Internship Report SBP (Repaired)

Internship 2017
Contents
ACKNOWLEDGMENT......................................................................................................................... 4
1.1Background of State Bank of Pakistan (SBP) .................................................................................... 5
SUBSIDIARIES OF SBP ....................................................................................................................... 6
SPB-BSC Field Offices....................................................................................................................... 7
1.2Vision, Mission & objectives ............................................................................................................. 8
1.3 State bank of Pakistan (BSC-Multan) culture .................................................................................. 8
SBP (BSC-LHR) Hierarchy .................................................................................................................... 9
1.4 Divisions of SBP ..................................................................................................................... 9
1.5 Organizational Organogramof SBP .......................................................................................... 10
1.6 Products and Services: .................................................................................................................... 11
What I have learnt ................................................................................................................................. 12
Development finance division .............................................................................................................. 12
1 CMD .......................................................................................................................................... 15
GSU .................................................................................................................................................. 16
PBU Prize Bond Unit ........................................................................................................................ 17
Project Report at State Bank of Pakistan .............................................................................................. 22
EXECUTIVE SUMMARY ..................................................................................................................... 22
INTRODUCTION ................................................................................................................................ 23
Overview .......................................................................................................................................... 23
History of Textile in Pakistan ........................................................................................................ 24
PERFORMANCE OF TEXTILE INDUSTRY IN PAST FEW YEARS ACCORDING TO
ECONOMIC SURVEY OF PAKISTAN ............................................................................................. 26
Ancillary Textile Industry .............................................................................................................. 28
Cotton Spinning Sector................................................................................................................... 28
Cloth Sector ..................................................................................................................................... 29
TEXTILE MADE-UP SECTOR........................................................................................................ 30
Hosiery Industry ............................................................................................................................. 31
Readymade Garment Industry ...................................................................................................... 32
Towel Industry ................................................................................................................................ 33
Canvas .............................................................................................................................................. 33
Synthetic textile fabrics .................................................................................................................. 34
4 MULTAN REGION: AN OVERVIEW ....................................................................................... 35
WHY WE DONT GO FOR VALUE ADDITION ........................................................................... 39
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WHAT INCENTIVE GOVERNMENT GIVING TO INCREASE EXPORTS: .......................... 40

Textile policy 2014-2019 ................................................................................................................. 40
Sectarian development Steps in Textile policy ............................................................................. 41
DUTY DRAWBACKS ........................................................................................................................ 45
Issues: In Government Policy ........................................................................................................ 45
OVERVIEW OF COMPETITION IN SOUTH ASIA: ................................................................... 46
Textile Industry in Bangladesh ...................................................................................................... 46
India ................................................................................................................................................. 46
Comparative Analysis: ................................................................................................................... 47
Conclusion ............................................................................................................................................. 49
Recommendations ................................................................................................................................ 50
Limitations ............................................................................................................................................ 50
Financial Analysis ........................................................................................................................... 52
PESTEL Analysis ............................................................................................................................ 57
3.4 Suggestions for Concerned Division ...................................................................................... 59
3.5 Recommendations (if you were manager there) ................................................................... 59
3.6Final Conclusion......................................................................................................................... 60
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EXECUTIVE SUMMARY
As we all discern that state bank is the central bank of Pakistan. It wheels and sets all the
commercial banks which function in Pakistan. It is a monetarist. It screens all the commercial
banks and preserves the money stream in the country. SBP is truly an extremely active
establishment operating since 1948. Being a student of Business Administration engaged as
an Internee in SBP is excellent chances to absorb theoretical know-how could be applied in
useful grounds.
I was nominated to do my internship in State Bank of Pakistan BSC, Multan. I worked there
for six weeks & it gave me superior real-world awareness about the maneuvers of the bank.
The objective of this Internship was to explore the issues relating to Finance and to find out
problems regarding the theoretical concepts with practical experience working in
an organization during the internship and to study the system of State Bank of Pakistan BSC,
Multan. The report includes the history of State Bank of Pakistan, subsidiaries, products and
services offered by the bank, its financial analysis, PESTEL analysis, SWOT analysis of the
bank and some suggestion on the basis of my involvement about the bank. State Bank of
Pakistan was established by Quaid e Azam on 1stJuly 1948 at Karachi. He said in his
first speech at that time that the bank will serve the economy and bank will be responsible
for issuing note and regulate the whole monetary system. The title role and responsibilities
of the bank was broadened by State Bank Act 1956. SBP is execution traditional and
nontraditional functions for the banking sector of Pakistan and is taking steps towards
Islamization of banking system.
At my stay at SBP, I was accommodated in Developing Finance Division (FEOD) and a

project was also assigned to me which I had completed namely Export Potential of Textile
Made ups in Multan.
At the end of report some recommendations are also given based on my observation and
study of system of SBP.
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ACKNOWLEDGMENT
All and every praise be to Allah Almighty, the Gracious, the most Merciful and the
Beneficent Who guides us from darkness to light and help us in difficulty. I am greatly
thankful to Allah Almighty and His last Prophet Hazrat Muhammad (SAW), whose blessings
and grace enabled me to complete this study.
It is a matter of great honor for me that Allah Almighty has given me a golden chance to
carry out my internship in such a bank and under a noble and very kind person Mr. Imran
Sadaf, Assistant Chief Manger. He deserves a great deal of credit, due to his able guidance,
during the completion of this report. I would like to convey my gratitude to him for his
willingness to motivate me.
I am thankful to all members of Foreign Exchange Operations Department for their

cooperation and guidance, especially Mr. Imtiaz Hussain who was always there for solving
my ambiguities. They were a source of inspiration and patience.
Special thanks goes to my family who provided a peaceful and bright home during the years
of my education and who helped me a lot in achieving the objective of future carrier. I am
also thankful to my friends here who supported and encouraged me throughout this period
and would like to express gratitude and love to them. I feel honored to be a part of such a
bank and work under such kind-hearted, noble, enthusiastic and hardworking people.
I'm also extremely grateful to be able to my Asst. Professor & Internship Coordinator Dr.
Muhammad Irfan Rao IBF, BZU Multan for his instructions well as service over the
whole course of period.
Regards:
Awais Raza
Bahauddin Zakariya University, Multan.
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1.1Background of State Bank of Pakistan (SBP)
State bank of Pakistan is the central bank of Pakistan. It was established in 1948. Initially
State Bank of Pakistan was entrusted with the task to regulate the issue of bank notes and
keeping of reserves with a view to securing monetary stability in Pakistan and generally to
operate the currency and credit system of the country to its advantage" (SBP order, 1948). .
On the inauguration of State Bank of Pakistan, a part of the speech of Quaid-e-Azam is
posted below.
I need hardly dilate on the important role that the State Bank will have to play in regulating
the economic life of our country. The monetary policy of the bank will have a direct bearing
on our trade and commerce, both inside Pakistan as well as with the outside world and it is
only to be desired that your policy should encourage maximum production and a free flow of
trade. The policy of the Pakistan Government is to stabilize prices at a level that would be
fair to the producer, as well as the consumer. I hope your efforts will be directed in the same
direction in order to tackle this crucial problem with success.
In financial sector reforms of 1994 State Bank of Pakistan got full autonomy. On January
21, 1997 this autonomy was further strengthened when the government issued three
Amendment Ordinances. These changes gave full and exclusive power to the State Bank to
regulate the banking sector, to conduct an independent monetary policy and to set limit on
government borrowings from the State Bank of Pakistan. Currently its primary functions
include regulating banking sector, maintenance of public accounts, devising monetary policy,
management of public debt, issuance of currency notes, and maintaining inflation.
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SUBSIDIARIES OF SBP
1.BANKING SERVICES 2. NATIONAL INSTITUTE OF

