AN EMPIRICAL STUDY OF FACTORS INFLUENCING PERFORMANCE

OF TEXTILE INDUSTRY: EVIDENCE FROM PAKISTAN

MUHAMMAD FAISAL
(FA15-EX-0047)

Supervised By
Mr. KASHIF ARIF

FINAL RESEARCH REPORT IS SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENT FOR THE DEGREE OF

MASTER IN BUSINESS ADMINISTRATION.

Mohammad Ali Jinnah University, Karachi

SPRING 2017

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 APPROVAL AND DECLARATION SHEET

This research report titled AN EPIRICAL STUDY OF FACTORS INFLUENCING

PERFORMANCE OF TEXTILE INDUSTRY: EVIDENCE FROM PAKISTAN was prepared

and submitted by Muhammad Faisal(FA15-EX-0047) and has been found satisfactory in terms of

scope, quality and presentation as fulfillment for the requirement of the course Masters in

Business Administration (MBA).

Checked and Approved by

________________________________
Professor Kashif Arif

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 ABSTRACT

Pakistan’s Textile industry plays a vital role in the global textile world and also a significant role

in the economy of Pakistan. The industry faces many ups and downs and faces a tough period in

its history. Global recession has not the only factor for the declining of Industry but it might be

many other internal factors such as unavailability of power resources, Inflation rate, Lack of

Research & Development and many others are liable for this decline. The objective of this

research is to find out the core issues which restrict the performance of Pakistan’s textile industry

through involving the population of executives, managers and others of Textile firm by

interviewing, observing and taking their views on our questionnaire. This research help institutes

related to textile industry in managing their resources and work for the development and growth

of Pakistan’s Textile industry.

Key Words: Pakistan Textile, Shortfall of resources, Inflation rate, Research & Development.

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 Acknowledgements

I wish to express my sincere gratitude to my course supervisor, Mr. Kashif Arif, for his patience,

support and guidance. I am grateful to those who agreed to participate in this research by

completing the questionnaire, conducting the survey, data capturing, analysis and editing. I wish

to express a word of gratitude to my employer for providing me the opportunity and support to

do my MBA studies, including my colleagues for their support. Words cannot express enough

my appreciation to my family, for their love, patience and support during the entire period.

Above all, I glorify the Almighty Allah for the strength, courage, wisdom and inspiration

throughout the period of my studies.

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TABLE OF CONTENT

CHAPTER 1: INTRODUCTION……………………………………………………………7
1.1 Problem Statement………………………………………………………………………….11
1.2 Research Objective…………………………………………………………………………11
1.3 Research Question……………………………………………………………………......…11
1.4 Key Research Question……………………………………………………………………..11
1.5 Limitation/Delimitations……………………………………………………………………11
1.6 Scope………………………………………………………………………………………..11
1.7 Hypothesis Development…………………………………………………………………...11
1.8 Conceptual Framework……………………………………………………………………..12

CHAPTER 2: LITERATURE REVIEW……………………………………………….…..13

2.1 Shortfall of Power Resources……………………………………………………………..15

2.1.1 Electricity Crises……………………………………………………………………15

2.1.2 Gas Shortage………………………………………………………………………..15

2.2 Inflation Rate……………………………………………………………………………...16

2.3 Lack of Research & Development……………………………………………………….17

CHAPTER 3: METHODOLOGY…………………………………………………………..20

3.1 Classification of Research…………………………………………………………………20

3.2 Data collection Techniques……………………………………………..………………….20

3.3 Population………………………………………………………………….……………….20

3.4 Sample………………………………………………………………………………………20

3.5 Data Collection tools………………………………………………………………………..20

3.6 Data processing & Analysis……………………………………………..………………….21

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CHAPTER 4: DATA ANALYSIS & FINDING INTERPRETATION……………………22

4.1 Demographics………………………………………………………………………………22

4.1.1 Business City…………………………………………………………………………..22

4.1.2 Gender…………………………………………………………………………………23

4.1.3 Department…………………………………………………………………………….24

4.2 Reliability Statistics………………………………………………………………………..25

4.2.1 Correlation…………………………………………………………………………….25

4.2.2 Regression…………………………………………………………………………….26

4.2.3 Anova…………………………………………………………………………………27

4.2.4 Coefficients…………………………………………………………………………..28

CHAPETER 5: CONCLUSION…………………………………………………………….29

5.2 Recommendation……………………………………………………………….………….30

REERENCES………………………………………………………………………………….31

APPENDIX-Questionnaire……………………………………………………………………..

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 CHAPTER 1: INTRODUCTION

1. Introduction:

Pakistan’s textile industry started its journey after the very next day of its creation with 3 textile
mills and 177,000 spindles and now according to the recent survey of year 2000, those 3 mills
have now convert into 6000 mills and spindles from 177,000 to 805 Million. As well as Pakistan
produced only 1.1Million bales in the year 1947 and now it’s gradually increased up to 10
million bales in the year 2000. The Industry has world class standing in Textile sector. Pakistan
has 3rd largest user of cotton. It shows that textile industry of Pakistan expand and promote itself
gradually as time passes. (Khalique, 2010).

