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Textile industry in eighth five year plan.

Textile Industry is the most important industrial sub-sector. It is based on abundantly available raw cotton, provides largest employment to industrial labour force and is also the largest foreign exchange earner in the country. It contributes nearly 60 per cent of our total exports in 1990-91. In the textile boom increased 1986-91, Pakistan has emerged as a major supply source of cotton textile in the world market confirming its competitive strength. The range of our textile exports comprises: Cotton yarn, cotton fabrics and made-ups including towels, hosiery, knitwear and Readymade Garments. The product mix improved with decline in yarn and grey cloth and an increased share of finished cloth, hosiery, garments and made-ups.

Like many of the low developed countries who have undergone structural changes, Pakistan has committed itself a more outward oriented industrial development strategy considerable progress has made on the policy, investment and regulations. It started deregulation in 1977-78, trade reforms started in the early eighties at a slow pace with major changes occurring in 1987-91. The incentives under rural industrial policy, the free trade policy and the recent incentives for import duty exemption and tax holiday announced in 1991-92, are land mark while major stress has been laid to the development of value added sectors.

Incentives for Development of Textile Industry

The Government Policy has announced the Rural Development Scheme where the textile industry enjoys fiscal benefit in term of exemption of Custom Duty as well as Income Tax Holiday. Further in the Trade Policy 1991-92, the Government has already granted the following incentives for the promotion of investment in the value added textile sectors.

a) Import of 'Machinery' and 'Spare Parts' has been allowed for the following industries, without import duty import Surcharges, Iqra Charges and Import Licence Fee for both industrial and commercial importers.

i) Textile Weaving (Shuttleless Looms) along with power generator.

ii) Textile Processing Industry.

iii) Made-ups, Garment, Hosiery and Towel Industry.

b) Besides above special incentives for textile processing and weaving industry had been granted to develop this sector. These incentives are as under:-

i) Due to high investment cost of shuttleless looms and textile processing units, additional funds for investment support will be provided to these sectors.

ii) Import of major dyes and chemicals used by the processing industry has been made duty free.

iii) Investment in these industries will not be questioned.

iv) Priority will be given for supply of water to processing and finishing industries.

v) Income Tax exemption on manufacture of garments made from local fabrics, expiring on 30th June 1991, had been extended up to 30-06-1994.

Since Textile Industry has been deregulated and no Government permission is needed for setting up a textile unit. The sponsors can contact the DFI's/Bank directly for financing the project. This Office is facing extreme difficulties in monitoring the data on new investments in textile industry as DFI's/Bank are firstly hesitant to part with the information due to their legal difficulties and secondly give this aspects a secondary importance. Based on the information collected through DFI's/Bank and through personal survey the position on new investment and the achievement in the Seventh Five Year Plan Period (1988-93) target for textile spinning was fixed at 1.5 million spindles. During the year 1990-91 forty (40) units with a capacity of 0.543 million spindles and 5.712 rotors with a total of 0.565 million spindles in 1989-90 and 0.602 million spindles in 1988-89. Hence in the first three years of five year plan period a total of 1.66 million spindles have been achieved.

Present Capacity

As result of the positive policy measures industry has grown at a faster pace and at present there are 302 spinning mills with an installed capacity of 6.08 million spindles and 80,008 rotors of which 5.30 million spindles and 68,201 rotors were operational as on 30-04-1992. The capacity would increase to 6.10 million spindles and 79,001 rotor by June, 1992. Performance Behaviour During 1982-83 and 1991-92.

Problems

Now a days Textile Industry is facing the following problems:

Raw Cotton price has been increased upto 900/100 Rs. per maund. Beside this heavy rain and flood has also damaged the cotton crop and the price of cotton may further increase.

There is on international recession in yarn. The cotton Spinning industry has been seriously effected by it. The price of cotton yarn in the international market has been reduced from US $ 450 (Per 400 lbs. bale) to nearly US $ 300 (bale of 400 lbs.) So there is a drastic reduction in the export price and the profitability in the spinning industry has been badly effected. It is TABULAR DATA OMITTED TABULAR DATA OMITTED estimated that the recession would be over and the demand in exports would grow though at a lower price.

Annual Growth

The installed capacity had a growth of about 8 per cent and while worked capacity had growth @ 11 per cent during the

period

1987-88 to 1991-92. The cotton consumption was
@ 14 per cent and production had grown
@ 14 per cent. This was due to the high


demand of cotton yarn in export markets. Mostly the increase in production had gone toward increase in exports. Recently the boom is now over and the demand of yarn in exports markets had declined and the industry is confronted with the problems of disposal of yarn. The local market is likely to improve for consumption of yarn but it will taken adjustment periods.

The production of yarn will grow at lower rate. This is because of the recession in increase local markets and secondly due to diversification to finer count or blended yarn which are mostly consumed in the domestic market and thirdly the delayed operation of newly coming textile mills who are under the pipe line which otherwise should have come earlier. The project for the 8th Five Year Plan is given in table.
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Title Annotation:Pakistan
Publication:Economic Review
Article Type:Industry Overview
Date:Jun 1, 1993
Words:987
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