CORPORATION: BANKING AND FINANCE:
(NIBAF)
Banking Services Corporation (BSC) National Institute of Banking and

established in January 2002, is the Finance is also denoted as State Bank
subsidiary of the State Bank of Pakistan. It Training Institute (SBTI) NIBAF
is delegated with the duty of money Islamabad. All foremostteaching
management, active and directorial &training accomplishments /courses,
oversight of foreign exchange divisions, State Banks Training Plans are held at
export and other finance, organization of NIBAF. Functions of NIBAF as under:
Government financial records and Directors Training Program
operative work connected to Government Research Officers Training Program
credentials. With the fluctuatingsetting of International Courses on Central and
banking segment, BSC has Commercial banking
enduredmomentousalteration. SBP has 16
offices of BSC in Pakistan
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SPB-BSC Field Offices
Field Offices
Karachi Office Lahore Office

Chief Manager Chief Manager
Islamabad Office Peshawar Office

Rawalpindi Office Quetta Office

Hyderabad Office Faisalabad Office

N. Nazimabad Office
Multan Office
Chief Manager
Chief Manager
Sukkur Office
Muzaffarabad Office Chief Manager
Chief Manager
Gujrawala Office
Bahawalpur Office Chief Manager
Chief Manager
D.I.Khan Office
Sialkot Office Chief Manager
Chief Manager
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1.2Vision, Mission & objectives
Objectives
As we all know that state bank of Pakistan is a non-profit making organization. Its chief
objective is to achieve or uphold the currency stream in country. Rise and fall in money
supply can generate inflation or deflation in country, so these belonging sought to be fingered
distantly and state bank is trying to do this.
The mission and vision of SBP is as under.
Vision Mission
To develop SBP-BSC into a vibrant To provide tremendous banking and
and competent organization armed financial services to stakeholders
with obligatory expertise and human more over guaranteeing application
resource proficient of covering of SBP policies, in order to
justifiable support to the State Bank command their hope and esteem.
of Pakistan in achieving its
objectives.
1.3 State bank of Pakistan (BSC-Multan) culture
Organizational culture represents a common perception the organizations members hold. We

should therefore, expect individuals with different backgrounds or at different levels in the
organization to describe its culture in similar terms.
State bank of Pakistan has strong bureaucratic organizational culture. This culture is a form
of management that has a pyramidal command configuration. The bureaucratic
organization is much planned with a high degree of stiffness in its
operations. Organizational diagrams normally exist for every single division, and verdicts are
made through a planned process. In a strong bureaucratic organizational culture, the
organizations core values are equally strongly held and extensively pooled. The more
affiliates who agree to take the fundamental ethics; the superior their commitment, the stouter
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the culture and the bigger its impact on affiliates conduct, as the great amount of sharedness
and strength generates an environment of great interactive rheostat.
SBP has bureaucratic culture because a bureaucratic culture organization is a ranked and
proper association that has numerous stages where responsibilities, power and everyday jobs
are passed on between divisions, offices or person. This configuration is held together by a
central or main administration, and it has led to the development of contemporary
civilization. Bureaucratic organizational configurations have numerous surfaces of
management that flow down from high-ranking administrators to regional and divisional
managers. Due to the many surfaces of management, decision-making power has to pass
through a larger number of surfaces than in blandish organizations.
SBP (BSC-LHR) Hierarchy

MANAGING DIRECTOR (OG-8)
DIRECTOR(OG-7)
CHIEF MANAGER(OG-6)
SENIOR OFFICERS(OG-5)
DEPUTY CHIEF MANAGER(OG-4)
ASST.CHEIF MANAGER(OG-3)
ASSISTANT DIRECTOR(OG-2)
OG-1 OFFICERS
1.4 Divisions of SBP

Following are various units at SBP-BSC
Banking.
Currency Management Dept.
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Prize Bond and Saving Certificate Dept.

Public Accounts Dept.
Quality assurance Dept.
Engineering Dept.
General Service Dept. etc.
Foreign Exchange Operation Division (FEOD).
Refinance Scheme Unit (RSU).
Deposit Account Unit (DAU).
Currency management and Accounts Dept.
Prize bond unit.
Internal Monitoring Dept.
Development finance division.
Public Account Unit (PAU).
Audit Dept.
Securities unit
1.5 Organizational Organogramof SBP
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1.6 Products and Services:

The State Bank of Pakistan deals into various assortments of banking to pact with
fluctuations in the
trade and industry environment and unalike purchasing powers. Here are some of the banking
areas that the bank looks into:
Handbook of corporate governance

Guidelines on risk management
Banking sector supervision in Pakistan
Microfinance for Small and medium enterprises (SMEs)
Minimum capital requirements for Banks
State Banks Shariah Board approves essentials and model agreements for Islamic
modes of financing
Procedure for submitting claims with SBP in respect of unclaimed deposits
surrendered by
banks/DFIs
Remittance facilities in Pakistan
Opening of foreign currency accounts with banks in Pakistan under new scheme
Guidelines on commercial paper
Guidelines on securitization
SBP Scheme for agricultural financing.
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What I have learnt

At the start of our internship all the interns were given an orientation of six departments. The
purpose of this was to provide the knowledge about actual work of SBP-BSC Multan. The
things I understood there are discussed below.
Development finance division

It has two basic units
1 AFU Access to finance Unit
2 RSU Refinance Scheme Unit
AFU
This unit is related to creating awareness of finance related policies and facilities available to
general public and commercial banks by SBP-BSC this is done through different activities
like seminars ,meetings and other events this unit also acts as guardian of all fair availability
of finance to general public by commercial banks it performs three functions
Focus Group
Focus group is consists of representative of all stakeholders of the proposed refinance policy
it has five kinds
1. SMEs
2. Agricultural
3. Microfinance
4. Islamic Banking
5. Housing Finance
Focus group is again consists of mainly people from banks, Governmentrepresentatives of

related focus group and general public. Focus group is used for three purposes firstly to take
feedback secondly for suggestions and lastly for discussion of issues .Agenda points are
raised by focus group and are discussed with chief then a meeting is called for discussion and
a proper documentation is made to get help in refinement of policies
Other Activities
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Other activities of AFU includes the development of business plan for the coming year and
conveying this to head office at Karachi .Monthly progress reports are also developed here
this unit also handles the complaints of from general public related to general public BC and
CPD Banking conduct and consumer protection department is also included in this
department which deal with complaint and forward them to banking Mohtasib Pakistan
Events
AFU is also responsible for organizing different event and meetings of different official
throughout the year .these events are totally organized by AFU
RSU
Refinance Scheme Unit provides finance to banks when are required the provision of finance
to general public and business for different purposes RSU issues finance under different
schemes these schemes are discussed below
EFS Export finance Scheme
This scheme was created in 1973 it provides finance in all three sectors include conventional,
Islamic and SMEs .Its basic purpose is to facilitate exports in order to increase foreign
reserves of Pakistan this scheme also focuses on export of value added products instead of
raw material .EFS works under parts
Part 1
It is transaction base finance facility available to all exporter on case to case basis through
commercial banks at pre and post shipment stage .on pre shipment stage finance is availed by
exporter to meet its shipping and manufacturing cost funds are available to both direct
exporter and indirect exporter .direct exporter can get 100% of its transaction amount and can
negotiate the share of its indirect exporter in that 100%.the duration of this finance facility is
180 days and a rollover of 90 days can be obtained on 117% performance
Procedure
The borrower approaches commercial bank for finance its exports after the approval the
exporter has to provide the proof of shipment to bank within 180 days banks takes 30 days to
process it and submits it to SBP which takes more 7 days to process and the whole process is
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completed in case of any sort of unforeseen circumstances the exporter is given the relaxation
to fulfil his obligation through another shipment of the same commodity to another importer
Part 2
It is a performance based credit facility to exporters .Exporters have to prepare a EE1 report
of overall financial year performance at SBP and commercial bank and after approval from
the FEOD of SBP the whole transaction amount is divided by two and result is granted limit
to exporter for next year of finance through a bank .With 705 performance the rollover of 180
days can be obtained.
EE Report
For limit allocation