Today, Pakistan is the 4th largest manufacturer and 8th largest exporter of textile goods and
apparels in the international market. According to the report of APTMA (2009-2012) the textile
industry of Pakistan contributes 52% of total exports which means it contributes $12.36 Billion
in the country’s economy. It shares up to 46% in total manufacturing of the country. The
Industry provides employment to 40% of the total labor force. On the basis of above finding
about manufacturing and exports, Textile Industry contributes in GDP of 8.5%. One very
important thing to mention here that Pakistan have a very wellbeing geographical location in
term of agricultural production and international trade as we have a China and India (which have
a very large population in the world) in our neighbors and furthermore the flow of Arabian sea in
our southern borders. (Walayat Shah et al, 2012).

After the signing and work-in-progress of China Pakistan Economic Corridor (CPEC),
international investors including China have shown a great interest in investing the textile sector
of Pakistan. According to Zhang Shaoyun; Deputy Director of department of Commerce in
China said that many Chinese companies have shown their keen interest in trading with Pakistan
and have also some investors who want to do a joint venture with Pakistani textile companies in
future.

Textile Sector plays a vital role in the economy and it has an advantage of best cotton fiber
known by the ‘Silver fiber of Pakistan’. Pakistan has an achievement of 1 st class exporter of
cotton yarn (Akhlaq, 2009). Its reaches its climax in production of Cotton in 1991 by the record
production of 12.82 Million bales (Fatima Enterprises ltd, 2011). As Pakistan is the 4 th largest
producer of cotton and it produces 12 to 13 million cotton bales in a year but unfortunately we
hardly exports our textile products up to 13 million US dollars. Pakistan is unable to transform
its ten million cotton bales into finished goods by exporting textile raw material and Grey cloth.
Whereas India, Bangladesh and China put value addition into their raw material and exports
value added goods in international market. If Pakistan’s textile companies do value addition on
ten million cotton bales and then export it to international market, this will result in better
formation of Textile industry. The country has also the 6th largest importer of manmade fiber
yarn such as polyester, nylon, cationic etc. Government institution must approach local and

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international investors to invest in installing a spinning plant by providing additional benefits
such as subsidies and tax-holidays etc.

According to the key textile policy of 2014-2019:

-The ministry establishes Textile Investment Support Fund (TISF) for emerging the
modernization in mechanical and technological support of industry and also for enhancing skills
of labors and technical staff. Moreover, TISF fund promote advanced infrastructure for textile
firms and institutions.

-For infrastructure development of industry, the ministry announces Rs. 1 billion as fund for
establishing new industrial states and textile city. These textile states will have fully equipped
with modern laboratories, fully equipped and well planned warehousing and marketing facilities.

-The government planned to not charge any tax on export of textile goods and to not receive any
duty on importing of textile machineries and equipments.

-The government tries to maintain friendly relations with all the major countries of the world and
convince them to maintain free trade policy with them

-For agricultural development of Cotton fiber, the ministry established Cotton Control Act and
Cotton Standardization Ordinance so that there will be more productivity of cotton crop in
country and we have more charm to increase our export by selling Cotton fiber or by exporting
finished or semi-finished cotton textile products.

- Textile sector of country declared as most priorities based industry. The sector receives full
load of power resources including Electricity and Gas resources without any interruption.

The entire above mention textile policies are seems to be good for sector only incase if it’s
applicable and followed strictly by government ministries and other institutions. But if we
compare the progress of Pakistan’s Textile industry from it’s past, its progress is remarkable
because it’s started its journey with few Mills and machines but currently the industry is much
more developed. Although current reports have shown that Pakistan gradually loses his market
share in international trade (in term of Textile product). According to the reports of APTMA,
textile exports of Pakistan had decline by 20% in 2008 (Akhlaq, 2009). The major weakness for
losing his share in international market is the quality of goods and wide range of products. In
order to get back our market share in international market, we have to think and react advanced;
as to produce product on high-tech machines and of high-class quality. This will surely bring the
forgotten status back of Pakistan’s Textile industry (Malik, 2000).

Pakistan have a recorded history that Textile sector of Pakistan achieved a remarkable figure in
exporting of textile products in the decade of 1960’s-1970’s by capturing 11% of total world
market of Textile (Fatima Enterprises ltd, 2011). But because of weak government policies and
framework, this industry suffers a lot of time by different rules, policies, procedures and ruling

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Governments. After the change of Government in 1970’s, new Government implement the
Nationalism policy nationwide and this results the downfall of this industry. Today this industry
has only 5% of Market capitalization share. And during 1973 to December 1992, almost 71
spinning units with 1136835 spindles, 6600 rotors and 7329 looms were shut down (Khalique,
2010).

The Growth of Textile industry in Pakistan was at its peak in the decade of last 1990’s after the
huge crises of 1970’s but unfortunately the industry is in declining state continuously because of
several problems such as Law and order issues, electricity and Gas crises, inflation rate and
exchange rate (Walayat Shah et al, 2012).

As per the statistic of APTMA, the province of Sind 5746 looms in the year of 1994-1995 and
after this, it goes in diminishing state and now according to the statistics of 2011-2012, only
3578 no. of looms are installed in Sind province. And same as the statistic of overall Pakistan
like the no. of installed looms in Pakistan were 13,318 but currently Pakistan has only 7170
looms. This decline in investment is due to the fact that investors are now feeling fear in term of
law and order, Inflation and market stability.

The objective of doing research is to identify the critical problems faced by the textile industry of
Pakistan and to find out the solution to re-establish the industry of textile. Moreover, to provide
the suggestions and solutions which help textile industry of Pakistan to restart its development
process and contribute in the economy of Pakistan.

