Impact of Textile sector on

Economy
In case of Pakistan
 Introduction
• Textile is a word come from the term “TEXERE” a
Latin word meaning “to weave”.
• Textile shields our bodies and brings comfort to
our homes
• A textile or cloth is a flexible woven material
consisting of network of natural or artificial fiber
• It is one of the basic needs of life after air and
food
• Textile industry has a vital role to play in many
other industries
 Food Industry: Coffee filter, tea bags
 Building materials: Roofing material, wire
coverings, air ducts, blinds, window screens
 Transportation: Interior of vehicles, seat belts, air
bags, vehicle filter
 Health Industry: Surgical masks, bandages, gloves
• Pakistan being an agricultural country, textile
industry is considered as its backbone
• Pakistan has 4th largest cotton producing
industry
• In Asia, Pakistan is 8th largest textile exporter
creating employment for about 38% of work
force
• At time of independence, 1947, only 300
looms were installed in mills
• Now Pakistan has 16000 in mills and 30000 in
power looms sector
• Textile industry is dominant manufacturing
sector in Pakistan 60% share in total exports
• Textile industries is also facing many
challenges
 Poor technology
 Power crises
 Poor yarn quality
 Lack of financial resources
 SROs limiting export
 Withholding taxes,
 Literature Review
• Syed Kashif Rafi (2005), found that textile
industries has been a catalyst of economic
growth throughout the world especially for
developing countries. Pakistan is 4th largest
cotton producer.
• Malik (1989), used various microeconomic
constant elasticity of substitution functions
and found that there are long term
employment creation chances from textile
industries.
• Tahir proved theoretically that direct taxes
also have negative impact upon textile
industry. Environmental issues cause textile
production cost to increase.
• Keane (2008),Textile industry plays an
important role in the economic development
of developing nations by producing jobs
especially to women generating foreign
currency.
• Sample: A sample of 27 big textile industries
running in different sectors of Pakistan is
taken.
• Period for study: A 5 years analysis is made
from 2008-2012.
 Variables
• GDP: Market value of all good and services produced
within a country in a given period.
• Manufacturing Value Added GDP: It gives the share of
GDP which is contributed in form of goods
manufactured domestically. Since textiles are
manufacture or is a value addition to cotton so the
GDP is used for.
• Profit before Income Tax: It is the income of the
industry left after deducting entire expenses. It is used
because it is sort of actual an industry could earn.
 Income Before Taxation of Major Textile
Companies (2008-2012)
S.No COMPANY NAME 2008 2009 2010 2011 2012
1 Gull Ahmed 201,838,000 169,861,000 708,227,000 1,537,454,000 -14,170,000
2 Nishat 6,396,968,000 1,561,501,000 3,286,069,000 5,411,912,000 4,018,567,000
3 Fazal 27,361,000 48,219,000 48,218,000 675,792,000 162,197,000
4 Dewan -72,565,416 -108,059,260 -21,145,714 -5,203,359 -59,831,106
5 Gadoon -286,778,429 -297,071,769 874,687,153 2,169,597,000 654,466,000
6 Banuu 43,669,000 9,709,000 94,268,000 143,757,000 174,520,000
7 Ahmed hassan -103,686,837 -55,103,686,837 57,835,126 235,894,371 167,614,187
8 asim 2,426,000 -33,877,000 27,161,000 45,078,000 36,766,347
9 allawasaya -25,468,884 -25,938,569 74,574,463 76,460,320 64,633,131
10 kohat 86,099,000 189,993,000 21,652,000 27,771,000 116,623,000
11 shahtaj 15,593,086 244,941,100 133,327,666 234,480,496 91,595,982
12 kohinoor -267,105,104 -661,761,010 -1,087,527,994 -1,215,276,966 689,070,687
13 artistic 373,722,000 410,338,000 370,925,000 395,273,000 496,438,000
14 cresecent 54,938,000 184,823,000 463,491,000 -13,890,000 -17,441,000
15 shahzad 4,177,770 38,834,594 164,837,930 200,473,652 143,223,518
16 fateh 37,556,385 39,026,362 27,722,147 4,951,803 12,124,625
17 masood 408,010,000 550,111,000 904,428,000 944,947,000 999,230,000
18 saif -79,409,000 -691,529,000 103,101,000 687,207,000 112,743,000
19 sapphir 670,600,418 274,063,653 1,115,613,706 1,774,035,028 1,129,942,224
20 salfi 25,141,203 234,958,951 411,462,184 389,479,732 178,469,758
21 alloct 84,386,774 5,254,323 166,677,300 421,921,460 200,010,243
22 mian -172,312,522 -76,126,811 36,070,642 36,002,288 -52,438,117
23 din 132,360,323 84,893,270 414,042,400 925,683,169 833,895,452
24 tata 27,677,420 -214,391,224 457,293,469 366,051,467 85,119,323
25 shams 28,016,000 116,939,000 165,296,000 40,170,000 84,750,000
26 shadman 14,551,536 51,040,912 135,119,724 -32,322,615 -268,152,707
27 nagina 12,609,152 14,650,351 262,549,759 489,530,200 364,032,943
Total 7640374875 -52983283964 9415975961 15967229046 10403999490
 Graphical Approach
Textile Income
20000000000

10000000000

0
2008 2009 2010 2011 2012

-10000000000

-20000000000

-30000000000

-40000000000

-50000000000

-60000000000
Share of Textile sector in GDP
Years % of Textile in GDP

2008 4%
2009 LOSS
2010 6%
2011 7.5%

2012 4.5%
 CORRELATIONAL APPROACH

Column1 GDP MVAGDP TEXINC

GDP 1 0.96119997 0.536522

MVAGDP 0.961199973 1 0.651471

TEXINC 0.5365225 0.65147097 1

 Conclusion
The study was to see the impact of the textile
sector upon the economy of Pakistan from 2008-
2012. The period was chosen to see the impact
after great recession. Pakistan being an
agricultural country has a land that produces one
of the best cotton in the world. Pakistan, being
one of the major textile producers, the study was
to check the significance of such a major industry
upon its domestic income generation (GDP).
From 7.5% in 2011 to 4.5% in 2012, the textile
contribution has reduced due to energy crises,
Pakistan has lost many of its orders abroad, and
hence, serious measures are to be taken by state
to protect this mega industry of Pakistan.