It is of previous year
Both part 1 and 2 use it
EPR included
EF statements
For performance evaluation

Only borrowing year EPR used
Penalties and rewards are granted on basis of EF statements
LTFF long term financing facility
This facility is for extended period of time of 10 years with two year grace period for special
purposes
FFSAP Financing Facility for Storage of Agriculture Produce
This facility is for encouraging the private sectors to preserve the agri products for their
offseason usage like fruit and vegetables this facility is available for buying machinery
generators from imports as well as local sellers
FSPPRE Finance facility for Power plant Renewal of Energy
This facility is available to anybody who wants to install a plant of energy of more than
20MW for import of the required machinery
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1 CMD
Currency management department is one of the active department at SBP BSC it basically
covers four different unit i.e.
Remittances
Currency operations
Government Payments
Currency Research and system division
Currency management is basically involved in provision of issuable quality notes to banks

and also the fresh notes injection .They are also concerned with availability of currency
notes at banks.
1.1 Remittances
Remittance is about the movement of currency inside and outside the SBP BSC. This
occurs in two parts
I. Inward Remittances
Inward remittances is whenever the cash is demanded inside of SBP-BSC from PSPC
Pakistan security printing corporation which is responsible for printing of fresh currency
notes. First it was a private company but now SBP has acquired it now it is working under
SBP. The currency notes are demanded from PSPC and they are sent by it through train
from Karachi. In this phase all the risks and responsibilities are subject to Pakistan
government.
II. Outward Remittances

Outward remittances is related to provision of cash to all banks for their daily needs if
they are facing a crunch. Whenever they are in need of cash they demand cash and cash is
delivered to them safely and all the expenses for transportation of cash are born by the
bank
2 Currency Operations
Currency operations control the issuance of fresh notes and moping out the non-issuable
note and replacing them with issuable notes it involves following activities
Accessing the cash needs through different assessments
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printing the fresh notes

Allocating the limits for each branch needs
Delivering the notes
Accepting the soiled, oily, watered and cut notes from general public and banks
also
Replacing them
Inspection of cash counters of banks and assessing the faults in SOPs instructed to
them
Destruction of the non-issuable note
2.1 Destruction and sorting of notes

Sorting of notes is done both manually and mechanically. The notes under 500 hundred are
sorted manually by hand and issuable and non-issuable notes are separated. Non issuable are
destructed and issuable are issued again. The notes above 500 are sorted by machine i.e. DNS
desktop note sorting and CNS counter note sorting and non-issuable cash is destructed
through VD.
2.2 Clean Note Policy implementation

This policy was implemented in 2005 to make the quality of notes better and to improve the
life of note CMU is also monitoring banks compliance with this policy and they penalize
bank for not following the policy.
3 Currency research and system division

This division is related to research on different issues related to note like the quality of note,
their size, material etc.
3.1 Forged Notes

In order to minimize the chances of forged note this divion is constantly seeking ways to
discourage this. They constantly make efforts to make the features of note complicated and
resilient in order to avoid this activity
GSU
General services unit of SPB Banking Services Corporation is related to procurement and
Assets Management, budgeting and Engineering.
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Procurement and asset management

For procurement generally PPRA 2004 Rules apply like if purchasing cost is 25000 then we
purchase only from one supplier. We do not need to go different suppliers and if cost is more
than 2 million then more option of supplier and advertisement on the websites of PPRA and
SPB And in two news papers.
Due to some PPRA assumption like monopoly we purchase only one suppliers and cost does
not Metter. And purchasing includes all kinds of office equipments.
Budgeting
GSU uses different ways of budgeting and every unit has its own maintenance budget.
Normally two ways of maintenance of budgeting used like zero page budgeting in which we
start from zero, no Requirement of bench mark of budget. And second way that is used is
Incremental budgeting that is according to previous year forecast base and according to this
benchmark we set the overall bank budget
Categories of assets
Assets categories on the basis of different costs
If the cost of the asset is more than 25000 thousand then it is called capital asset.
If the cost of asset 25000 is between 5000 thousand that called expense asset.
And if the cost of asset is t less than 5000 then it is called expense impressed asset.
And according to rule straight line depreciation method used for the depreciation of assets.
Another category of assets like office equipments that normally contain machines, LED,
Dispensers, and office furniture, electronic data processing assets that normally contain
computers, Laptops etc.
Taxes payments
According to taxes rules like province taxes imposed on services like on contracts. And normally
two kinds of taxes sales taxes and withholding income taxes .further more sales taxes imposed
two category GST Means general services taxes under federal government and imposed tax on
procurement normally 17%.And Punjab sales taxes imposed on services that normally 16 %.
PBU Prize Bond Unit

Prize bonds are the debt instrument of government from general public. Public savings are
utilized by government and in return government provides them the incentive of prizes. Prize
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bonds are issued under the regulation of ministry of finance and managed by PBU at BSC.
Prize bonds are scheme of national savings.
Here is the detail of printing and distribution of Prize Bonds
Indent the printing of prize bonds

to PSPC is ordered
Freshly printed Prize

PDO bonds are sent to public
debt office at lahore and
Karachi
prize Bonds are
Field Placed in Vaults
under the
Office custody of DCM
or ACM
Fresh prize bonds are entered in Globes System and Stamped it is called the issuance of Prize
Bonds. Whenever the Balance of prize bonds is required then these are unsealed By CMD.
Each Prize Bonds contains a unique serial number and a prize number on which it is awarded
prizes. Prize bonds have 8 denominations 100,20,750,1500.7500,15000,25000 and
40000.Each denomination is issued in form of series of one million.
1.1 Sales
Sales of prize bond can be on cash basis or cheque at cash counter. The cash counter submits
a credit voucher at the evening \
1.2 Encashment
It means when the prize bond is issued for payment of its face value at counter and a debit
entry is recorded
Prize bond life cycle
Here is the life cycle of a prize bond. There are four draw for each prize bond denomination
and each occurs after three months.
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!st jan to 31
jan open
period
Prize
Bond
Cycle feb and
march
Next draw Shut
period
Draw for small prize bonds occur at 15 of month and for large amount prize it is 1 st of each
month
3 Draw Procedure
Draw committee is formed consisting of DCM and ACM and members from National Savings
and a chairman is selected. The member of Chamber of Commerce are also part of this
committee. Draw is performed through hand operated Draw Machines with the help of Special
Children for First, Second and Third Prize. The Draw number is noted and draw results are
published for general public, they can claim the prize within six years of draw date.
Cash payment is made below amount 18500 and above amount is paid through pay orders.
The bonds with cash amount lower than 10000 are returned back and bonds with prize
amount higher than 10000 are retained.
4 Payment
Payment procedure is carried out through three counters. Their name and functions are tabled
below
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31 33 Prize
30 Receipt
Processing Bond Box
tax payment Paying
status is Certificate is
checked issued Payment
application is
retained in box
stamped and at day end
AMC
bond particular
verification
are checked
This whole process of payment is summarized below
After all this bond is holed and a satatment retained not for sale is written on it.
5 Premium bond
Premium bond have four characteristics
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5.1 Registered
It means they are issued and registered on the name of a person who is buying them. For
acquisition application, CNIC and account maintenance certificate is provided then they are
entered into Globus and authorized
5.2 Profit bearing