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1.1 Problem statement:

From very beginning of Pakistan’s creation, its economy mostly depends on Textile industry. In
1960’s Pakistan had a large share of Textile exports in international market and now this
increased share decreases day to day due to certain factors.

1.2 Research Objective:

To find out the factors due to which Pakistan’s textile industry loses his strength in international
Market.

1.3 Research Question:

What are those factors due to which textile industry of Pakistan loses his strength and also loses
his market share in international Market?

1.4 Key Research Question:

I. What is the relationship between resources on performance of Textile Industry?

II. What is the relationship between research & development activities on performance of
Textile Industry?
III. What is the relationship between inflation rates on performance of textile industry?

1.5 Limitations/Delimitations:

 Private Textile firms don’t share true data due to privacy policy.
 Not approachable to conduct whole nations data.
 Most companies’ doesn’t have previous record.
 Unauthorized facts and figures recorded.

1.6 Scope:

 Know the factors due to which industry faces downfall.

 Companies have advantage to up come their mistakes and go upward in sector.
 Government receives high taxes if industry flourishes more.
 Goodwill increases of a nation if product exist and available in International Market.

1.7 Hypothesis Development

 Power Resources:
Ho (a): There is no influence of resources on performance of Textile industry.
H1 (a): There is an influence of resources on performance of Textile industry.
Ho (b): There is no relationship between resources and performance of Textile Industry.
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H1 (b): There is a relationship between resources and performance of Textile Industry.

 Lack of Research & Development activities:

Ho (a): There is no influence of research and development activities on performance of Textile
industry.
H1 (a): There is an influence of research and development activities on performance of Textile
industry.
Ho (b): There is no relationship between research and development activities and performance of
Textile Industry.
H1 (b): There is a relationship between research and development activities and performance of
Textile Industry.

 Inflation Rate:
Ho (a): There is no influence of inflation rate on performance of textile industry.
H1 (a): There is an influence of inflation rate on performance of textile industry.
Ho (b): There is no relationship between inflation rate and performance of Textile Industry.
H1 (b): There is a relationship between inflation rate and performance of Textile Industry.

1.8 Conceptual Framework:

Textile industry is one of the most important among all the industries of Islamic Republic of
Pakistan. It is in fact the backbone of a country. It is one of the largest manufacturing sectors,
which contributes in the economic growth of the Pakistan. It contributes large share of
investment, employment, export earnings and foreign exchange in an economy. This industry of
Pakistan competes with the other textile manufacturing countries such as China, India,
Bangladesh, Indonesia, Malaysia etc. Competition among countries is based on low cost and
timely delivery. Shortage of electricity/gas resources and high inflation rate are significant
factors to stand in competition world-wide. Power resources play an important role in any
manufacturing zone to increase economic growth. We must achieve our target to regain our
international market share by providing our companies a better production process, have a High-
tech and improved technology with full utilization of managerial skills and labor force.
As a result of non-availability of Power resources, the textile production capacity of various sub-
sectors has been reduced. Production of textile industry decreases due to electricity crisis. Some
mills uses alternative source of energy like generator for the proper supply of electricity. Cost of
electricity which is generated via generator is high and if electricity is not generated via
generator, the production operations of the textile industry stopped which increased the unit cost
of production.

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Inflation rate is also the most importance factor in the downfall of textile sector because it impact
on country’s economy. Due to the high inflation rate and unfavorable balance of Payment,
Pakistan textile products does not complete globally.

Following is the graphical representation of theoretical frame work of our study. The model
includes 3 independent variables, namely, shortfall of Power resources, Inflation rate and Lack of
Research and Development activities. The dependent variable of our study is the performance of
textile industry in Pakistan.

Lack of Resources (Power &

Natural Gas)
“Factors affecting
performance of Pakistan’s
Inflation Rate Textile Industry”

Lack in Research and

development Activities

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 CHAPTER 2: LITERATURE REVIEW

2. Literature Review

Textile Industry is considered to be the major industry among all industries because now a day’s
textile and clothing is not restricted to the basic need of human being but to be considered more
than that. Asian continent is the major source of providing textile goods and apparels all over the
global world. European Continent, United States of America and many others are the bulk buyer
of textile products. (Walayat Shah et al, 2012).

In Asian region, Pakistan has positioning 8th ranked in the export of textile products. Therefore in
export point of view, the importance of this industry can’t be ignored as textile sector is
considered the largest sector in Pakistan among all sectors and no other sector can replace to this
textile industry (Sohail & Ammar, 2012).

Islamic Republic of Pakistan is the manufacturer and exporter of best quality textile goods and
apparels all over the world especially the exports of cotton textile products. Pakistan Textile
industry enjoys the major advantage of quality cotton raw material among many exporters of
Cotton Products. Currently the industry has gone towards in downward trend and loses his
market share in world textile products market due to the competition in global market of China,
India and Bangladesh etc. (Walayat Shah et al, 2012). Pakistan’s Textile industry had lost its
share in export from 66% to 53.7 in international Market (Economic Survey of Pakistan, 2008-
09) (See Table ‘A’).

The major reason behind the downfall of industry is the poor infrastructure and non-availability
of important resources such as frequent supply of power resources, transportation of goods, tax
filling structure, and un available of manufacturing elements in local market. The manufacturing
companies mostly import machine tools and elements from international markets including
China, Germany and Japan etc. Moreover, the country is facing energy crises and no such action
was taken by government institution to cope up with this crises. As a result, the energy sector
produced power with expensive resources like furnace oil etc and provides it on high rates to
commercial and industrial user. The manufacturing units also used generators and other
resources to make production 100% and this result in increased cost of production (Akhlaq,
2009).

