organization, Karachi

Mission
Develop & revitalize the Textile Industry in Pakistan to establish solid export base by
creating / maintaining Textile database & serving as bridge between Industry &
Government.

Introduction
Textile Commissioner’s Organization existed even prior to independence as an
attached department. After independence the Organization was first set up as a
subordinate office of the Ministry of Industries, and then merged with the
Department of Supplies and Development in 1959. It was again made an independent
Organization headed by a Textile Advisor in 1961 but abolished in 1962 and the
organizational setup was merged with the Investment Promotion Bureau, under the
title of Directorate of Textiles. This arrangement continued till the year 1973. In
November 1973, the Textile Commissioner’s Organization with the status of an
attached department under the Ministry of Industries, and headed by a Textile
Commissioner was created and separate budget was allocated. In September 2004
after the creation of Ministry of Textile Industry, its administrative control was
transferred to this Ministry.

13 of 40
Role
Textile Commissioner’s Organization is the professional body to advice government
on technical matters relating to the Textile industry. It constantly:

• Monitors moves in the textile industry locally and internationally.

• Gathers statistical data
• Accurately grasp the problems and difficulties of the industry and draw
up appropriate policy measures to solve them.
• Drafts new laws and regulations & follows the process of their
enforcement and execution.
• Monitors the process of permeation of policies and appraises the
effects of policies. Determines the interaction within different sub-sectors of
textile industry & evaluates the proposals made by different sub-sector to
draw up a consensus with national importance & priority.

Services
TCO provides every possible support to Ministry of Textile Industry on Textile Sector
of Pakistan.

1. Plays a role of a bridge between Textile Industry & Government. It

takes up the problems of Textile Mills to Government for their solution.
2. It collects/maintains a database of entire Textile Industry of Pakistan &
provides the required data to Ministries & other Govt. departments.
3. It provides Cess Collection Service to Faisalabad Textile University.
4. It provides help in drafting new laws & regulations.
5. It helps in monitoring the process of permeation of policies

Textile Commissioner’s Organization is also represented on the following Textile

related concerns:

o Karachi Cotton Association

o Pakistan Central Cotton Committee
o National Textile University, Faisalabad
o Textile Machinery Company
o Representation on Sub-Committee in relation to various sub-
sector of Textile Industry
o Pakistan Standard and Quality Control Authority
o Pakistan Textile City Company Limited/Garments City
Company, Karachi

For Further details, please visit TCO`s website www.tco.gov.pk

National Textile University, Faisalabad

National Textile University is an educational institution that has taken many steps for
raising the overall standard of education and to boost up the Textile Industry of the
country to compete in the international market. The most notable have been:
rationalizing of tuition fees, hiring of new faculty at competitive salaries, up-
gradation of facilities, introduction of semester system and introduction of new
discipline like Garments manufacturing.

14 of 40
NTU Contribution to the Industry

1. 95% of textile industry is being run by NTU graduates

2. Till 1992 the only Nationalized Institution producing textile graduates
3. Presently, the leading institute with maximum numbers of textile
graduates per year
4. Only Institution in the country preparing graduates with special focus
on export oriented segment of textiles
5. Textile testing services

Future Plans
1. Considering the increased demand of Textile Industry, increase of students
intake
2. Research & Development Programmes
3. Doctoral Studies
4. New Disciplines proposed:
 Textile Management
 Textile & Apparel Designing
 Knitting Technology
 Industrial Engineering
 Polymers & Composite Sciences
 Non Woven Materials

For further details please visit NTU`s website: www.ntu.edu.pk

15 of 40
PAKISTANI
TEXTILE
INDUSTRY

16 of 40
Cotton is the cash crop of Pakistan. The quality of cotton and cotton related products
of Pakistan are unmatched in the international markets. The ever-growing textile
industry of the country has shown consistent expansion and stability over the last
many years.

The exports of textile and textile products of Pakistan have shown a significant
increase in the recent years. The government has offered various incentives for the
industry’s up gradation and modernization.

Pakistan’s textile industry is a major contributor to the national economy in terms of

exports and employment. Pakistan holds the distinction of being the world’s 4th
largest producer of cotton as well as being the 3rd largest consumer of the same. In
the period July2007-June2008, textile exports were US$ 10.62 Billion and accounted
for 55% of the total export. Pakistan has 13% of the market share.

Pakistan is at the center of a rapidly developing textile & garments manufacturing

region. Apart from fulfilling its local requirements, Pakistan has emerged as the
textile hub of the region. There exists a strong political will to modernize the textile
sector and there is an increasing demand for compliance with ISO and other
international quality certifications and standards.