The profit of half of the rate of treasury bills is paid after six months
5.3 Transferable and hypothecation

It means their ownership can be transferred and they can also be used as collateral for
borrowings.
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Project Report at State Bank of Pakistan
Export Potential of textile made ups in Multan
EXECUTIVE SUMMARY
The report is about the export potential of textile made-ups in Multan. Starting
from the introduction of textile in Pakistan including the historical performance
of textile sector of Pakistan we particularly explored the potential of textile
made-ups, their exports in previous years according to the economic survey of
Pakistan. Then we reached at the overview of textile sector of Multan where we
discussed the figures and their exports by doing the analysis of textile. We then
came to know the issue regarding not going towards value addition which was
because of lacking of infrastructure, low investment and less use of manmade
fibers. Furthermore we have also discussed the incentives which government is
providing in Pakistan which is related to the duty drawback which is the main
incentive given by the government in order to get the idea of competition in
global market and also by having the comparative analysis of India, Pakistan
and Bangladesh including their export performances of textile and incentives
provided by the government. Lastly we did the SWOT analysis of textile sector
of Pakistan which result in the suggestion, limitation given by the textile units
running in Multan as well as secondary data was studied to find out the insights
at the national level. Finally we concluded our whole report by saying that we
can be more benefitted by the textile sector if we focus on made-ups section of
it.
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INTRODUCTION
TEXTILE
Textile is a term that comes from texture which is a Latin word that means to weave. A cloth
when manufactured by weaving or knitting forms a fabric.
Textile Value Chain Process:
Cotton value chain starts from Ginning that adds value to it by separating cotton from seed and
impurities but Spinning can rightly be called as the first process of the chain that adds value to
cotton by converting into a new product i.e. conversion from ginned cotton into cotton yarn.
Since spinning is in the beginning of value chain, so all the later value added processes of
weaving, knitting, processing, garments and made-ups manufacturing are dependent upon it.
The textile industry is often considered a backbone of the Islamic Republic of Pakistans
economy. Pakistans textile Industry is the fourth Largest Cotton Producer, sixth largest importer
of raw cotton and the third largest Consumer.
Overview
Pakistans textile industry ranks amongst the top in the world. Cotton based textiles contribute
over 60% to the total exports, accounts for 46% of the total manufacturing and provide
employment to38% manufacturing labour force. The availability of cheap labor and basic raw
cotton as raw material for textile industry has played a major role in the growth of the Cotton
Textile Industry in Pakistan
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History of Textile in Pakistan
In 1947, independence of subcontinent from the British rule and its division in two independent
countries, Pakistan and India, opened new avenues for the textile sector. Pakistan then,
comprised two areas, East Pakistan (now called Bangladesh) and West Pakistan. The West was
the cotton producing area and East was renowned for jute production. At the time of partition,
East Pakistan received only 90 cotton mills out of 389 mills of erstwhile undivided Bengal.
Whereas, West Pakistan was left without any industrial setup
1950-1959:
In 1950 Textile industry was started in our country. PIDC came into being which had the main
objective of industrializing the country in major fields. The modern development of the sector
started in 1953 with the inauguration of the Valika textile Mill at Karachi.
1960:
In mid-sixties there were about 180units of textiles bleaching, printing and processing units,
mostly situated in Karachi and Punjab. New private investment began with a highly protected
home market. Newly established mills were based upon imported technologies but there was a
lack of technical staff and shortages of capital.
1970:
With the establishment of the Central Cotton Research Institute in Multan in 1970, cotton
breeding process attained momentum in the country. In 1970-71 there was 113 textile units and
the industry had 2,605 thousand spindles and 30 thousand looms. After the separation of East
Pakistan Cotton Export Corporation of Pakistan was established which meant that most of the
private sector work was taken over by the state? The textile industry suffered heavy losses
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because the export of cotton was controlled by the CEC.
1980
There was a rapid growth in spinning sector till 1980-81 spinning continued to expand. The
eighties brought a relief to the textile industry due to the boom in international market and
industry friendly policies of the government.
1990-98:
World demand for good quality, wide width fabrics grew and replacement and a modernization
process started. Machinery for producing garments and made-ups was also freed from import
duty. As a result, a huge expansion in the spinning sector took place in the first five years of the
1990s.The number of units rose to 440 in1996-97
1999-2008:
The global recession which has hit the global textile really hard is not the only cause for concern.
Serious internal issues also affected Pakistan's textile industry very badly. The high cost of
production resulting from an instant rise in the energy costs has been the primary cause of
concern for the industry. Depreciation of Pakistani rupee during last year has significantly raised
the cost of imported inputs. Furthermore, double digit inflation and energy crises have affected
the overall textile sector. Growth trend of the textile industry during last 10 years is as follows;
(Source: Ministry of Textile)
YEARS GROWTH
2001-02 4.10%
2002-03 5.20%
2003-04 20%
2004-05 24.50%
2005-06 11.23%
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2006-07 8.40%
2007-08 4.05%
2008-09 -0.70%
2009-10 -1.78%
2010-2011 1%
This table shows the growth trend of industrial sector during last 10 years. Since 2002 it
was steadily growing and it increased abruptly in 2004 showing a jump from 5%-20%
growth. This sudden sharp curve was due to higher input prices along with the record
high exports to US making it seventh largest market for US cotton. During 2007,
Pakistan economy went through worst political and economic instability due to Benazir
Bhuttos assassination followed by unstable law and order situations. Moving ahead in
2008 the textile sector showed record negative growth due to financial church in global
economy resulting in slow down in economy growth chased by soaring oil, food and
other commodity prices, softening of external demand and turmoil in the international
financial market. The economy is also going through the most terrible energy crisis
affecting the performance of the textile industry
PERFORMANCE OF TEXTILE INDUSTRY IN PAST FEW

YEARS ACCORDING TO ECONOMIC SURVEY OF PAKISTAN
Textile is the most important manufacturing sector of Pakistan and has the longest production
chain, with inherent potential for value addition at each stage of processing, from cotton to
ginning, spinning, fabric, dyeing and finishing, made-ups and garments. The sector contributes
nearly one-fourth of industrial value-added and provides employment to about 40 percent of
industrial labor force. Barring seasonal and cyclical fluctuations, textiles products have
maintained an average share of about 62 percent in national exports. The export performance
during the period under review is given in the Table
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Export of Pakistan Textiles (US$ Millions)
2016-17
2015-
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 16 Jul-Mar
Cotton & Cotton

textiles 9755 13147 11803 12628 13348 13139 12168 9112
Synthetic textiles 446 608 546 406 383 331 288 167
Sub Total textiles 10201 13755 12349 13034 13731 13470 12456 9279
Wool &woolen
textiles 137 132 121 122 125 119 98 61
Total textiles 10338 13887 12470 13156 13856 13589 12553 9340
Total exports 19290 24810 23624 24515 25131 23885 20802 15119
Textile as % of
Exports 54 56 53 54 55 57 60 62
Source: Ministry of Textile
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Comparison of pakistan textile Exports