The study of Imran (2011) empirically shows that there was a downfall in textile industry of
Pakistan due to global financial crises of 2008. In study he conducted a survey from 141
factories of Pakistan and result found that there is adversely affected due to global financial
crises along with power crises and inflation rate. Whereas on the other hand study of Sumra
(2012) rejected the impact of global financial crises on textile sector of Pakistan and concluded
that there was a downward trend in 2008 due to shortfall of power resources, law and order
situation, high cost of production and cheap marketing activities done by textile companies.

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Skilled labor human capital is also a keen barrier in the growth of textile industry. Investors want
to invest in new high-tech machines and to build advanced factory manufacturing infrastructure
but because of non-availability of skilled labor force, the dream of advanced and robotic textile
manufacturingsetup doesn’t take place yet (Kiran Jameel et al, 2014).

There following might some reasons due to which industry faces severe downfall of textile
sector:

 Power load shedding

 Oil prices increases
 Increases the price of Natural gas
 Inflation rate increases
 Unavailability of New and advance technology
 Lack of Infrastructure
 Political Instability
 Lack of research and development work in textile sector

The literature focused the downfall of Textile industry of Pakistan which is due to such factors
like unavailability of electrical and natural gas resources, Inflation rate and Lack in research and
development work in the textile sector of Pakistan (Beenish Shah et al, 2013).

SWOT analysis is the strength, weakness, opportunities and threats. It is a key tool through
which a businesses and individual can easily do strategic planning. Through this tool business
can identify internal and external factors which are helpful in making developing strategies of
business in order to remain competitive in the market.

SWOT analysis of Pakistan textile industry is very important to understand the overall scenario
of Textile industry and through it we can able to compare with competitors in Asia. Below is the
SWOT analysis of Textile Industry of Pakistan (Sohail & Ammar, 2012).

Strengths Weaknesses

o Self sufficiency of Raw Material. o Lack of research & development work.

o Cheap Labor force availability. o Poor and old infrastructure of country.
o Ranked 4th as producer of raw cotton. o Obsolete equipment & technology.
o Industrial manufacturing facilities o Unstable political situation.
available. o Unskilled and untrained labor force.
o Latest and new designs for export products. o Old and traditional way of thinking and to
o Largest foreign exchange earnings from work with it.
Textile Industry.

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 Opportunities Threats

o Ideal of new textile hub. o New and existing competitors in the

o International marketing mechanism market.
o Joint venture with international companies o Quota system
o Reducing the production’s cost. o Modernization
o Building the good image of the country
o High value products manufacturing.

2.1. Shortfall of Power Resources.

Power and Natural gas resources are the basic factors in the process of manufacturing textile
goods. Without proper resources it is very difficult to run textile sector. And Pakistan’s Textile
industry is facing almost 8-10 hours of electrical load shading per day and almost 2-4 days of gas
load shading per week (Walayat Shah et al, 2012).

2.1.1. Electricity crises

Islamic Republic of Pakistan’s economy mostly depends on Textile exports. The Shortage of
power resources in Pakistan became the major factor which impact textile industry (Aamir et al,
2012; Afzal, 2012). The major industrial areas of Pakistan especially Punjab, Sind and others
have facing serious problem of power shortfall. Due to the non-fluency in manufacturing
process, it hurts the production process and results in the low productivity of goods. The gap
between power supply and demand crosses up to 500 megawatts (Walayat Shah et al, 2012). On
the other side textile mills uses alternative sources like generators etc to meet the deficiency of
electricity need which increases the cost of production of textile goods. Result come up with the
low stability of competitiveness of textile product in international market (Aftab & Mehreen,
2010).

According to Chairman (Mr. Shahzad Ali Khan) of All Pakistan Textile Mills Association,
Punjab said that the total demand of Electrical power in Pakistan is less than 11000 mega Watts
and Pakistan have capability to easily meet the target by using Thermal Power generation but
still Pakistan’s textile and others are facing long hours load shading and continually electrical
power shortage. Because of this factor, it’s difficult for Textile owners to run the Plant and also
to put more investment in Manufacturing textile and other industries (Walayat Shah et al, 2012).

Industry crucially faces the major crises in 2008-09 due to shortage of electricity resources and
globalization (Aamir et al, 2012; Afzal, 2012). More over a study on economy growth and

15
electricity crises and founded that the cost of electricity increases due to the crises of oil and
increase in the oil prices (Shibata, 1983).

The load-shedding of electricity cause a rapid decrease in production which also reduced the
export. The cost of production has also rise due to instant increase in electricity tariff and interest
rate. Due to load shedding some mill owner uses alternative source of energy like generator
which increase their cost of production further. Due to such dramatic situation the capability of
competitiveness of this industry in international market effected badly. Power sources can
increase the efficiency, growth and export if proper resources are available to these industries.
(Afzal, 2012).

2.1.2. Gas Shortage

Pakistan’s Textile industry has also facing the shortage of gas resources. In the beginning policy,
the industry has been exempted from gas load shading but unfortunately the policy changed by
the institutions and now industries also faces the gas load shading (MoT 2009-10).

APTMA sources confirmed that because of the disruption and shortage of Gas resource, the
country beers the loss of approximately Rs.1Billion. Moreover, the dyeing and finishing
processes of textile sector are badly affected by 60 to 70 % and the manufacturers are unable to
fulfill export orders of global market. He suggest that Private companies must invest in energy
sector to provide industrial user a non-stop and smooth power supply (Aftab & Mehreen, 2010).