As the textile industry of Pakistan being is in the midst of industrial up gradation and
the businessmen are seeking newer solutions to bring more efficiency in their
production systems. Therefore, the pioneer of grasping this opportunity will be the
most successful business organization in Pakistan as none of the local industry can

17 of 40
cater this tall order. National organizations will enjoy the benefit of globalization and
will witness more joint ventures and collaborations between local and international
brands.

TEXTILE
POLICY

18 of 40
 2009-14

THE MINISTER’s SPEECH

Ladies and Gentlemen!

1. It is a matter of great privilege for me that the Ministry of Textiles has transformed
the vision of Shaheed Benazir Bhutto into reality by formulating the first ever textiles
policy of Pakistan under the guidance of President Asif Ali Zardari and Prime
Minister Syed Yousuf Raza Gilani. This policy was approved today by the Federal
Cabinet. It is also a matter of great honor for the People’s Government that it has
succeeded in given this policy which aims to develop this sector as an integrated
chain. I am grateful to the Finance Minister for his invaluable support and advice in
the formulation of this policy. The efforts and devotion of the officials of the Ministry
of Textiles are also duly acknowledged. We have held extensive consultations with all
the stakeholders, including industrialists, exporters, investors, State Bank of Pakistan
and Ministries of Finance, Industries, Commerce, Agriculture, Planning and
Investment, and their inputs are fully reflected in policy.

Ladies and Gentlemen!

2. You are all aware of the importance of the textiles sector. Let me just say that from
the inception of Pakistan, textiles have been the mainstay of our economy and
exports. This sector is providing livelihood to more than 10 million farming families.
It also accounts for 40% of the industrial employment. Despite the recent downturn in
the global demand, the textiles and garments exports accounted for more than 50
percent of our exports during the last financial year (2008-09). We have a world

19 of 40
standing in this sector. We are the 4th largest producer of cotton and 3rd largest user of
cotton. Yet we are 12th in terms of international trade, which means much of our
advantage is lost in low value added semi-manufactured exports.

3. A variety of reasons explain the poor state of our textiles sector. Machinery and
technology has not kept pace with world standards, infrastructure has been lacking,
especially power, gas and clean water, available skills are deficient, high degree of
fragmentation mars efficiencies, uneven growth of value-chain undermines balanced
development of the sector, external restrictions such as quota and restricted access
provided limited opportunities and absence of a well defined policy framework
created uncertainties and promoted haphazard development of the sector.

4. The textiles policy, while addressing the above failings, has been prepared with the
over-riding objective to realize the true potential of this sector. Presently, we are
converting one bale of cotton into $1000, whereas our competitors are converting it to
up to $4,000. In the five year from 2009-14, the first textiles policy targets that this
rate of conversion should be doubled from $1000 to $2000. This will require
increasing the level of exports to $25 billion by the end of the policy period.

5. Let me briefly touch upon the major thrust of the textiles policy 2009-14.

Key Initiatives under Textiles Policy 2009-14

Cross-cutting Issues

6. I will first explain those initiatives that affect the entire value-chain.

7. A Textiles Investment Support Fund (TISF) will be established for incentivizing

investments in specific areas including modernization of machinery and technology,
removing infrastructural bottlenecks, enhancing skills, better marketing and use of
information and communication technology (ICT). Through this fund following
initiatives will be undertaken:

Technology Up-gradation Fund (TUF):

8. To facilitate new investments and upgradation of technology Government will

contribute part of the investment financing or part of the investment cost through the
TUF. Under this scheme, for capital intensive projects, government will pick-up 50%
of interest cost of new investment in plant and machinery with a maximum of 5%. For
small investments, government will contribute up to 20% of capital cost as a grant.
For this purpose, Government has kept a budget of Rs.1.6 billion in the current
financial year for this scheme. This will increase to Rs. 17 billion by 2014.

Infrastructure Development:

20 of 40
9. Based on the experience from textiles city and garments cities models, Government
plans to set up more such industrial estates to ensure availability of all industrial
amenities at reasonable cost.

10. Clusters will be developed where small investors can set up their facilities. The
clusters will be provided with laboratories, product development centers, research
centers, common sheds etc.

11. With a view to bridging a major gap in compliance support will be provided for
setting up effluent treatment plants for the existing industry.

12. Schemes for common warehousing, storage and marketing facilities will also be
launched to ensure timely and cost effective availability of inputs.

13. An amount of Rs. 1 billion is being allocated this year for infrastructure
development in the areas just mentioned and all measures will be initiated on public
private partnership model.

Skills Development:

14. A comprehensive training plan will be developed to upgrade the overall pool of
skills in the textiles value chain in close consultation with the industry and will be
implemented during the next five years.

15. Facilities will be provided for audits to enhance productivity and efficient
processing.

16. Government will also support acquisition of foreign expertise in enhancing local
productivity and supervisory skills and for this purpose Government has exempted
foreign experts from income tax.