30000
25000
20000
15000
10000
5000
0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Textile Total Exports
As we can see that the contribution of textile to overall exports has been above 50% maintaining
an average of 60%.
Ancillary Textile Industry
The ancillary textile industry includes cotton spinning, cotton cloth, cotton yarn, cotton fabric,
fabric processing, home textiles, towels, hosiery and knitwear and readymade garments, these
components are being produced both in the large scale organized sector as well as in the
unorganized cottage / small and medium units. The performance of these various ancillary textile
industries is illustrated as under:-
Cotton Spinning Sector
The Spinning Sector is the backbone of the Pakistans textile industry. At present, as per record
of Textile Commissioners Organization (TCO), it comprises 523 textile units (40 composite
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units and 483 spinning units) with 13.269 Million Spindles and 185 thousand Rotors installed
and 11.083 million spindles and 140 thousands rotors in operation with capacity utilization of 84
percent and 76 percent respectively, during Jul-Mar, 2017.
Cloth Sector
There are three different sub-sectors in weaving via, Integrated, Independent Weaving Units, and
Power Loom Units. There is investment in the shuttle-less looms both in integrated and
independent weaving sector. This trend is likely to intensify in the country. The power loom
sector modernized and registered a phenomenal growth over the last two decades. The growth of
power loom sector is due to favorable government policies as well as market forces. The
production of cloth in Mill Sector is reported while the production in Non-Mills Sector is not
reported and therefore, is estimated.
Cloth Sector Production
Production July-March July-March % Change
2016-17 2015-16
Mill Sector (M. Sq. Mtrs.) 783.250 780.233 0.39
Non Mill Sector (M. Sq. 6098.220 6091.972 0.10
Mtrs.)
Total 6881.470 6872.205 0.13
Cloth Exports
Quantity (M.SqMtr.) 1410.359 1659.455 -15.01
Value (M.US$) 1581.174 1685.264 -6.18

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TEXTILE MADE-UP SECTOR
Being value added segment of Textile industry made-up sector comprises different sub groups
namely Towels, Tents & Canvas, Cotton Bags, Bed-Wear, Hosiery, Knitwear & Readymade
Garments including Fashion Apparels. The table given as below compares export performance of
made-up sector during the period 2017. Export performance of made-up sector during the period
July-Mar FY 2016 is presented in Table
Export performance of textile made-ups
July-March July-March % Change
2016-17 2015-16
Hosiery Knitwear
Quantity (M.Doz) 89.520 85.460 4.75
Value (M.US$) 1745.663 1746.917 -0.07
Readymade Garments
Quantity (M.Doz) 24.823 23.704 4.72
Value (M.US$) 1704.064 1608.717 5.93
Towels
Quantity (M.Doz) 132.723 135.646 -2.15
Value (M.US$) 578.024 597.001 -3.18
Tents/Canvas
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Quantity (M.Doz) 33.907 25.989 30.47
Value (M.US$) 107.053 68.361 56.60
Bed Wears
Quantity (M.Doz) 263.814 244.295 7.99
Value (M.US$) 1585.691 1508.609 5.11
Other Made up
Value (M.US$) 485.148 471.618 2.87
Exports Distribution of Textile made-ups

Hosiery Knitwear Readymade Garments Towels
Tents/Canvas Bed Wears Other Made Ups
8%
29%
25%
1% 10%
27%
Hosiery Industry
There are about 13372 Circular Knitting Machines, 10646 Flat Knitting and 23241 Socks
knitting machines spread all over the country. The capacity utilization is approximately 70%.
There is greater reliance on the development of this industry as there is substantial value addition
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in the form of knitwear. Besides locally manufactured machinery, liberal import of machinery
under different modes is also being made and the capacity based on exports is being developed.
The export performance of knitwear during the period under review is given below in Table
Hosiery Exports
2016-17 2015-16
Quantity (000.Doz) 89.520 85.460 4.75
Value (M.US$) 1745.663 1746.917 -0.07
Readymade Garment Industry
Readymade garment industry has emerged as one of the important small scale industries in
Pakistan. Its products have large demand both at home and abroad. The local requirements of
readymade garments are almost fully met by this industry. Garment industry is also a good
source of providing employment opportunities to a large number of people at a very low capital
investment. Production of garments by units depends on export orders directly or indirectly.
These orders have somewhat risen in terms of value, but they have fluctuated widely in terms of
quantity. Generally export earnings from garments have increased significantly. Exports
increased from 23.704 million dozens in various types of readymade garments worth US$
1608.72 million during Jul-March FY 2016 as compare to 24.823 million dozens worth US$
1704.06 million during Jul-March FY 2017, thus showing an increase of 4.72 percent in terms of
value and 5.93 percent in term of quantity
Exports of RMG
2016-17 2015-16
Quantity (M.Doz) 24.823 23.704 4.72
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Value (M.US$) 1704.064 1608.717 5.93

Towel Industry
There are about 10,000 Towel Looms including shuttle and shuttle less in the country in both
organized and unorganized sector. This industry is dominantly export based and its growth has
all the time depended on export outlets. During Jul-March FY 2017, exports in term of quantity
recorded at 132.723 million kg as compared to 135.646 million kg showing a decrease of 2.15
percent. Export performance of towel sector during the period is given below in Table.
Exports of Towel Industry

July-March July-March
2016-17 2015-16 % Change
Quantity (M.Kgs) 132.723 135.646 -2.15
Value (M.US$) 578.024 597.001 -3.18
Canvas
The production capacity of this sector is more than 100 million Sq. meters per year. This sector
is also known as raw cotton consuming sector. This value-added sector also has a great potential
for export. This sector recorded $ 107.427 million during Jul-March FY 2017, as compared to $
68.361 million in comparable period last year, thus showing an increase of 56.60 percent. In
terms of quantity during Jul-March FY2017 it is recorded at 33.907 million kg as compared to
25.989 Million kg. Thus showing an increase of 30.47 percent
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Exports of Canvas

2016-17 2015-16
Quantity (M.Kgs) 33.907 25.989 30.47
Value (M.US$) 107.053 68.361 56.60
Source: Ministry of
Textile
Synthetic textile fabrics
During July-March FY 2017, synthetic textile fabrics worth $ 166.958 million were exported as
compared to $ 222.114 million showing a decline of 24.83 percent as compared to last year.
Even in Quantity term the exports of synthetic decreased by 56.05 percent. Industry is carpets
and rugs. During Jul-March FY 2017, carpets and rugs worth $ 61.206 million were exported as
compared to $ 74.030 million showing a decline of 17.32 percent.
In terms of quantity the exports of carpets and rugs also decreased by 3.64 percent. The exports
of carpets during the period July-March FY 2017 is given in the Table.
Export of synthetic textile fabrics

2016-17 2015-16
Quantity (M.Sq.Mtr) 1.322 1.372 -3.64
Value (M.US$) 61.206 74.030 -17.32
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4 MULTAN REGION: AN OVERVIEW
Textile production is a major industry. It is based on the conversion of fibber into yarn, yarn into
fabric. These are then dyed or printed, fabricated into clothes. Different types of fibber are used
to produce yarn. Cotton remains the most important natural fiber, so is treated in depth. There are
many variable processes available at the spinning and fabric-forming stages coupled with the
complexities of the finishing and coloration processes to the production of wide ranges of
products. Production of textile in Multan is being done in many sectors of Multan. According to
the data we collected from such sectors are:
Yarn Sector 45%.

