ENVIRONMENTAL ANALYSIS STUDY REPORT OF

TOPIC: TEXTILE INDUSTRIES

FOR THE SUBJECT

Principles of Management

Student

S R .# N AME R OLL N UMBER

1 MAAZ ALI 29
2 AYESHA KAMILEEN KHAN 10
3 BISMA SABIR 13
4 AHMAD RAZA 05
5 AREEBA GHAFFAR KHAN 09

S UBMITTED TO

MISS NIDA MASROOR

KARACHI UNIVERSITY
ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

1- Infrastructure
The textile industry of Pakistan has been suffering from a lack of adequate infrastructure
facilities which are so desperately needed for its smooth operation. Pakistan being one of the
main textile producers has been failing to meet the demand even if it has more foreign orders
because of the lack of proper infrastructure and utilities. Considering the current situation of the
Textile Industry of Pakistan, here is a brief analysis of some important factors affecting the
infrastructure of the Textile Industry of Pakistan.

 Natural:

The textile industry has been condemned as being one of the world's worst offenders in
terms of pollution. Traditionally produced fabrics contain residuals of chemicals used
during their Manufacture - chemicals that evaporate into the air we breathe or are
absorbed through our skin. Some of the chemicals are carcinogenic or may cause harm to
children even before birth while others may trigger allergic reactions in some people.
Cotton is the second-most damaging agricultural crop in the world.

 Demographic:

There are prescribed manners for the demographic infrastructure of any industry. The
industry should be located in an industrial area which makes it easy for the industry or
factory to dump their waste because the humidity level and the temperature in the dyeing
department is so high which could result in affecting the working conditions, the health
of the workers or can cause any other disaster if not managed appropriately. Moreover,
the industry should also be located in an area that is near to the suppliers to get the raw
materials quickly.

 Technology:

Incorporation of new technology is obligatory for surviving for every firm and
organization. Pakistani textile sector is failed to invest in the cotton sector and facing
challenges for competing with other Asian textile industries. This is due to the obsolete
and outdated machinery, lack of research-oriented attitude, Power failure, shortage of gas
supplies in winter, increased rates of petroleum products, lack of CNG, as well as water
shortages, which is resulting in low profitability, low production volume and high
production cost as compared to other countries like India, Bangladesh, and China.

 Economic:

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

Pakistan has been facing long-term, structural fluctuations which have inherited high
inflation, large income inequality, and a chronic lack of spending for infrastructure. In the
last two decades, economic depression is witnessed all over the world. This has caused a
huge sudden change in the purchasing power of the customers. Poverty level, Foreign
Direct Investment, and export are on the high-speed decline. Many garment industries
have been shut down today due to all these factors. With frequent price fluctuations, the
garment industry is forced to increase the prices of their products which customers are
not willing to purchase.

 Legal:

Local and central government influence over the industrial sector is an external factor.
Different tariffs and tax policies are implemented by the Government to make sure the
transaction is fair and according to the regulations set by the Company’s Ordinance 1984
i.e. if the organization is trading so, both parties should make sure that they are dealing
according to the rules and regulations set by the government of Pakistan.

 Ethical:

The ethical environmental issues faced by the textile sector of Pakistan which is
compromising the standards and quality of Pakistani textile products can be summarised
as follows:
a. Ensuring the purchase of environment-friendly supplies.
b. Ensuring a pollution-free process of production
c. Having an efficient system for the disposal of waste
d. Making the product and the process of production as environment-friendly as
possible.
e. Adopting eco-friendly packaging.
f. Ensuring the purchase of environment-friendly supplies.
g. Ensuring a pollution-free process of production
h. Having an efficient system for the disposal of waste
i. Making the product and the process of production as environment-friendly as
possible.
j. Adopting eco-friendly packaging.