17. Government will allocate Rs. 1 billion during the current year for skill
development initiatives.

Standardization:

18. A legal framework will be developed to specify standards and testing

requirements, prescribe disclosure requirements and other matters relating to the
practices and methods relevant to the sector. This has become necessary in view of
compliance standards imposed by major importing countries.

Zero Rating of Exports:

19. Government recognizes the principle that exports should not be taxed. Efforts will
be made to identify all direct and indirect levies that add to the cost of doing business
without appropriate compensation so that remedial measures can be adopted.

Rationalization of Tariff Structure:

21 of 40
20. The principle of cascading will be implemented while ensuring adequate
protection to the local industry and removing anomalies.

Removing Regulatory Bottlenecks:

21. An extensive exercise will be undertaken covering all sub-sectors, to identify

rules, regulations, procedures, levies and other regulatory constraints that hamper the
development of the sector. Based on this exercise, appropriate measures will be
adopted to simplify or remove such irritants.

Market Access:

22. Government will be expending concerted efforts to secure due access for Pakistan
in some of the key destinations of our exports. Preferential access as well as FTAs in
such markets will be the focus of such efforts.

Marketing Support:

23. Government will provide necessary support for branding, grading, labeling and
such other activities that would add value to the textiles chain.

Export House Scheme:

24. To initiate a process of building big export houses, Government is planning to

treat local sales of yarn and fabrics to large exporter as deemed exports. For this
purpose, small producers will get 1% drawback on levies and unadjusted taxes on
sales to the export houses. An amount of Rs. 2 billion has been budgeted for the
current year for this scheme.

Marketing Insurance Scheme:

25. Government will introduce an insurance scheme to protect our exporters against
unforeseen losses, which may arise due to failure of the buyer, bank or problems
faced by the buyer country. A working group will be set up to develop a feasible
scheme for the consideration of the government. This scheme will help remove
uncertainties currently faced by the exporters, especially in a global markets hit by a
massive financial crisis.

Information and Communication Technology:

26. Government will also support efforts aimed at enhancing efficiency through the
use of information and communication technology in such fields as development of
websites and e-commerce platforms.

Sub-sector Initiatives

27. The policy will also focus on certain sub-sector issues from fibre to garments
including ginning, spinning, weaving, knitting, processing, fashion designs, handloom
and handicrafts, carpets and technical textiles etc.

22 of 40
28. Specific schemes will be launched, mostly on public-private partnership basis, to
upgrade and improve these sectors.

Fibres:

29. The persistent problem of contamination and trash content will be addressed
through enforcement of the standards laid down in the Cotton Control Act and Cotton
Standardization Ordinance.

30. A comprehensive training and capacity building program will be developed to

establish a system in the private sector for grading and classifying cotton.

31. Incentives will be provided to ensure that proper premiums are paid for increased
production of contamination free graded cotton.

32. Measures will be introduced for production of long staple cotton for value added
products and to meet domestic demand for high quality fabrics, including introduction
of BT cotton on priority basis. Simultaneously, measures will be introduced for
cultivation of organic cotton in new areas to increase value and production.

33. The policy will also aim at providing a paradigm shift and concentrate on other
high value added fibres, especially manmade fibres, to enrich the export mix.
Necessary incentives will be provided to encourage investment in additional capacity
in the MMF industries at competitive prices. NTC will determine required protection
for such industries.

34. Measures will also be taken to develop other vegetable fibres (jute, flax etc.), wool
and sericulture for supporting diversification within the natural fibres.

Ginning:

35. A comprehensive scheme will be prepared and implemented for conversion of

ginning industry into an efficient ‘service sector’ to benefit the growers.

36. A ginning institute will also be established at Multan to undertake research in

improved ginning methods. Similar initiatives will be taken in other cotton growing
areas including Vehari.

37. Government will be provided financial and technical assistance to those who
would be willing to use more efficient technology.

Filament Yarn:

38. There is a need to improve efficiency, competitiveness and economies of scale in

the filament yarn industry. Government will also ensure skills development and
research through Synthetic Fiber Development and Application Centre (SFDAC) to
facilitate the manufacturing of finer filaments for value addition. To make industry
further viable mergers and acquisitions will be facilitated along with consolidation.
NTC will determine the required protection needed for the healthy growth of this
industry.

23 of 40
Spinning:

39. Investments in rotor technology and specialized attachments like compact

spinning, lycra etc. will be encouraged along with ring spinning to attain economies
of scale. To overcome the problems of power shortage, measures would be taken to
incentivize power generation by the mills.

Weaving and Knitting:

40. Assistance will be provided for increasing capacities, up-gradation and

defragmentation. Cost-sharing and technical assistance will be provided to encourage
Investment in shuttle less looms, knitting and power looms sector up-gradation.
Common working sheds and clusters will be developed to ensure availability of
utilities and to encourage consolidation of non-mill sector.