Spinning sector 11.5%.
Weaving sector 6.2%.
Textile made up of 30%
Performance of textile Exports in Multan
The total Textile Exports in Multan region are given below as it is clear that this pattern is not
different from the Pakistan as it is mainly composed yarn and fabrics sector which is major
problem of Pakistan. And value addition is also not satisfactory in Multan too.
Export Value in Million USD 2016- Percentage

Product/Export Items 17 Share
Yarn & Fabric 426.29 72.28%
Textile Made Ups 163.45 27.72%
Total Textile Exports 589.74
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Exports Distribution of Textile in Multan
Textile Made
Ups
28%
Yarn & Fabric

72%
Analysis of Export Mix
Total textile exports from Multan area stand at USD. 589.740 Million in 2016-17 (01-07-2016 to
30-06-2017). Mix of textile exports is majorly dominated by Yarn & Fabric with 72 % share
while made ups represent only 28 % of textile exports in Multan region. This huge difference in
exports of value added items and raw textile items i.e. yarn & fabric is quite disappointing, thus
causing a huge loss of foreign exchange for Pakistan. If local textile manufacturer opt for
forward integration, it can bring considerable amount of foreign exchange to Pakistan. Exports of
Yarn & Fabric of USD. 426.29, if converted into textile made ups, can bring incremental foreign
exchange by utilizing local FOPs. Ultimately, it will result into higher profit margins and can be
benefitted through economies of scales. Exports of yarn & fabric of USD. 426.29 M is potential
loss of exports which could be done after value addition
Analysis of Financing Facilities to Exporters and producers Under

Schemes of SBP
Long term financing Facility (LTFF)

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SBP is providing financing facility to import the machinery in order to give hands to value
addition under this scheme SBP is offering finance at an end user rate of 5% to textile sector
Only new plant, machinery & equipments to be used by the export oriented projects in following
sectors for producing exportable goods shall be eligible for financing under the Facility: Core
Categories
1. Textile & Garments

2. Fabrics
3. Garments
4. Made up
5. Towels
6. Art silk & synthetic textile
The table under shows the finance facility provided to textile for development of their unit and
to support value addition
Total Number of Number of Units Amount Disbursed Percentage of Units

Units Availing LTFF under LTFF Availing LTFF
82 24 Rs. 5,578.33 M 29.27 %
Export Finance Scheme
The Export Finance Scheme (EFS) is in operation since 1973 with the objective to boost exports
of the country. Under the scheme short term financing facilities are provided to exporters throug
h Banks for exports of all manufacturing goods especially value added products with the excepti
on of basic & primary commodities/raw materials as mentioned in negative list issued vide BPR
D Circular No. 5 dated February 24, 2003. It operates in two parts viz PartI (Transaction Ba
sed) and PartII (Performance Based)
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EFS PartI:
PartI is a transaction based facility. The commercial banks provide export finance to the export
ers on casetocase basis at preshipment and/or postshipment stage against Firm Export Orde
r/Contract/LCs. The exporter has to show export proceeds equivalent to the loan amount as p
erformance. The tenor of the facility is up to 180 days with a rollover option for further 90 days
subject to showing performance equivalent to 117% of the borrowed amount in case of availing
rollover option.
EFS PartII:
It is a performance based facility, where entitlement of exporter for revolving export finance lim
it is equal to 50% of the export proceeds realized through export of eligible commodities in the p
receding financial year. Export performance of an exporter is matched annually against total loan
availed during the financial year on daily product basis. The exporter has to realize export re
ceipts from the export of eligible commodities, excluding any exports for which finance is o
btained under PartI of the Scheme during the relevant period. The maximum tenor of the loan
under PartII of the scheme is also 180 days which could be rolled over for another 180 days sub
ject to showing at least 70% shipment of loan availed in initial 180 days.
Mark up Rate:
Currently, markup rate under EFS for the borrower stands at 3% (banks get refinance from SB
P at 2% and are permitted a maximum spread of 1%).
To further incentivize the financing under EFS (PartII) the rates under EFS PartII has been link
ed with export performance. Exporters giving higher performance under EFS PartII can avail m
ark up rate rebate ranging from 0.51.5 percentage points depending upon the level of performan
ce achieved
The financing provided by SBP BSE Multan is given below under this scheme the percentage of
units availing the finance is quite low as compared to export performance of Multan units
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Total Number of Number of Textile Amount of Finance Percentage of Units

Textile Units in Units availing EFS Disbursed under Availing EFS
Multan Area EFS
82 06 Rs. 444.482 M PKR 07.31 %
WHY WE DONT GO FOR VALUE ADDITION
In Pakistans Textile Industry emphasis is on the spinning activity. Major portion of yarn
produced (of good quality) is exported rather than utilizing large part of it for producing high
value-added products like fabrics, or garments. This is an important structural weakness of our
textile industry. This yarn imported by countries like Japan (major export market for yarn), Hong
Kong, and South Korea who have well-flourished textile industry convert it into high value-
added products and fetch much higher prices in the international market. These countries do not
grow cotton, but they have well-established textile industry because they have invested in
modern manufacturing technology as well as in qualified and well-trained work force. Their
efficient methods of production have enabled them to overcome the handicap of imported yarn.
Whereas in Pakistan, textile industry continues to suffer due to lack of investment, and well-
qualified work force, despite having the advantage of cotton and labor. In the weaving sector
(organized mill sector) the installed loom age capacity has kept on shrinking from 30,000 in
1971-72 to 10,000 in 1998-99 [Pakistan (1999-2000). Out of which only 5000 are working/or
effective. On the other hand the number of spindles has increased in the same period from 2.9
million to 8.3 million, out of which 6.6 million are effective or working. This implies that the
organized mill sector has made an utmost shift towards spinning and almost gave up efforts to
develop or modernize the weaving sector. But this decline of fabric production in mill is
compensated by the production in the non- mill sector. More than 80 percent of our cloth is
produced in this sector. But the problem with this non-mill sector is they have low technology
power looms in their units, which mostly produce narrow width poor quality gray fabrics, which
is sold at a lower price. No doubt, Multi-fiber Arrangements (MFA) leads to harmful
consequences for the textile industry of Pakistan. For instance, it stalled modernization of the
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sector, as the government provided incentives for expanding low-cost power loom sector at the
cost of an organized mill sector, to reap the advantages of low-cost. The resulting feature was the
technological backwardness of Pakistan textiles (Chaudhry and Hamid: 1988). Encouragement
of the power loom, leads to the decline in mill production and consequently closure of the huge
installed capacity [APTMA (1995-96)]. As far as the garment production in Pakistan is
concerned, the highest value-added product among the textile group, but the price we are getting
for our products is less compared to other countries. According to one estimate 70 percent of
these units are in the unorganized sector, producing cotton-made articles. These units do not have
modern machinery and use the non-mill made cotton cloth. This may be one of the reasons that
the price we fetch for our apparel exports is low compared to other countries.
The content of man-made/ or synthetic fibers in the textile products of Pakistan is marginal
only 11 percent It can be regarded as a significant difference between Pakistani exports and
the successful North East Asian countries. The usage of synthetic fibers in their textile products
is very large e.g., in Korean products more than 70 percent. As mentioned earlier, the
comparative advantage in textiles and clothing has been declining for the industrial countries and
rising for the developing countries as a group.
WHAT INCENTIVE GOVERNMENT GIVING TO INCREASE

EXPORTS:
Textile policy 2014-2019

Goals
To double value-addition from $1billion per million bales to $2 billion per million bales
in five years.
To double textiles exports from $13 billion per annum to $26 billion per annum in next
five years.
To facilitate additional investment of $5 billion in machinery and technology.
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To improve fibres mix in favour of non-cotton i.e. 14% to 30%.

