1.7 Removal of subsidy:
The textile industry was exempted from sales tax but the removal of subsidy leave a bad impact. Zero rating facility is there just for exporters. Withholding tax, sales tax import duty on machinery increases in special excise duty from 1 to 25 percent all these are nothing just an increase in problems of Pakistan textile industry. And Pakistan is losing its position in international market.
1.8 Cut of import by US & UE:
From last 40 years US and UE was ever biggest importers of our most of textile products but recently from last three years a major decrease in imports by UE and US has been seen which is harmful for Pakistani industry. They are moving towards other Asian countries.
Debt obligations hold back the financial growth. Due to an enormous quantity of debt economic condition of Pakistan is running down that’s why Pakistan is facing problem to fulfill basic needs of people. In most of industries in Pakistan funding of World Bank is about 80% to 90%.
1.10 Global crisis:
Global Financial crisis of 2007 had bad effect on the textile industry after Second World War these were biggest financial crises. The worldwide cloth and garment production have been punch badly by international economic crisis. There is a thrilling effect of these crises on textile industry. Before July 2008 more than 8,200 textile units was closed and a large number of labor from this sector was unemployed and many others are on risk of unemployment. These fluctuations in global economy from 2007 to 2010 most adversely affected to all countries of the world mostly to developing countries.
1.11: war against terrorism:
The war against terrorism and increasing uncertain condition of law and order not only leave affect on foreign direct investment but also for our vesting costumers. This is reason for reduction in client. Because of political instability and changes in governments and there polices there is an ambiguous situation in country.
The competition of textile industry of Punjab and KPK is not at equality basses because the port of Karachi is much for from Punjab and transportation expenditures are too much as compare with industry in SINDH. The owners of textile mill in Punjab or KPK may not compete with textile owners of sindh for the reason that the finishing material of Punjab industry first transport to Karachi for export sake. Finally the cost of Punjab’s product is double by cost of transport which raises the cost competition among Punjab and Sindhs exporters.
Although facing the entire these troubles the domestic purchases of shares of several companies are rising it shows that a number of big listed units are making moral effort for international competition. Textile sectors scheduled companies’ present strong profitability. Last year in 2012, at 6 august the Rs.39 was the share price of suraj textile at end of session 27 of November its share price was Rs.64 per share. NISHAT mills Rs.43 to Rs.63, Reliance Weaving Rs.7 to Rs.28.90, Fazal cloth Rs.78 to Rs.112.45, Banero Rs.220 to Rs.286.95 Faisal spinning Rs.43.37 to Rs.87 Nishat chuniau Rs.15.99 to Rs.33.70 Shamas textile Rs.13.30 to Rs.44.50 Crescent textiles Rs.9.98 to Rs.18.97 from august 6 to 27th of November. And this increase in prices and values is not due to any inflation because at that period according to state bank of Pakistan inflation was decreased from 11% to 7.7% and banking extend was shrink from 6.82 % to 5.54%. It means that increase in value of share was due to the strong financial position of these groups and indicate a strong position of basic textile. Nishat chunian is going to expand its capacity of spinning by installment of 22,000 spindles. Many other big industrial groups are also increasing the number of there production houses.
In an interview of chair man all Pakistan textile mills associations dated 28.11.12 by Mr. AHSAN BASHIR it was stated that recently china wants to leave production of basic textile products and Pakistan textile wants to take the position of china by filling the gap of china.
By the removal of quota restriction after free trade agreements like multi fiber agreement world trade organization provide us a chance to increase revenue by increasing there production and quality of this important production sector. Pakistan’s bordering nations demonstrate that those nation which provide appropriate concentration to textile zone later than WTO and MFA they are tacking complete benefit of intercontinental opportunities of exchange orbit and have turn out well in growing their overseas exports and have retain their relative dominance in this sector. These nations are leading to modification in domestic industry according to the requirements of new markets. This modernization is helpful for them in commentating. This is the base of China for maintain of there position.