Non-woven:

41. The non-woven sector is one of the emerging sub-sectors having considerable
uses in value-added products. To encourage this sector, training modules will be
developed to impart knowledge and skills.

Processing:

42. Policy will support new investments in processing industry, especially in the
processing of narrow-width fabric and knit dyeing. Up-gradation of existing
machinery and technology will also be supported.

Home Textiles:

43. Home Textiles is the first stage of high value-added products. Of late, Pakistan
has made significant advances in this area and its products are ranked amongst the
best. However, the values realized are still low compared to those available to other
brand names. Here the efforts will have to focus on fashion and design and branding.

Garments:

44. Garments sub-sector is the ultimate value-spinner for the textiles chain. The
subsector faces a number of challenges that hamper utilization of its fullest potential.

45. The policy will address the challenges to facilitate promotion of this important
sub-sector. In particular, government will endeavor to make this sub-sector the
manufacturing hub for highest value added products including availability of trained
manpower, promotion of fashion designs and support in development and marketing
of brand names. Entrepreneurs will be encouraged to take maximum advantage of
abundant labor and for this purpose sourcing and marketing training will be provided

24 of 40
along with the establishment of product development centers. To ensure requisite
protection to the domestic industry, steps will be taken to eliminate illegal imports of
the value added products, especially fabrics and garments.

Fashion and Design:

46. To promote value added industry, there is a critical need to develop the fashion
and design industry. This will include increased number of fashion institutes, faculty
development, industry linkages, special programs for local brands and designers
recognition, affiliation with international fashion institutes, dissemination of
information on new fashion trends, product development centers, introduction and
availability of new fibres and their processing etc. on public-private partnership basis.

Technical Textiles:

47. Technical textile is an emerging area of high value addition where given our
strength in heavy clothing we can claim a significant share of the world market.
Government will develop a proper strategy for the promotion of technical textile in
the country. For this purpose an exclusive centre of excellence.

Handloom and Handicrafts:

48. Training and facilitation will be provided to strengthen traditional craftsmanship

for production set-up, sourcing raw materials and marketing.

49. Steps will be taken to identify clusters for the traditional textiles within each
subsector.

50. Arrangements will also be made to link up these clusters with fashion schools so
that new designs and modern trends are assimilated in the traditional crafts.

Carpets:

51. Government will facilitate consolidation and adoption of new technology in

dyeing, finishing, and testing and product development in carpet industry. To enhance
production and exports, assistance will be provided for anti-child labor certification to
ensure wider acceptability of Pakistani carpets, availability of fine raw materials, and
establishment of research and development, testing and product development centre.

Indigenization:

52. Textiles sector has grown to be the single largest manufacturing sector of
Pakistan. However, support industries like textile machinery manufacturing, textile
dyes and chemicals and accessories industry has not developed proportionally. Most
of the demand is met through imports. There is an urgent need to promote
development of industries that would ensure indigenous supply of such important
technology and raw materials at home at competitive prices.

25 of 40
53. Promotion of joint ventures with leading international brands will be a key
objective of the policy. Government will provide appropriate incentives to encourage
such initiatives.

54. Intensive training and awareness campaigns will be initiated to disseminate

information on comparative benefits of upgrading machinery and using domestic
resources.

55. Viability studies for production of textiles dyes, chemicals and accessories will
also be initiated. Based on these studies measures will be introduced for encouraging
establishment of industries considered economically viable.

Women Employment Support Program:

56. We recognize that contribution of women is equally important for achieving our
economic objectives. As such, providing opportunities for women has been an
essential element of our socioeconomic policies. This objective has been translated
into one of the initiatives being taken in the textiles policy. To encourage women
participation in the industry, government will pick two regulatory costs to employers,
namely social security and EOBI. The cost of this measure is estimated at Rs.2 billion
for the current year.

Support for Disabled and Handicapped:

57. Value added textiles sector also has the capability to give employment to disabled
and handicapped. To further Government’s policy in this area, it is proposed that
EOBI and social security contributions of such persons will be also be picked up by
the Government.

Immediate Measures
Ladies and Gentleman!

58. The policy proposes a long-term comprehensive approach for sustained growth of
the sector. However, the industry is facing serious challenges and its continued
survival will call for immediate action in certain critical areas. Accordingly, the
following measures are being proposed to be financed from the textile investment
support fund initially:

Export Refinance at Lower Rates:

59. The export refinance will be available at 5%. The cost of Rs.2.5 will be borne in
the budget.

Relief on Existing Long Term Loans:

60. To mitigate the heavy burden of financing cost on existing units, the long term
loans will be converted on the same pricing as applicable to LTTF scheme, together
with a grace period of one year on both existing and converted facilities, without the
facility of refinancing. This would entail a support of Rs.5 billion.