 Political:
Political unrest, strikes, price ceilings, price floors, and other strategies have critically
affected the economy and textile sector of Pakistan. Frequent changes of the government
have adversely maligned the policies of the textile sector. The textile industry in Pakistan
has been facing some serious challenges from the growing political tensions and issues.
The policies regarding foreign exchange, imports, exports, and investments have been

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

consistently unpredictable due to political instability. For instance, the creation of a

shortage of fiber or raw material to maximize the profit, Challan policies on highways or
motorways, etc.

 Social and cultural:

The fashion and apparel industry in Pakistan is experiencing accelerated growth and
youth appear to be the guiding force behind it. Society and Culture are very important
factors that any organization cannot ignore. There should be a perfect match between the
production and social systems in a specific area. This match will help us in gaining high
goodwill. Therefore, we need to examine the socio-cultural environment of a country
before entering its markets, to know the demands and requirements of the target
consumers Following Factors must be considered:
a. Rapidly growing Population
b. Varying customer behavior
c. Religion and culture
d. Age distribution
Advertisements and Marketing have to be done by keeping in the demands and
requirements of the people of the specific culture in a country.

2- Employee:
An employee is an individual hired by an employer to perform a specific job.

 Natural:

In the textile industry important workplace health and safety regulations specific to textile
manufacturing. Textile companies need to ensure that employee exposure to certain
chemicals doesn’t exceed safe levels. For example, several chemicals used for dyeing
purposes can cause cancer. There are ways to reduce the danger though, and that’s where
workplace observations and incident reporting come in.

 Economic:

The textile industry–being the largest sector of the economy- has been playing an
important role in the national economy of Pakistan since the independence. Even today, it
is the country’s most important and prime sector. Its share in the economy, in terms of
contribution to GDP, employment, investment, value-added industry, exports, and foreign
exchange earnings is better.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Social & cultural:

Employees are the backbone of any organization. If they are motivated, they can perform
well. Considering the social and cultural norms, there come few points which the
employers should provide to their employees:
1- A neat and clean work environment should be provided to the employees.
2- Proper labor uniforms should be given to the employees.
3- The production area should have a proper ventilation system and the humidity
level should be balanced.
4- Employees should be given their wages on time and proper overtime should
be given to employees if there is any late sitting after a certain duty hour.
5- Lightning should be proper in the workplace i.e., natural & artificial.

 Technological:

Most employees use new technology, the internet or some other machinery in the textile
industry it’s a form of new technology at working area, in the upcoming, days the fast
speed of technological development is seen and it increases the demand for highly skilled
and well qualified human resource.

 Demographics:

Demographics means the study of population-based factors like age, race, and sex. On
top of scouring through resumes, we also took note of job proposals from employers and
Census Bureau data. Among textile workers, 40.8% of them are women compared to
53.1% which are men. The ages of textile worker employees. Interestingly enough, the
average age of textile workers is 40+ years old, which represents 64% of the population.

a. Male, 53.1%
b. Female, 40.8%
c. Unknown, 6.1%

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Ethical:

Employees are the pillars of any organization. Employee relationship is a very broad
concept and it is one of the essential functions of human resource management. It also
helps to better good employee relations. Management should organize activities that will
help to know an employee at the personal and professional level. Well-planned employee
relations will promote a healthy and balanced relationship between the employee and the
employer.

Political instability is the biggest obstacle

 Political:
The Politics of the textile sector’s employees cannot be fully understood without having
true knowledge about structural negligence of workers’ health and physical well-being,
which were important to the global dynamics of the textile markets and the competitive
practices of cotton manufacturers. The Textiles Policy is based on actionable plans to
make the textiles sector competitive and sustainable. The Government will make sure that
the benefits of the textiles Policy are spread at the national level and have a positive
impact on small and medium enterprises.

 Legal:

The legal of employee in the textile sector is the focus of package mainly on employment
generation in the textile sector, given its high labor intensity. Fixed-term employment
means that a textile sector can flexible in hiring contractual workers for a fixed period
and the workers can even do overtime to meet the supply commitments. The overtime
work limit has been raised to 8 hours as compared to earlier.