According to PACRA 2011, if ministry of Business development of Pakistan take a prompt

action and make a policy to provide all Natural gas to large scale textile and fertilizer industries
instead of providing gas to CNG pump, this will improve the production capacity of Textile
sector and also businesses eventually achieve the target of exports to the international market.
More over all CNG stations diverted to LPG in order to manage the unemployment in CNG
stations and also to secure the investments of CNG stations owners but due to social and political
situation it couldn’t be implemented. The government must take prompt and corrective action in
order to solve the Natural gas crises faced by the textile industry of Pakistan.

2.2 Inflation Rate

Inflation means the overall rise in price level in an economy. It’s measured as change in
Consumer Price Index (CPI). This CPI reflects the buying behavior of consumer in an
economy. The high inflation rate increases the cost of Production. Pakistan is facing a
problem of double digit inflation rate and this become a great hurdle for exporters because
double digit inflation rate always result in reduction of exports. Inflation rate has also a
negative impact on the overall economy of country. (Aftab & Mehreen, 2010).

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High inflation rate is also the major cause in impacting the growth of Pakistan textile industry
(Afzal, 2012). Due to high inflation rate and interest rate, textile industry is going towards in
declining state day by day (Afzal, 2012). Some researchers have analyzed the effect of
international shocks on firm entry and exit. Baggs, Beaulieu, and Fung (2007) find that an
appreciation of the currency reduces sales and, hence, the survival of existing firms, while Head
and Reis (1997) conclude that a depreciation of the currency tends to increase the number of
establishments as well as the scale of production of existing firms. Therefore, it is obligatory for
government to maintain and sustain the suitable inflation rate so that investors can invest in
industry without any hesitation.

According to the research report in which it’s said that yarn and raw material is the basic source
of manufacturing Textile goods. It’s a challenge for textile businesses to maintain quality of
textile goods after increasing the price of yarn and raw material. The price of Cotton yarn also
impact the raw material price for harvesting the Cotton crop. The farmer’s bearing costly
materials of Cotton crop that’s why they are shifted to another crop like Sugarcane etc. The main
cause of increasing the price of raw material is that the inflation is increasing day by day as the
price of oil and petroleum increases continually. More over farmer doesn’t get reasonable price
of the crop which they are harvesting. The middle men which involve between farmer and buyer
also plays a negative role in it coz they enjoy benefits between transaction and not give
reasonable price to farmer(Chaudhry and Hamid 1988; Walayat Shah et al, 2012).

2.3. Lack of Research & Development (R&D)

Research & development (R&D) plays a significant role in the development of Textile industry.
The industry is facing low productivity due to obsolete and low technology machines. The
industry requires huge investment in Biotechnology and genetic engineering technology
machines which has been used by developed nations in order to standup in competition in
international market. These technologies have such beneficiary functions that they are able to
grow several different verities of cotton such as colored cotton, organic cotton and others to
enhance value to the textile process. This advancement in technological process will attract
international buyers and they have taken keen interest in buying from Pakistan on cheap prices
instead of developed nation on expensive prices. The developed nations are consistently engage
in research and developing work to create new and innovative designs, fabrics and prints to
attract global customers. More over developing nations find the ways to enhance and increase
new target markets also improve infrastructure to increase productivity in textile cycle process
(Akhlaq, 2009).

Through Research & development process it become more successful for companies to bring
awareness about new international brands. We can easily introduce eastern brands in
international market equivalent to international brands. The textile sector lacks in producing new
brand of international standards. Moreover the limited target market and unstable political
environment, investors aren’t ready for taking risk in making complete textile chain by investing

17
in processes of textile manufacturing and they only suffer by exporting raw material and semi-
finished goods instead of exporting high value added products like developed countries (Syed
Shah et al, 2014).

In Islamic Republic of Pakistan, the government bodies related to textile industry have no
practical efforts in Research and Development (R&D) work. Also the APTMA (All Pakistan
Textile Mill Association) have no record in research & development (R&D) work to enhance the
productivity of Textile goods quality, up gradation of current technology and equipment used by
Textile sector, and find out the ways to encourage the effective methods of production in order to
meet the competitiveness in global textile market. More Over APTMA is also ignoring the
agriculture sector such as Cotton crop related to textile industry in order to increase the national
productivity of textile goods but also to earn foreign exchange by exporting cotton yarn in
international market. The industry suffers in the latest means of production methods, up graded
technology and also the shortness of skilled and trained labor force. Businesses have investment
potential but due to the unavailability of trained labor force and technical engineer, the owners
do hesitate in investment in textile sector of Pakistan (Akhlaq, 2009).

Textile Industry faces a very tough competition in the international market. The buyers all over
the world need high quality of goods in reasonable price. Markets don’t have minimum courage
to compromise on quality due to bargaining power of buyers. The industry should consider the
quality of raw material in order to improve the quality of Pakistan’s textile goods with the help
of research and development institutions. The responsible governing and private institutes should
do practical work through Research and Development (R&D) institutions to enhance the quality
of cotton fiber and other artificially made filament yarn (Faini 1995). Once the quality of Raw
material is improved, the products of Pakistan’s Textile industry automatically compete in
international global market (Sohail & Ammar, 2012).