26 of 40
Restructuring and Reorganization of the Textile Sector:

61. To deal with deeper problems of problem loans to textiles sector, a two pronged
strategy will be adopted. Those textiles units which are suffering from the general
market slump but are otherwise technically viable will be helped through transitional
support – in the form of loan restructuring, interest rate relief, relaxation of prudential
regulations, additional financing, investment tax credit etc. Others that lack technical
viability would be encouraged to merge with sounder units through the vehicle of
Resolution Trust Corporation (RTC), whose establishment is currently in hand at the
Ministry of Finance. Government will support the process through the issuance of
warrants to those acquiring the units, which will be valuable once the restructured
units are brought on the stream by the new owners. This process will be helpful
throughout the industrial sector not limited to textiles alone.

Drawback of Local Taxes:

62. There is a multitude of costs imposed on exporters that raise the cost of production
and render our exports uncompetitive. Additionally, outages of power and gas, cross
subsidization in prices of utilities and frequent closure of industry on account of law
and order add further burden to our industry. Exporters are also losing business or
merely holding on to the existing businesses because the buyers have stopped visiting
Pakistan. For all these, and many more, factors it is very difficult for our exporters to
be able to compete with nations which face no such problems.

63. It is proposed to compensate our value-added textiles exports for a period of two
years through provision of drawback to offset the costs imposed on them directly and
indirectly by a variety of government agencies and disruptions caused by law and
order problems. However, this support will be linked partially to performance. For
this purpose following drawback scheme is proposed:

_ Processed Fabric ………...…..1% of the FOB value of exports

_ Home Textiles ……………….2% of the FOB value of exports
_ Garments …………………….3% of the FOB value of exports

64. In addition, those who will achieve an increase of 15% in exports relative to last
year will be given 1% additional draw-back.

65. The scheme will cost Rs.17 billion during the current fiscal year (2009-10) and
Rs.27 billion for the next fiscal year (2010-11).

Refund of past R&D Claims:

66. To settle the past claims under R&D scheme of 2007-08, Government is
allocating Rs. 5.4 billion.

Monetization of PTA:

67. To promote utilization of manmade fiber and diversify the export mix,
monetization of customs duty of PTA is being continued to offset additional cost for

27 of 40
the users for the current year. This would entail an expenditure of Rs.4.5 billion
approximately during current financial year (2009-10). The issue of this duty will be
finally decided by the National Tariff Commission during the year.

Ladies and Gentleman!

68. The Textiles Policy represents a new beginning for the textiles sector. Through
this policy, the government has not only set out a road map for the development of
this sector but has provided the necessary support without which rapid progress of this
sector is not possible. It is now the responsibility of the private sector leadership
sector, exporters, labors and others connected with this sector to transform the vision
of the policy into reality. The exports target of $25 billion is ambitious but not beyond
our potential. If we have to depend on our own resources and would like our debt
burden to lessen, then it is only the textiles sector that offers the requisite opportunity
to strengthen our economy and support it to stand on its own feet.

69. I appeal to the national spirit of all those associated with the textile sector to rise
to the occasion and expend their best efforts to achieve the goals of the textiles policy.
This alone will pave the way for Pakistan to earn its rightful economic place in the
comity of nation, which was the dream that our beloved leader Shaheed Benazir
Bhutto had nurtured.

Pakistan Zindabad

28 of 40
 CRITICAL
EVALUATIONS

POSITIVE ASPECTS
 The hefty package for the sector carries special duty-drawback rates, besides
repayment of earlier research support, subsidy on long-term financing loan
and development and other subsidies.

 The policy focuses on export promotion measures, instead of steps to increase

production and revive the ailing industry.

 Without amending the rules of business, the government has issued two
policies for the promotion of exports — the four-year trade policy announced
in July focused only on non-textile products.

 The textile policy does not mention any specific target for sub-sectors.

 There is also no mention of increasing production which has reached a

saturation point and is producing low-quality products.

29 of 40
 According to analysts, Pakistan’s textile and clothing sector sells its products
cheaper than Bangladesh in the international market. ‘How come you expect
foreign investment in a sector which produces low quality products?’ they
said.

 Under the new policy, the textile industry has been exempted from load
shedding. It will also enjoy priority in gas allocation like the fertilizer sector.
An amount of Rs.2.5 billion has been allocated to make export refinance
available at five per cent.

 An amount of Rs.44 billion as special drawback rates will be provided to

value-added textile exports for two years — Rs17 billion in 2009-10 and
Rs.27 billion in 2010-11.

 The proposed rates include one per cent of the FOB value of exports on
processed fabric, two per cent of the FOB value on home textiles and three per
cent of the FOB value on garments.

 In addition, exporters achieving an increase of 15 per cent will get one per
cent additional drawback. Another Rs5.4 billion has been earmarked for
earlier refunds of research and development subsidy for the sector.