3- Suppliers
The global cotton and textile communities are facing historically volatile times, regardless of
which part of the supply chain they belong to. Without question, the problem our industry faces
are significant - but they are by no means insurmountable. In this new era, success will require a
level of communication and transparency greater than we have ever had in the past, and this is an
opportunity that we can take advantage of.

 Natural:

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

Weather changes affect textile industries. For instance, during the summer season manufacturers
contact suppliers who provide raw material according to the seasonal requirements. Suppliers
provide fabrics like cotton and linen in the summer season and during winter they supply raw
materials like wool, jersey, knitted fabric, or silk. The natural environment affects the demand of
the customers as well as the manufacturer’s preference for a specific supplier. There needs to be
contacted with suppliers according to the targeted market.

 Demographic:
Considering the textile sector there are different kinds of raw materials having different and huge
suppliers, having different raw materials, for example, a dealer of thread provides thread but a
not dyed thread. Purchase of yarn is mostly provided on cash payment so some of them are
providing yarn or credit and charge a markup on it because of the monopoly or shortage of
provider on different yarn fibres.

 Social-cultural:
There is an impact of cultural values on the textile industry of Pakistan such as animal skin is
used to make wool and leather, following that manufacturers should be well aware when
importing animal fibre. This socio-cultural factor affects highly the textile sector regarding the
awareness of overseas suppliers.

 Economic:
According to suppliers if we talk about economical factor supplier plays a large role in the
making of finished goods because cost-cutting is the objective of any product, for instance, we
have two kind of thread suppliers dye material thread and nondyed thread so dyed threads a
supplier provides the complete raw material that saves time and cost both which effect on overall
revenue or job profit.

 Technological:
Technological advancement in all sectors of the country has changed the entire socio-economic
environment. Textile supply chains are driven by big brands, wholesalers, and retailers. In
Pakistan's textile sector there is a lot of technological development. The bulk of fabric sector
companies are ongoing with old patterns, utilizing old engineering and machinery, many do not
hold entry to the new supply concatenation. With the advancement of technology many textiles
use new patterns, manufacturers buy material like fabrics or threads in bulk quantities by placing
an order to suppliers via mail or other technological sources.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Political:
Pakistan’s political landscape is characterized by unstable government, inconsistent policies, lack
of foresightedness, and poor governance. Political factors highly affect suppliers, such as trade
restrictions which are the result of protectionism. It may be direct or indirect in the form of
tariffs, quotas, or other duties and taxes. The government of Pakistan has imposed a 6% import
duty and anti-dumping duty imposed on the import of polyester staple fibre (PSF) to allow the
textile industry to manufacture blended textile products for both domestic and export markets.
PSF constituted a direct substitute for cotton, a commodity in short supply, and timely removal
of import duties on PSF would secure the textile industry on the regional level as well as
internationally.

 Legal:
Regarding the textile sector of Pakistan, this sector is lacking in legal aspects. This results in
manufacturers breaching the contract to avoid such issues and to ensure that they are fulfilling all
the requirements of the contract act, one party must ensure to take signs on purchase orders to
eliminate risks and other fraudulent activities and to strictly act on a payment plan.

 Ethical:
Pakistan textile sector is facing a basic ethical issue that there is a delay in payment considering
suppliers. Purchase orders in which due date payment is clearly mentioned but the textile sector
is really low therefore, suppliers face difficulties that may affect economic growth and
fluctuation of money.
Making competitive payment to the suppliers for the products purchased from them.
In aspect to that commitment to the business, cost-cutting and monopoly of suppliers are main
tools to overcome these issues.

4- Customers:

A customer is an individual or business that purchases another company's goods or services.