To improve product mix especially in the garment sector from 28% to 45%.
To strengthen existing textile firms and establish new ones.
SME sector will be main focus of attention to enhance growth in value-added products
through support and incentives schemes.
Schemes and initiatives will be launched for increasing usage of ICT.
The textiles sector will be made domestically and internationally compliant especially
with respect to labour and environment rules and conventions.
Textiles units will be encouraged to use modern management practices for improving
efficiency and reducing wastages.
Clusters would be systematically developed and existing clusters will be strengthened.
11
Vocational training of workers for capacity building, internships and different
programmes for enhancement of skills and higher per capita productivity would be
introduced.
Facilitate the creation of 3 million new jobs.
Promotion of speciality skills training for professionals and supervisory levels.
Adopt measures to increase ease of doing business and reducing cost of doing business.
Sectarian development Steps in Textile policy
Weaving Sector
Weaving City would be established, initially in Faisalabad through PSDP funding and then will
be replicated in other part of the country to de-fragment this sector, along with the provision to
provide space for machinery and spare parts manufacturing.
Knitting
The small and medium knitting units will be supported to increase their capacities, up-gradation
of their machinery and de-fragmentation.
Processing
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The Policy would encourage investment in narrow width capacities to increase production of
finished fabrics for the apparel sector. The Government will identify areas where effluent
treatment plants can be established through public-private partnerships. Special Purpose Vehicle
(SPV) will be incorporated to establish Model Combined Effluent Treatment Plant (CETP) in
Khurrianwala, Faisalabad. The Government would seek funding from international donors and
operational cost would be provided by the processing industry. Further, machinery for the ETP
may be considered for inclusion in the LTFF.
Carpets
Carpets especially hand woven is a value added segment of the textiles value chain. The sector
will be provided due importance as a value added made-ups industry of Pakistan.
Technical Textiles
Technical textiles are an emerging area of high value addition and through concerted efforts we
can gain significant share in the world market. However, there is a need to invest in R&D in this
area. Government will develop a proper strategy for the promotion of technical textiles in the
country. For this purpose an exclusive centre of excellence to impart training, develop skills and
provide relevant information about world trends in such fields like geo tech, media tech and
Sport tech will be established.
Garments and Made-ups
Entrepreneurs will be encouraged to take maximum advantage of availability of abundant labor

force and for this sourcing and marketing training will be provided along with the establishment
of product development centers. The training would also focus on fashion garments and trends,
apparel merchandising, made-ups designing and quality control etc. The centers will collaborate
with leading fashion institutes to provide in-depth training in specialized high value fashion
garments. Programs will be initiated to raise profiles of local brands and designers and to explore
new overseas markets. Innovations in garment production will encourage development of new
raw materials for the sector.
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The government will take steps to reduce illegal imports of value added garments in domestic
market to encourage domestic manufacturing. Further, steps would be taken for proper
examination and assessment of huge imports under the head of worn clothing.
Textiles Exporter of the Year Award:
In order to create recognition of the textiles sectors role in the national economy, the Ministry of
Textile Industry would initiate a Textiles Exporter of the Year Award in various categories
including highest value-addition.
Brand Development:
The Ministry of Textile Industry would encourage setting up Pak cotton brand, fashion labels
and brands abroad to increase exports. As brand development requires long term financial
commitment, the Ministry would develop a scheme similar to LTFF with the State Bank of
Pakistan in which loans may be made available at same policy rates available in LTFF scheme.
Market Support and Development:
The Ministry would ensure that participation in international exhibitions by TDAP will be
carried out after due consultation with the stakeholders and transparent criteria will be developed
for the participation of SMEs in these exhibitions. A dedicated annual textiles exhibition will
be organized domestically in each year of the Policy period.
World Textiles Centre:
Establishment of World Textiles Centre envisages the setting up of an international buying

house to attract more export orders. In the first phase, thirty renowned international buying
houses will be provided free space and services. In the second phase, more buyers would be
provided space as per requirement. The Ministry of Textile Industry would also establish
Apparel Houses in metropolitan cities which are also textiles hub to provide one stop showcase
facility to exporters so that international buyers can see a range of products in one place and
place their orders. This would further facilitate the domestic commerce.
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Domestic labor laws:
The garment sector is a cyclical business and observes fluctuations in production capacities as it
is dependent on export orders. The Ministry in consultation with the Ministry of OPH
56RD, provincial labor departments, Employers Federation of Pakistan, would recommend

measures to facilitate manufacturing units as per ILO conventions. A workers welfare fund
will be created especially for handloom and hand knotted carpet sectors to give encouragement
to the poorest sections of society. At the same time, efforts would be made in tandem with the
above stated stakeholders to reduce the role of regulatory agencies through creation of one-
window system.
Allied Industry
Textiles sector has grown to be the single largest manufacturing sector of Pakistan. However,
support industries like textiles machinery manufacturing, textiles dyes and chemicals and
accessories industry have not developed proportionally. Most of the demands in these areas are
met through imports. There is an urgent need to promote development of industries that would
ensure indigenous supply of such important technology and raw materials at home at reasonable
prices.
Promotion of joint ventures with leading international brands will be a key objective of the
Policy. Government will provide appropriate incentives to encourage such initiatives.
Intensive training and awareness campaigns will be initiated to disseminate information on

comparative benefits of upgrading machinery and using domestic resources.
Viability studies for production of textiles dyes, chemicals and accessories will also be initiated.
Based on these studies, measures will be introduced for encouraging establishment of industries
considered economically viable.
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DUTY DRAWBACKS
Prime Minister Nawaz Sharif has announced incentives worth Rs180 billion in a bid to boost
Pakistan's sagging exports. The package includes the removal of customs duty and sales tax on the
import of cotton. Customs duty on man-made fibers other than polyester and sales tax levied on the
import of textile machinery has also been scrapped.
Under the package, the new duty drawback rates for textile garments will be 7%; textile made-ups
6%; processed fabric 5%; yarn and grey fabric 4%; while sports goods, leather and footwear will be
taxed at 7%. The PM expressed confidence that the package will help achieve the government's
objective of export-led growth.
Issues: In Government Policy
Time Constraint:
SBP-BSC Multan is giving this incentive only to cases between Jan-June. The cases of export which
were done earlier were not having any kind of such incentive.
Media announcement:
Media announcement of these incentive makes them public and when the buyer come to know about
these incentives they start to demand the share in those incentives which results in discouragement
of exporter.
Bailout packages:
Commerce Minister Khurram Dastgir Khan on Wednesday said the government has proposed
Rs200 billion bailout packages for revival and modernization of textile industry.
While informing the Senate Standing Committee on Textile Industry, he said that on the
directive of the prime minister a special package was under consideration for introducing new
technology and massive infrastructural modernization of the textile industry. If this step is taken
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it will definitely result in boost in value addition and ultimately increase in foreign exchange
reserves.
OVERVIEW OF COMPETITION IN SOUTH ASIA:
Textile Industry in Bangladesh