 An amount of Rs4.5 billion has been allocated to continue monetization of

customs duty of PTA to offset additional cost for users for the current year. A
decision about this duty will be taken by the National Tariff Commission
during the year.

 Another Rs5 billion has been allocated to convert long-term loans on the same
pricing as applicable to the LTTF scheme together with a grace period of one
year on both existing and converted facilities, without the facility of
refinancing. Textile machinery will be zero rated.

 In order to encourage women’s participation in the industry, the government

will pick two regulatory costs to employers — social security and EOBI. The
cost of this measure is estimated at Rs.2 billion for the current year.

 The government plans to treat local sales of yarn and fabrics to large exporter
as deemed exports. For this purpose, small producers will get one per cent
drawback on levies and unadjusted taxes on sales to export houses which will
cost Rs.2 billion.

 The government has set a target to increase the rate of conversion of cotton
from $1,000 to $2,000 over the next five years. A textile investment support
fund and technology upgradation fund (UTF) will be set up. An amount of
Rs1.6 billion has been allocated for the UTF for the first year. However, this
fund will go up to Rs.17 billion by 2014.

 Under UTF for capital intensive projects, the government will pick up 50 per
cent of interest cost of new investment in plant and machinery with a

30 of 40
 maximum of five per cent. For small investments, government will contribute
up to 20 per cent of capital cost as a grant.

 An amount of Rs.1 billion has been earmarked for infrastructure development

for 2009-10 in public-private partnership. More industrial estates will be
established, besides developing clusters.

 An amount of Rs.1 billion has allocated for skill development initiatives. A

comprehensive training plan will be worked out.

 A legal framework will be developed to specify standards and testing

requirements, prescribe disclosure requirements and other matters relating to
practices and methods relevant to the sector.

 The principle of cascading will be implemented while ensuring adequate

protection to the local industry and removing anomalies. All regulatory
bottlenecks will be removed. Market access will be increased through free
trade agreements.

 The government will provide necessary support for branding, grading, labeling
and other activities that would add value to the textiles chain. An insurance
scheme will be introduced to protect local exporters from unforeseen losses
and help the industry in IT-related issues.

 The policy will focus on certain sub-sector issues from fibre to garments,
including ginning, spinning, weaving, knitting, processing, fashion designs,
handloom and handicrafts, carpets, technical textiles. Specific schemes will be
launched, mostly on public-private partnership basis, to upgrade and improve
these sectors.

 The persistent problem of contamination and trash content will be addressed

through enforcement of the standards laid down in the Cotton Control Act and
Cotton Standardization Ordinance. Measures will be taken to develop other
vegetable fibres (jute, flax etc.), wool and sericulture for supporting
diversification within natural fibres.

 A ginning institute will also be established in Multan to undertake research in

improved ginning methods. Similar initiatives will be taken in other cotton
growing areas.

31 of 40
 NEGATIVE ASPECTS
 In the trade policy announced on 18th July 2007, scope of the scheme was
further enlarged to cover export oriented, core and developmental sectors,
purchase of locally manufactured machinery and compact spinning.

 But Textile Policy 2009 is heading for disaster due to bureaucratic roadblocks,
non-coordination between ministries, lack of interest and influence of mafias
to safeguard their interests.

 Pakistan's textile and clothing exports fell in the first eight months of the
current fiscal year, due to surging raw material prices, energy crisis, financial
costs and global recession.

 Cotton remains a primary raw material for the textile industry in Pakistan,
accounting for over 70 percent of the total production cost.

32 of 40
 2006-07 (July-June) was the best year for Pakistan’s textile and clothing
industry when the industry managed to export US$ 10.8 billion with the
support of friendly government policies, international propitious environment,
and lower cotton prices.

 Cotton production in the country is stagnant at around 12 million bales of 170

kg while cotton consumption has passed the 16 million bales mark due the
massive expansions in spinning sector during the last five years. Widening
demand and supply gap of cotton is pushing cotton prices to higher levels.

 Cotton yarn, the primary export earning category went down by 15%, woven
readymade garments by 12%, bed wear by 10%, knit wear garments by 3%
during the period.

 However, exports of cotton cloth and Towels went up by 6% and 10%

respectively.

 Shipments to foreign countries were down 6 percent in value terms during the
first eight months of the current fiscal year compared with the same period last
year.

 Since 2004, diesel prices in Pakistan has gone up by 150 percent, petrol prices
by 71 percent, gas prices by 91 percent, electricity cost by 60 percent,
minimum wage of unskilled workers by 140 percent.

 Furthermore, shortage of energy also affected the textile industry and exports
from Pakistan. During the summer season electricity shortfall is about 2,500
megawatts which results in around four to six hours of daily power cuts.