According to research that due to the lack of Research and Development (R&D) in the
agriculture productivity of cotton, result arise in the low quality of cotton fiber as compare to the
rest of Asian region. This low quality of cotton fiber provides subsequent low profitability and
therefore farmers are shifting to other cash crops, such as maize, sugarcane etc. In Punjab alone,
the profitability in cotton area decreases by 1.14 percent as compared to the last year. Textile
businesses argue that the Cotton Vision 2015 declared the targets of 20 million bales till 2015, it
is an excellent target but in reality the cotton production is decreasing each year. This is due to
the complete failure of research and development (R&D) institutions and authorities (Sohail &
Ammar, 2012).

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3. RESEARCH METHODOLOGY

3.1 Classification of Research:

The nature of research is Descriptive instead of Applied. The reason behind Descriptive is that
there is availability of too many researches and other second hand information’s are used in this
research on textile industry of Pakistan. Many past researches had resolved too many issues
regarding textile industry but still there is a gap and the industry requires more illustration on
past issues and challenges. The mainly purpose of Descriptive research to be conducted is to
understand more clear on the issues of textile industry and to provide with more advanced and
unique assessments.

3.2 Data Collection Techniques:

In research the Quantitative technique for data collection has been used because the researches
having worked on statistics will be coup up through quantitative data collected techniques
instead of Qualitative techniques. All the data will be collected through survey by conducting
questionnaire fill ups from selected respondents. Also by using personnel relationships I collect
data by collaborating face to face from different textile officials and also convince them to share
statistic that are related to their firms belonging to textile industry. Moreover other statistics will
collect by watching and analyzing media news and journals.

3.3 Population:

The population of this study is executives, Managers and the persons who are belonging with all
textile companies & mills of different textile zone and areas of Pakistan as well as government
bodies from whom I can easily obtain my required data for research.

3.4 Sample:

Due to time constraints, the sample size is limited and it’s consisted of only 300 (Three Hundred)
respondents who all are belonging from major textile group from all over Pakistan. The
Convenient sampling technique of non-probability method has been used.

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3.5 Data Collection tools:

Questionnaireis the tool which can use in collection of data. Each Independent variable have four
questions in questionnaire whereas as Dependent variable have three questions in it.

Variable Name No. of Items

Performance of Textile Industry 03
Shortfall of Power Resources. 04
Inflation Rate 04
Research and Development. 04

3.6 Data Processing & Analysis:

All the data which are collected will put into computer on Microsoft Excel and then transfer it to
Statistical Package for Social Science (SPSS) for following different analysis:

3.6.1 Reliability Statistics

Cronbach’s Alpha measures the internal consistency through which data is observed for a
research report and a value of Cronbach’s Alpha nearer by 1 (one) considered to be strengthen of
internal consistency of an instrument through which data is collected and on other hand if it’s
nearby 0(Zero) shows a complete inconsistency (the questionnaire through which data is
collected was completely out of field).

3.6.2 Correlation

Correlation test shows the relationship between 2(two) variables and the existing independent
variables are significant with dependent variable or not. As you see in the Correlation chart of
SPSS result, all independent variables have a correlated impact with Dependent variable

3.6.3 Regression

In the Regression test on SPSS, it’s examine how much model is run through given task and ‘R’
value in test indicates the level of coefficient of correlation degree. Moreover ‘R Square’
indicates coefficients of determination that explains how much a total model is explained.

3.6.4 Anova

According to rule, Anova model requires Sig. value > 0.05 and in case the sig. value is
completely acceptable. F test Value shows the combination of overall variable.

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3.6.5 Coefficients

Coefficient table shows the positive or negative relationship between variables and also indicates
that whether variable is significant or not. In our case, Coefficient table shows that there is a
positive relationship of all dependent variables with independent variable other than Inflation
rate remaining other variables are significant.

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 4 DATA ANALYSIS & FINDINGS:

4.1 Demographics:

4.1.1. Business City:

Interpretation: Demographics of Business city shows that the respondent’s majority belongs to
Karachi city which is the financial hub of Pakistan. The second business city respondents are
from Faisalabad which is also considered to be the industrial hub for Pakistan’s economy. Other
respondents are from Lahore and other cities of Pakistan.

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4.1.2. Gender:

Interpretation: In Pakistan’s Textile there shows that owners mostly rely on males instead on
females. In above Gender demographic chart, it consists of almost 80% males and just 20%
respondents are females.

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4.1.3 Department:

Interpretation: In the case, mostly respondents belongs from Finance department while Dyeing
&finishing department have 2nd largest respondent population. The 3rd one are Marketing
department respondents in and the other left space belongs to Supply Chain department.

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4.2Reliability Statistics

Variable Name Cronbach’s Alpha No. of Items

Performance of Textile Industry 0.819 03
Shortfall of Power Resources. 0.817 04
Inflation Rate 0.825 04
Research and Development. 0.859 04

Interpretation:Cronbach’s Alpha measures the internal consistency through which data is

observed for a research report and a value of Cronbach’s Alpha nearer by 1 (one) considered to
be strengthen of internal consistency of an instrument through which data is collected and on
other hand if it’s nearby 0(Zero) shows a complete inconsistency (the questionnaire through
which data is collected was completely out of field). Above mention result of SPSS of report,
shows that the variables have very well Cronbach’s Alpha outcome and almost all have result
nearby 1(one). This means that the questionnaire of report through which data was collected has
proper questions and all are according to our required specification. All variable showsHigh level
of internal consistency in data collecting instrument of our research work.

