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Textile sector of Pakistan
THE share of textile industry in the economy along with its contribution to exports, employment, foreign exchange earnings, investment and value added makes it the single largest manufacturing sector for Pakistan. Textile trade is classified into two broad categories i.e. textile which include yarn, fabric and made ups, and clothing which represents readymade garments.
Sector Highlights (2006-07)
• Cotton based textile contribute -Over 60% of the total exports
•Accounts for 46^x)f manufacturing
-Provide employment to 88% manufacturing labour force
• Pakistan is the world's fourth largest producer of cotton and the third largest consumer of the same
• The availability of cheap labour and basic raw cotton as raw material for textile industry has played the principal role in the growth of the Textile Industry in Pakistan Investment in the Sector • The industry made an investment of approx $60 billion during the period 1999-2006. This investment includes both investment ► through bank loan as well as sources
• This investment has been made in form of BMR, expansion and new capacity.
• Textile machinery worth S0.8 billion has been imported during 2005-06 and $0.4 in July-March 2007. This major investment has been made in spinning, weaving, textile processing and making up sectors
• The exports showed positive improvements and cotton textile export grew from $10.4 billion in 2005-06 to $10.8 in 2006-07.
•Leading investor •countries
• USA and the EU are Pakistan's largest trading partners account-
ing for 25 percent and 20 percent share of Pakistani exports respectively
• Other major importers include China. UAE and Saudi Arabia.
•Investment policy
• 100% foreign equity is allowed
• Gradual reduction of import duty on textile machinery and parts to 5% ad valorem except spinning rings on which it is 10%
• Sales tax on import of and local supply of major inputs/raw materials utilized in the entire manufacturing regime of textile industry have been rated zero
• Import duty on raw material, sub-components and components used in local manufacturing of textile plants and machinery of export sector has been reduced to 0% (SR0 565(1)/2005)
• Import duty on ginning presses has been reduced to 5%
• Turnover tax has been reduced to 1% on retailers of specified textile fabrics and articles of apparel including readymade garments or fashion wear. The 15% sales tax levied earlier on retailers has been reduced to 2%
• State Bank of Pakistan will provide long-term financing for export oriented projects at reduced markup of 7% and 6% for 7 and 3 years period respectively
• The refinancing rate has been reduced to 7.5% from 9% R&D support @6% shall continued to be given to readymade garments and knitwear exports
• In addition R&D support will also be available for exporters of the following:
• 1. Dyed/printed fabrics and white home textiles@3%
• 2. Dyed printed home textiles @5%
•Reforms in Textile Sector
•Ministry of Textile Industries (MIN I EX) has taken a number of proactive measures since its inspection. These include: Pakistan Textile City Project; the principal objective of the textile
city is to develop and manage a stateof the art industrial zone on 125 acres dedicated to remove quota's applicable in the WTO agreement on textile and clothing.
•Garments City in Karachi, Lahore (inaugurated) & Faisalabad
• The purpose of this projects is to provide facilities and necessary infrastructure to the textile sector with a view to promote value added garments (woven & knitted), home textiles, made-up and accessories to the international markets.
Clean cotton programme
•This programmes aims at procurement of standardized and clean cotton so that the loss maybe checked and the value added chain may be compensated by providing them high quality contamination free raw materials.
•Pakistan Textile City (Karachi)
• The concept of the textile city Is based on supply of industrial infrastructure like natural gas. water, electricity, sewerage and waste disposal mechanism to prospective investors, through one-window operation
• This projects on public private partnership basis
• Total cost of the project is Rs 3.6 billion, excluding estimated costs relating to establishment of the proposed self generated power plant projects and the water treatment plant
• 700 acres of land has been
acquired from Port Qasim Authority (PQA)
• Out of 1,250 acres earmarked of the project
• Master plan of the Project has been prepared by NESPAK Textile Garments Skill
Development Board (TGSDB)
• TGSDB was formed under Ministry of Textile Industry under, the pursuance of the Trade Policy 2005-06 initiatives to develop critical mass of trained force of Stitching Machine Operators for the Textile Garmented Sector
• This SMOT (Stitching Machine Operators Training) scheme was funded by EDF and its first phase is completed
• In this first phase approx 3,800 people were trained and 2,300 have been employed in Sialkot and Faisalabad.
Establishment of Cotton Fiber Testing Laboratories
• The government has established 5 cotton fiber testing laboratories with High Volume Instruments (HVIs) at Karachi, Sanghar (Sindh), Rahim Yar Khan, Vehari and Multan (Punjab)
• This projects shall facilitate cotton growers and ginners in pricing cotton in terms of true textile value and quality as well as improving fiber processing and yarn manufacturing
• In the second phase 5 more HVI's are being installed at Mirpur Khas (Sindh) and Faisalabad, Bahawalpur, Sahiwal, DG Khan in Punjab.