 Consumer price index (CPI) in Pakistan reached the highest level 21.1 percent
(YoY) in February 09 due devaluation of the local currency by around 27%
against the US dollar in last one year.
 To counter the rising inflation in the country, the government of Pakistan has
announced an increase in minimum wages of unskilled workers to
PKR6000/month (US$75/month), but there is reported wide payment of the
older rate still, of PKR4000/month (US$50/month).

 In order to cover the way for the IMF bailout, State Bank of Pakistan raised its
bank lending rate in early November by 2 percentage points to 15 percent.
While since 2004, interest rates have risen dramatically. Kibor (Karachi Inter-
Bank Offered Rate) has surged 261 percent.

 On the domestic front, Interest rate has gone up by 20%, during the last six
months and inflation in the country has reached 21%.

 Likewise, the bank spread, on a weighted average basis, rose from 2 percent to
an excessive 7.75 percent. The interest rate is charged at around 7.5 percent

33 of 40
 -repayable in 7 years- against normal rates of 12 to 13 percent. This size of
bank spread is among the highest in the world.

 The textile industry in Pakistan invested US$6.4 billion during the period
1999-2007, when interest rates were extremely low. Textile machinery
imports, as a result reached the highest level of US$928 million during the
fiscal year 2004-05. This was US$438 million in the last fiscal year, reflecting
the lack of modernization in the industry.

 The government of Pakistan had been paying a 6% Research and

Development (R&D) subsidy on exports of woven and knitted garments, 5%
on dyed and printed home textiles, and 3% on dyed and printed fabrics.

 These payments are now suspended since July 2008. The textile industry has
been facing financial crunch and is still waiting for the R&D claims. There are
60 per cent dues of R&D yet to be paid.

SURVEYS & REVIEWS

 According to a survey conducted by The Financial Daily, the value-added
apparel exports are facing serious decline due to the unrestricted export of
cotton and cotton yarn and other reasons.

 According to Pakistan textile industry association, 90 percent of Pakistan's

textile industry is losing money losses and facing closure. More than two
months of production has been lost due top lower cuts and gas shortages.

 According to a study of Pakistani textile and apparel sector conducted

by Werner International, management consultants to the world textile, apparel
& fashion industry, some of the garment units were over-staffed by 57 per
cent. That was an internal negative factor whereas external factors included no

34 of 40
 duty-free market access to the EU and negative image and perception of
Pakistan abroad.

 The shift in government policies, increases in input costs, and the global
recession have changed the scenario for textile exports from Pakistan. Now the
textile industry in the country is passing through a very critical period with
number of closures and shutdowns. Reuters

 Federal Textile Adviser Dr Mirza Ikhtiar Baig accepted that Pakistan has a
very low share of the international textile market. China tops the US market
with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per
cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20
per cent of the US market. In the European market, China tops again with a
share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only
1.5 per cent while the Philippines had lost 11 per cent of the market.

 European buyers suggested Baig that Pakistani garment manufacturers could

cut their cost up to 45 per cent in sewing by improving efficiency. While Baig
told that Labor productivity is very low & our regional competitors take 75
minutes to complete and produce one piece of cloth whereas we take 133
minutes for the same work. We also waste 30 per cent in finishing and 12 per
cent in washing.

HURDLES FACING
 According to a letter of the State Bank addressed to the Pakistan Readymade
Garments Manufacturers and Exporters Association (PRGMEA), The State
Bank of Pakistan has received Rs.5 billion from the government under the
textile package but there are no instructions by the ministry for utilization of
the amount despite several demands by the textile industry.

 Bilal Mulla, Chairman FPCCI Standing Committee on Value Added Textile

Products and former chairman PRGMEA, told The News that the current
procedure of registration and verification of export units is very cumbersome,
was the main hurdle in implementation of notification under the Policy.

 Chairman Pakistan Apparel Forum (PAF) and Coordinator Pakistan Hosiery

Manufacturers Association (PHMA) told TFD that the first-ever Textile Policy

35 of 40
 2009-2014 greatly increased the flow of orders for garments, but due to the
skyrocketing prices of cotton yarn, the textile industry cannot compete in the
international market as the cost of doing business has also gone sky high.

 Chairman Pakistan Readymade Garments Manufacturers and Exporters

Association, Mohsin Ayub Mirza, Central Chairman PHMA Rana Mohammed
Mushtaq Khan, Central Chairman Pakistan Knitwear and Sweater Exporters
Association (PAKSEA) Kamran Chandna, complained that exports of cotton
and cotton yarn to the neighbouring countries are harming textile sector.