4.2.1Correlations

Performanc Shortfall of inflation Research

e of powerresour rate and
textileIndus ces developme
try. nt

Pearson 1 .910** .763** .792**

Performance Correlation
of textile
Sig. (2-tailed) .000 .000 .000
Industry.
N 250 250 250 249

Pearson .910** 1 .771** .779**

Shortfall of Correlation
power
Sig. (2-tailed) .000 .000 .000
resources
N 250 250 250 249

Inflation rate Pearson .763** .771** 1 .789**

Correlation

Sig. (2-tailed) .000 .000 .000

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 N 250 250 250 249

Pearson .792** .779** .789** 1

Research Correlation
and
Sig. (2-tailed) .000 .000 .000
development
N 249 249 249 249

**. Correlation is significant at the 0.01 level (2-tailed).

Interpretation:Correlation test shows the relationship between 2(two) variables and the existing
independent variables are significant with dependent variable or not. As you see in the
Correlation chart of SPSS result, all independent variables have a correlated impact with
Dependent variable likewise Shortfall of power resource have strongly correlated with the
performance of Pakistan’s textile industry by 91% and it’s also a significant variable. Moreover
Research and Development also have strongly correlated with Dependent variable by almost
79% and its significant variable too. One of the variables which is inflation rate is not significant
and have no impact on the performance of textile industry. Overall sum up of Correlation test is
that from three (3) independent variables have shown a highly impact on the performance of
textile industry which inflation rate doesn’t significant and have no impact on the performance of
Pakistan’s Textile industry.

4.2.2Regression:

Variables Entered/Removeda

Model Variables Variables Method

Entered Removed

Research and . Enter

development,
1 shortfall of
power resources
inflation rate

a. Dependent Variable: Performance of textile Industry

b. All requested variables entered.

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 Model Summary

Model R R Square Adjusted R Std. Error of the

Square Estimate

1 .923a .851 .849 .37589

a. Predictors: (Constant), research and development, shortfall of power

resources, inflation rate

Interpretation:In the Regression test on SPSS, it’s examine how much model is run through
given task and ‘R’ value in test indicates the level of coefficient of correlation degree. Moreover
‘R Square’ indicates coefficients of determination that explains how much a total model is
explained. So in above case; single model is run as seen in chart box and ‘R value” that is 92.3%
shows the high level of Correlation degree between Dependent and Independent variables of a
model. R square which is 84.9% means that the data is reliable to be used for estimation of
population and in other words it indicates that model is absolutely fit and explained.The Std.
Error is significant as it reflect sampling Fluctuation a statistic model will present. There is
37.5% Fluctuation of Sampling Mean shows in Std. Error of the estimate box.

4.2.3ANOVA:

Model Sum of Df Mean F Sig.

Squares Square

Regression 197.834 3 65.945 466.731 .000b

1 Residual 34.616 245 .141

Total 232.451 248

a. Dependent Variable: Performance of textile industry

b. Predictors: (Constant), research and development, shortfall of power

resources, inflation rate

Interpretation: According to rule, Anova model requires Sig. value > 0.05 and
in case the sig. value is completely acceptable. F test Value shows the
combination of overall variable and here in this case F-Test value is (46.73).

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4.2.4Coefficients:

Model Unstandardized Standardized t Sig.

Coefficients Coefficients

B Std. Error Beta

(Constant) .159 .099 1.605 .110

Shortfall of .781 .046 .729 16.909 .000

power
resources
1
Inflation rate .067 .049 .060 1.363 .174

Research and .174 .044 .176 3.953 .000

development

a. Dependent Variable: Performance of textile industry v

Interpretation.Coefficient table shows the positive or negative relationship between variables
and also indicates that whether variable is significant or not. In our case, Coefficient table shows
that there is a positive relationship of all dependent variables with independent variable other
than Inflation rate remaining other variables are significant. Inflation rate have sig. value .174
which is more than 0.05, that’s why it’s insignificant.

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 5 CONCLUSION

5.1 Conclusion:

Pakistan’s Textile Industry is the most important and vital among all the other industries
of Pakistan from the very first day after its creation. The industry faces many troubles and
seen toughest periods in decade. The global recession which has hit the global textile
industry but this was not the only reason behind the downfall of industry. The other
internal factors such as Lack of power resources, inflation rate, Lack of Research &
development work and many others are also the major reasons behind the downfall.
These are the reasons which results in the low production capacity and high production
cost of Textile goods and due to which our exporters are unable to meet the require
demand of international buyers.

Pakistan’s Textile industry have very well potential in term of physical, financial, human,
natural and time resource as the industry enjoys a major advantages such as climatic
condition, cotton fiber crops, Cheap labor rates and availability of deep sea ports such as
Karachi port Trust in Sind and Gawader port in Baluchistan. That’s why the product of
Pakistan is considered and fulfills the criteria of international Market. Moreover Pakistan
has also a cheap source of transportation through its international sea ports like Karachi
and Gawader ports. Buyers can easily import goods with cheap cartage/freight cost.

Currently Pakistan’s Textile industry is facing many issues due to which investors seems
too much conscious while investing in textile industry. If governmental and private
institution takes keen interest for solving such issues in a way that Government impose
resource availability emergency for industries and other trading institutes. Power supply
companies give priority to industries on residential users while providing electricity; and
Government must construct numerous dams and utilizes other sources to produce cheap
electricity in Pakistan. More over government should also allow private investments in
power industry so that userenjoys good and caring service. Government also makes a
policy for providing gas resource to industrial users instead of CNG stations and others.
This will impact on economy and results in national and foreign investments in
Pakistan’s Textile industry.