Customers are important because they drive revenues; without them, businesses cannot continue
to exist.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

• Natural:
a) Climate change:
In the textile sector nature affect the consumer in such a way i.e. in summers, the heat
continuously generated by the machines causes suffocation in the department which
decreases the life of the machine, resulting from an increase in maintenance
expenditures. As a result, the cost of production increases which is ultimately covered by
the customers.
b) Raw material:
Another factor is the raw material which affects the customers. Sometimes the whole
cotton crop gets devastated by the climatic calamities due to which the prices rise and
affect the customers.

 Demographic:

Demographics is the most influential factor in the textile sector. Demographics represent
the distribution of target customers concerning their age, gender, religion, and area.
a) Fashion:
The customer demands according to the current fashion in the society.
b) Lifestyle:
The customers demand according to their lifestyles which vary from culture to
culture. Which class to hit a middle class or upper class.
c) Seasonal change:
The Customers’ demands change with the season i.e. warm clothes for winters &
cool clothes in summers.

• Economic:
Economic factors are connected with goods, services, and money. Despite directly
affecting business, these variables refer to the financial state of the economy on a greater
level--- whether it is local or global.
Economic factors affecting business include:
a) Interest rates
b) Exchange rates
c) Recession
d) Inflation
e) Taxes
f) Demand/supply

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Let's look into a few of these factors in more depth, to see how exactly they can affect a
business growth:

a) Interest rates:
The high-interest rates have been the primary cause for the negative growth of the textile
sector of Pakistan. The high-interest rates have increased the cost of production which is
mostly covered by the customers.

b) Recession:
An economic recession has the potential to change the purchasing attitude of customers,
which might force companies to drop their prices or clear smaller volumes.

c) Taxes:
The high tax rates have also a great impact on the textile sector of Pakistan. The demand
for textile is inelastic due to which most of the burden of tax is beard by the customers.

• Socio-cultural:
The changing attitude of society has also a great impact on the textile sector of Pakistan.
Change in social factors can impact a firm in many different ways. Below is a list of
social factors which effects customers and the sizes of markets:

a) Lifestyles
b) Buying habits
c) Educational level
d) Emphasis on safety
e) Religion and beliefs
f) Health consciousness
g) Sex distribution
h) Average disposable income level
i) Family size and structure

 These factors can affect our attitudes, opinions, choices, and interests. So, it can impact the
sales of products and revenues earned by the textile sector.

• Technological:

In PESTLE analysis, technological factors are variables that relate existence, availability,
and development of technology.
It might be unclear how technological factors can directly affect business unless a step is
taken back to look at the technology being used in day-to-day life. Think about the

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

machine which is being used for printing purposes. Technology hugely dictates the way
many things are done in businesses
Technological factors affecting business include
a) The existence of 3D technology
b) Computer calculation speed/power
c) Engine efficiency
d) Automation
e) Internet connectivity

 Let's look at how these can affect business in some more depth:
a) Automation
b) The automation of many unskilled tasks can allow companies to replace human
production lines with entirely machine ones. This can reduce costs for
manufacturers, distributors, supermarkets, and many other different businesses. It
attracts the customer to have a product of good quality and cheaper rates
c) Internet connectivity
It’s undoubtedly that in recent years global internet connectivity has been on
rising. This presents an even larger market for many companies who use the
internet to connect with their customer

• Political:

Governments can raise or lower corporation tax, which will impact profits. They can also
affect businesses by increasing value-added tax on products or business rates. They can
bring in new laws like the National Minimum Wage, which impacts profits and
employment rights.
So, this uncertainty in political decisions can affect the customer in the same way.

• Legal:
These are external factors that refer to how the law affects the way businesses operate
and customers behave.
Product transportation profit margins and viability of certain markets are all examples of
things that may be influenced by legal factors.

 Legal factors affecting business include:

a) Consumer law
b) Discrimination law
c) Copyright law
d) Health and safety law
e) Fraud law
f) Import/export law

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Let's look at how one of these might affect business in more depth:

a) Consumer law:
Consumer law (alternatively known as consumer protection) is designed to protect
consumers from fraudulent companies or practices, and preserve their rights in the
marketplace.