 Chairman APBUMA, Syed Muhammad Asim Shah termed the reduction in

refinance rate to five per cent as a positive step, however, it wasn’t clear
whether the service charges of banks were included in the subsidy on mark-up.
Over the offer of 1% additional duty drawback on 15% increase in exports, he
said no major exporter would benefit from that concession. The 5% mark-up
rebate on upgrading technology was also a positive step, but much would
depend on its implementation. Rs.5.4 billion earmarked for the payment of
pending claims of research and development grant would clear dues of
exporters, but no timeframe had been set for the purpose.

 Pakistan Powerlooms Association Secretary General Khaliq Qandeel Ansari

said some of the incentives might not yield positive results and might lead to
pilferage or wastage of money like the establishment of warehouses abroad as
importing countries were reluctant to even grant visa to Pakistanis and they
might not allow warehouse facilities due to terror threat. The existing training
institutes had not delivered desired results. So, the huge amount may be
misused. The policy gave the priority to the textile industry in the supply of
power and gas, but mills had received notices for a cut in gas supply in the
coming winter. The mills already running on 100% capacity would not be able
to get one per cent additional rebate on increase of 15% in exports. The fund
for technology up-gradation would be wasted as it would not be possible to
install new equipment in view of ongoing electricity power and gas shortages.

36 of 40
SUMMARY

The textile sector holds a lead role in the development of the manufacturing sector in
Pakistan. It comprises majority of the manufacturing sector output, provides
employment to the bulk of the manufacturing sector labour force and it is a major
foreign exchange earner for the country. It is the textile sector which converts raw
cotton of 67 cents a pound into value-added finished goods worth $5 to $6 a piece and
earn valuable foreign exchange for Pakistan and the largest employment provider. The
trade in textiles is directly affected by the phenomenon of globalization that is leading
to lower tariff barriers and removal of quantitative trade restrictions.

That’s why; following PM’s speech for the textile sector is considered by the industry
as a think pad of current government.

Textile Policy Aims At Making for Sustainable Growth: PM

37 of 40
PM Gilani said the textile industry has had its highs and lows, with robust beginning
that lost the momentum halfway. Pakistan is no more known for its premium quality
cotton and cotton products as value conscious competitors have edged us out in the
international market. Pakistan is the fourth largest producer of cotton but is ranked
12th in global textile exports, and stressed the need for its improvement for the benefit
of people. At present the textile industry is beset with energy shortages, security
concerns and high cost of capital.

Textile exports last year, he added, registered a negative growth of 9.5 percent, which
is a matter of serious concern. He said textile sector is plagued by inherent problems
which are historical and complex. We also need to look at external factors which
affect our industry seriously.

He said a quota-free trade regime has brought more challenges than opportunities
while exposing the ill-preparedness of our textile industry in a competitive global
grade environment. The recent global financial meltdown and sharp falls in trade
volumes have thrown up new challenges. Last year Pakistan’s total exports were
down by 6.7 percent and textile exports 9.5 percent mainly because of global demand
shrinkage.

The Prime Minister said keeping both domestic and global contexts in mind, it was
necessary than ever before to come up with a comprehensive response strategy. He
hoped that the textile policy 2009-14 is equipped with appropriate policy instruments.
He said the ultimate goal of the textile policy is the creation of an enabling
environment for the industry to grow. Textile sector has been the major provider and
foreign exchange earner and must continue to be so. He said focus on this sector
should give a clear message that this government puts poverty alleviation, job
generation and industrial development very high on its agenda and is taking all
possible steps in this direction.

BIBLIOGRAPHY

• http://www.textile.gov.pk/

• Media Articles of some Economists & Industry Related Intellectuals

• Interviews to
-“Mr. Ismail Ahmed”- General Manager, Soorty Enterprises (Pvt) Ltd.
-“Mr. Muhammad Hanif”- Manager ‘Imports’, Soorty Enterprises (Pvt) Ltd.
-“Mr. Shuakat Khatri”- Manager ‘Exports’, Soorty Enterprises (Pvt) Ltd.

• Discussions with different Governmental Officials

38 of 40
 APPENDIX

Better Strategy for Development of Textile Sector

Ministry of Textile Industry is taking various steps to improve efficiency of textile
industry in all its spheres like management, productivity, quality and marketing,
keeping in view the challenges of the free global trade regime. Special attention is
being given to develop the areas of human resource, technology and infrastructure to
boost the textile sector to achieve the objectives of gaining proper share in the
international market. As a part of this program, Ministry of Textile Industry has also
planned to create awareness among the industrialists through seminars. During the
seminar, the experts deliver lectures and give presentations on the following topics:

1. Technical Textiles
2. Mergers and Acquisition

39 of 40
 3. Business Plan for a new SME
4. Economical use of Dyes and Chemicals (4E - Economy, Ecology,
Efficiency and Energy)
5. Competitiveness of Textile Industry – Issues and Challenges

The heads of different textile associations, CEOs of textile companies/mills and

business entrepreneurs of various sub-sectors of textile industry have been
participating in the seminar.

40 of 40