Institutions are also responsible for investment in research and development. This
research and development include the newly and updates technology machines and
innovates new ways of production so that our product meet the international criteria and
Pakistan will also be considered as furious and innovative products exporter.

29
One of the field experts have a recommendation that government should ban unnecessary
imports of textile goods from China and others countries so that private investors make
sure that their investment is safe and secure and then they take interest in investing and
fulfilling the need of public demand. Instead of importing goods from other countries,
government business development institution convinces international manufacturers of
Textile products to formed textile plants there in Pakistan. This will become a very
healthy and strong action in favor of Pakistan’s Textile industry.

5.2 Recommendation:

Government and private (both) institutes are liable for the downfall of textile industry.
Therefore the recommendation is that government should make a free textile governing
body and sit with them on a single plat form to discuss the issues regarding textile
industry and insure them that Government must take keen action and necessary steps for
the up growing of Textile industry. Through this way, this industry comes to its original
position again and become goodwill of Pakistan in global world.

30
References:

Aamir, M., Khan, K. I., & Rehan, M. F. (2012). Stock Market Prices and Performance of Textile
Industry of Pakistan in Last Five Years–An Evidence of EMH. Mediterranean Journal of
Social Sciences, 3(3), 437-448.

Akhlaq, M. A. (2009). SWOT analysis of the textile industry of Pakistan. Pakistan Textile
Journal, 08-09.

Azam, A., Nazir, F., Nazir, S., Nazir, S., Tasleem, S., & Rafiq, M. The Impact of Financial
Crises on Pakistan’s Economy.

Jameel, K., Akhtar, M. N., & Azeem, K. Causal factors of Textile sector growth: An
Econometric Case study In Pakistan.

Khan, A. A., & Khan, M. (2010). Pakistan textile industry facing new challenges. Research
journal of international studies, 14, 21-29.

Malik, A. (2010). Demand for textile and clothing exports of Pakistan. Working Papers &
Research Reports, RR-No.

Shah, S. I. A. (2014). The cotton stainer (Dysdercus koenigii): An emerging serious threat for
cotton crop in Pakistan. Pakistan J. Zool, 46(2), 329-335.

Shah, W., Warraich, U. A., & Kabeer, K. (2012). Challenges Faced by Textile Industry of
Pakistan: Suggested Solutions. KASBIT Business Journal, 5, 33-39.

Shah, Z. A., & Hussain, H. An Investigation of Lean Manufacturing Implementation in Textile

Sector of Pakistan.

Shibata, H. (1983). The energy crises and Japanese response. Resources and Energy, 5(2), 129-
154.

Sohail, A. (2012). Risk Analysis of the Pakistani Textile Industry: A Macro Analysis.

Tariq, S. R., Shaheen, N., Khalique, A., & Shah, M. H. (2010). Distribution, correlation, and
source apportionment of selected metals in tannery effluents, related soils, and groundwater
—a case study from Multan, Pakistan. Environmental monitoring and assessment, 166(1),
303-312.

Trela, I., & Whalley, J. (1989). Unravelling the Threads of the MFA.

Malik, A. (2010). Demand for textile and clothing exports of Pakistan. Working Papers &
Research Reports, RR-No.

31
Shah, S. I. A. (2014). The cotton stainer (Dysdercus koenigii): An emerging serious threat for
cotton crop in Pakistan. Pakistan J. Zool, 46(2), 329-335.

Shah, W., Warraich, U. A., & Kabeer, K. (2012). Challenges Faced by Textile Industry of
Pakistan: Suggested Solutions. KASBIT Business Journal, 5, 33-39.

Shah, Z. A., & Hussain, H. An Investigation of Lean Manufacturing Implementation in Textile

Sector of Pakistan.

Shibata, H. (1983). The energy crises and Japanese response. Resources and Energy, 5(2), 129-
154.

32
Appendices

33
 SURVEY QUESTIONNAIRE

Business City. *Gender: Male Female

Designation: Dept.:

Please tick () any option as per your choice of understanding

5= strongly agree, 4= agreed, 3= neither agreed/nor disagreed, 2= disagreed, 1= strongly disagreed

i. Pakistan Textile industry requires more business friendly policies.

ii. International trade contractsmay result in increase the exports of
Textile.
iii. Business NGOsalso play their role in order to develop thetextile
industry instead of relying on Government institutions only.
iv. The most significant factor which affects the performance of industry
is the shortage of power resources.
v. Shortfall of power resources (electricity & Gas) increases the
Cost of production.
vi. Power supply companies give more preference to residential user as
Compare to industrial users.
vii. If government allows the private investments in power sector,
this may result in the development of Industry.
viii. Country inflation rate has the impact over development of textile
sector.
ix. Enforceable Inflation rate of economy may result negative while
signing local and International export orders.
x. Investors hesitate in investing due to enforceable inflation rate.
xi. Inconsistent inflation rate of country looses bargaining power of
exporter in international market.
xii. Lack in Research & Development (R&D) work may results in declining
the performance of Textile Industry.
xiii. Working with old and traditional infrastructure causes the decline in
textile sector.
xiv. Unavailability of advance technology machines may also responsible
for the low performance of textile industry in Pakistan.
xv. Continuous training &development of human resource may beneficial
for Textile sector.

34