• Ethical:

To improve the relationship with the customer and provide better facilities, there come
few factors which must be built:
a) Development of customer service communities.
b) Offer pro-active customer services.
c) Study complaints & compliments of customers.
d) Hold daily stand-up meetings with the team.
e) Provide multichannel support.
f) Slash waits times.
g) Being friendly & professional.
h) Finding effective ways to save them time & money.

5- Competitors:

A competitor is an individual, business, group, or association that goes up against you or

your organization. If someone is attempting to beat you in a race, that individual is your
competitor
Political instability is the biggest obstacle for th3-Competitors:
 Natural

The climatic effect and influence are the foremost since cotton plays an expansive role in
the textile sector of Pakistan. A major portion of cotton available in Pakistan is grown in
the southern part of Punjab province which unexpectedly experiences high temperatures
in August and September and due to this extreme weather condition, the cost of yarn
increases allowing our competitors to provide better quality at low cost.

 Demographic

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

Pakistan despite being one of the top textile producers for a long time is facing tough
competition from new competitors now (i.e., Bangladesh, Vietnam, and Turkey) which is
encountering problems for local textile producers to survive.

 Social culture:

Considering the preferences of customers, the textile sector of Pakistan has to forcibly go
through a situation where the customers have a great devotion towards foreign brands
which is providing better opportunities to our competitors (mostly European and
American markets) resulting in a decline of local textile businesses.

 Economics:

For the past few years, Pakistan's textile sector has been facing huge competition from
regional players i.e., Bangladesh, India, and Vietnam. Comparing the current situation
with the past decades, the share of Pakistan in global textile has been decreased to 1.7%
from 2.2% whereas, our competitors such as Bangladesh had seen a rise of 79% while
India had a raise of 16%.

 Technological:

The technological change in the textile sector of Pakistan has been unpromising for a
long time. Except for a few enormous local textile producers, the small businesses have
been facing great problems in adapting modern textile technology. Most of the local
producers prefer used machinery for their cost-cutting, resulting in lower standards as
compared to the foreign ones.

 Legal:

Pakistan has been facing the problem of political instability since its birth in 1947. From 1947
until 2021, the governments have failed to maintain political stability in Pakistan. There is an
uncertainty in government’s structure and we all know when a ruling party faces this sort of
uncertainty they fail to do well for public. The opposite parties tend to take advantage of the
situation.
Looking forward, the clothing business in Pakistan faces some genuine difficulties from the
developing political tensions and issues. The strategies in regards to unfamiliar trade, imports,
fares, and ventures have been reliably capricious because of the political instability in the
country. So, the continually changing guidelines and instability in the arrangements of the

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

government have enormously hampered the general attire industry in accomplishing its ideal
potential.

 Political:

Currently, trade restrictions are playing a great role in disturbing the textile sector of
Pakistan. These trade restrictions may be direct or indirect in the form of tariffs, quotas,
and other taxes and duties. Following few trade restrictions may be considered to sum up
the situation:
a. Frequent change in tax rates
b. Poor law and order
c. The increasing number of competitors
d. Import & export restriction
e. Energy crisis
f. Research & development etc.

 Ethical:
When it comes to ethics in competitors, let us look at two firms and say they are both in
the business to maximize profits and make a good return for their investors/shareholders.
At the same time, they are competing against each other. So they try to devalued others.
Competitors use different domains to get the market to spread negativity against
competitors.

6- Intermediaries:
 Intermediaries are the independent groups or organizations within the channel that make the
product available for consumption. There are four main types of intermediaries: agents,
wholesalers, distributors, and retailers. Intermediaries that buy and resell products. There
are four generally recognized broad groups of intermediaries: agents, wholesalers, distributors,
and retailers.

 Natural:

Considering the export distribution channels of the textile sector of Pakistan, it can be
divided into two channels i.e., air & sea.
Sea: There are various climatic changes that sometimes reduce the quality of the
products, delay the shipment & sometimes the whole shipment sinks due to humidity
level which results in heavy losses.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

Air: The weather affects this channel also i.e., if there is an unexpected climatic change it
may delay the fight or if any calamity happens, the shipment may be lost.

 Demographic:

In Pakistan, textile manufacturers need a lot of effort to export to the international

market.
If we talk about the textile sector or exporter organization so there lay come thousands of
intermediary’s channels in the market i.e., all kind of agents, logistic & different dealer
has hundreds of employees working to facilitate our both parties even out of the country

 Social culture:

Social factors affecting fashion include cultures, norms, lifestyle, demographics, and
population changes. For example, a small clothing manufacturer needs to create styles
that appeal to those of different cultures, especially if those cultural groups represent
large enough segments of its market and language is the biggest barrier in the
intermediaries in this sector mostly locally agents are illiterate and the foreigner is highly
literate so that become social culture barrier and in other words, if we consider an export
organization so they both use different culture and different core believes and they have
different kind of fashion which is not so commonly used

 Economics:
Pakistan's textile industry is using multiple channels to export its products. There are
many middle companies as a part of this channels like a freight forwarder, clearing agent,
and many other intermediaries there are many international companies outsourced
production in Pakistan so they follow less complicated production systems but most of
them rely on international orders. Pakistan exports a large quantity of yarn around the
world but its value addition sector is under development procedure. Pakistani textile
industry is encountering competition in the international market with help of these
intermediaries. These intermediaries in other words help in the competitiveness of the
companies in the international market.

Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can
have different environmental laws and liability laws. For example, in United States,
Texas and Florida have different liability clauses in case of mishaps or environmental
disasters. Similarly, a lot of European countries give healthy tax breaks to companies that
operate in the renewable sector.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

 Technological:
In the current era, technological advancement has a great the impact on peoples’ mindset,
the masses these days are more into online shopping. Young consumers have grown to
use mobile phones and computers. Also, these technological advancements are providing
ways for small businesses to commence from very less investment so, these technological
advancements are helping us to satisfy our consumers in a better way.

 Political:

As indicated by the WTO, the European Union is the largest importer of textiles and
clothing, representing more than 23% of the worldwide textile and attire imports. The
largest product segment in the region is knitwear; however, the most attractive and
fastest-growing product categories are active sportswear and fashion. And introduce
rebate and R & D of exporting textile rebates are an important trade policy tool for
promoting exports. They entail the refund of value-added tax and consumption tax
already paid on exported goods during production, circulation and sales.
So, if we approach these sectors, we have to maintain good relations and enhance our
service by those intermediaries and try to create better dealing between those countries

Legal:

There are a lot of private companies in Pakistan that are providing export relating
services to exporters. These companies provide now a wide range of advisory services in
Pakistan. For instance, they provide legal advice, new researches, new market search, and
improving quality, etc. The impact of these services is very promising in the textile sector
of Pakistan, making small as well as larger businesses operating legally.

 Ethical:

There has been a lot of ethical issues faced by textile Intermediaries channels in Pakistan.
The Ministry of Textiles is playing a great role in overcoming these issues. The issues are
as follows:
a. Need to deal with other countries regarding the textile quotas and other issues
regarding textile exports.
b. Development of the nationwide textile policy in which they define taxes and
facilities to the textile sector.
c. Introduction of necessary laws for the protection of the textile industry in the
country.

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ENVIRONMENTAL ANALYSISOF PAKISTAN TEXTILES INDUSTRIES

d. To ensure that the labor force is skilled

e. To ensure the research and development programs in the textile sector.

Looking ahead, the apparel industry in Pakistan faces some serious challenges from the growing
political tensions and issues. The policies regarding foreign exchange, imports, exports and
investments have been consistently unpredictable due to the political instability in the country. In
short, the constantly changing regulations and instability in the policies of the government have
greatly hampered the overall apparel industry in achieving its optimum potential.

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