The textile and clothing industries provide the single source of growth in Bangladesh's rapidly
developing economy. Exports of textiles and garments are the principal source of foreign
exchange earnings. By 2002 exports of textiles, clothing, and ready-made garments (RMG)
accounted for 77% of Bangladeshs total merchandise exports. In 1972, the World Bank
approximated the gross domestic product (GDP) of Bangladesh at USD 6.29 billion, in 2014, the
GDP stood at USD 173.82 billion, growing by almost 27 times in a matter of four decades.
Bangladesh's exports industry alone comprised USD 31.2 billion in FY 2014-15, 81.69% of
which was made up by ready-made garments. Bangladesh now holds the 2nd place in producing
garments just after China. On its own, the knitwear sector encompasses 39.83% of total
exportsa staggering USD 12.43 billion. Bangladesh is the world's second-largest apparel
exporter of western brands. Sixty percent of the export contracts of western brands are with
European buyers and about forty percent with American buyers. Only 5% of textile factories are
owned by foreign investors, with most of the production being controlled by local investors.
Bangladesh's textile industry has been part of the trade versus aid debate. The encouragement of the
garment industry of Bangladesh as an open trade regime is argued to be a much more effective form of
assistance than foreign aid. Tools such as quotas through the WTO Agreement on Textiles and
Clothing (ATC) and Everything but Arms (EBA) and the US 2009 Tariff Relief Assistance in the
global clothing market have benefited entrepreneurs in Bangladesh's ready-made garments (RMG)
industry. In 2012 the textile industry accounted for 45% of all industrial employment in the country yet
only contributed 5% of the Bangladesh's total national income.
India
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Indias textiles sector is one of the oldest industries in Indian economy. Even today, textiles
sector is one of the largest contributors to Indias exports with approximately 15 per cent of total
exports. The textiles industry is also labour intensive and is one of the largest employers. The
textile industry has two broad segments.
First, the unorganised sector consists of handloom, handicrafts and sericulture, which are
operated on a small scale and through traditional tools and methods.
The second is the organised sector consisting of spinning, apparel and garments segment
which apply modern machinery and techniques such as economies of scale.
The textile industry employs about 51 million people directly and 68 million people indirectly.
India's overall textile exports during FY 2015-16 stood at US$ 40 billion.
Indian khaadi products sales increased by 33 per cent year-on-year to Rs 2,005 crorewhich is
approximately US$ 311.31 million in 2016-17 and is expected to exceed Rs 5,000 crorewhich is
approximately US$ 776.33 million sales target for 2018-19.
Comparative Analysis:
Pakistan Bangladesh India
Total Exports $20.802Billion $35Billion $363.63Billion
Textile Exports $12.553Billion $17Billion $40 Billion
-Textile Made-ups $6.2Billion $13.95Billion $29Biilion
-Other Textile Exports $6.3Billion $3.06Billion $11Billion
Percentage of Textile 60% 16% 11%

Exports to Total Exports
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Percentage of Textile 49% 82% 72.5%

Made-ups to Textile
Exports
Govt. Policies to encourage Textile Exports
R&D Upgrade labour

skills by
allocating Rs
2,200 crore (US$
330 million)
Drawback of Taxes Under the The tariffs paid on The Government

Scheme package, the new imported inputs and of India plans to
duty drawback the value-added tax introduce a mega
rates for textile paid on local inputs package for the
garments will be used for export powerloom sector,
7%; textile products are which will include
made-ups 6%; refunded. social welfare
processed fabric schemes,
5%; yarn and insurance cover,
grey fabric 4%; cluster
while sports development, and
goods, leather up gradation of
and footwear will obsolete looms,
be taxed at 7%. along with tax
benefits and
marketing
support, which is
expected to
improve the status
of power loom
weavers in the
country
Cash Incentives Prime Minister Under the cash Encourage new

Nawaz Sharif to compensation entrepreneurs to
announce a scheme, domestic invest in sectors
Rs200 billion suppliers to export- such as knitwear
grant for the orientated RMG by increasing
upgrading of the factories used to allocation of
receive a cash funds to Mudra
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textile industries payment equivalent Bank from Rs

to 10% of the value 1,36,000 crore
addition of the (US$ 20.4 billion)
exported RMG to Rs 2,44,000
crore (US$ 36.6
billion)
Any other scheme A firm can delay the Subsidies on

payments of tariffs machinery and
until they are ready infrastructure
to consume inputs
imported earlier and
if these inputs are
used for producing
export products then
they are not required
Conclusion
Textile sector is major sector of Pakistan as well as of Multan but it is not benefiting us as it
should or it is doing in India and Bangladesh the main reason we identified is less focus on value
addition. The infrastructure of textile in Multan is not supporting to forward integration. This
drawback is mainly related to higher cost of production that our investors are afraid of investing.
The rise and fall of textile sector are alarming to them and pose a higher risk to them.
Government is taking steps to encourage our local producers but the competition in global
markets is so tough that we are unable to compete it. The principal focus of our sector is cotton
based products but internationally the use of manmade fiber is so much that we cannot compete
to them. Introduction of textile policy and provision of electricity to textile sector is very good
initiative and we hope that it will be result in growth of value addition and will unleash the
export potential of textile made ups in Multan as well as in Pakistanthe Finance facilities to
textile sector are enough but the number of units availing the facility are so low increase in
financing can also result in development of textile sector.
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Recommendations
On the basis of our findings in research here are some recommendations
The focus on value addition will result in higher foreign exchange and ultimately the
higher return to producers
In order to fight against energy crisis the textile units can set up their own renewable
energy units like solar panels. In order to do this the finance can be availed by SBP.
The development of brand will result in higher demand of our products
We should also go for the sectors which suit our local inputs instead of importing them
Making allies with foreign brands can be good source of revenue
As we know that made ups sector is labor intensive so we should try to go for it and it
will help us reduce poverty as well
The financing facilities are available SBP should create awareness to increase the amount
of disbursed loan to textile sectors
The steps like Duty drawback are very good and help us to be cost effective so it should
be provided in a consistent manner
Limitations
Limited time was a vital limitation due to which we were unable to perform our analysis
in a diverse way
Data collection was not easy job because no states were available on Multan region
Data we gathered were from commercial banks and it does not represent the actual
exports potential of Multan but this can provide an estimate
No data was available on the total production of textile sector
In future the research can be continued on the trends of exports of textile from different
sector
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Analysis
Financial Analysis
We perform a ratio analysis of state bank of Pakistan (BSC) on the basis of following financial
statements.
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Debt Ratio (amount in 000)

Years Total liabilities Total assets Debt ratio
2014 48,419,422 49,419,422 0.979
2015 51,241,582 52,241,582 0.980
The debt ratio measures the proportion of assets financed by the outsiders money. The higher the ratio
the greater the amount of other persons money being used to generate the revenue. The bank has almost
same ratio in the two years that shows its assets are financed up to 98% by the credit money.
Debt/Equity Ratio (amount in 000)

Years Total liabilities Total equity Debt/equity ratio
2014 48,419,422 1000,000 48.4
2015 51,241,582 1000,000 51.2
Debt to equity ratio has increased in 2015 which is a negative sign for the SBP.
Return on Equity (ROE) (amount in 000)

Years Net income Average Total equity ROE
2014 50,109 1000,000 .050,109
2015 50,491 1000,000 .050,491
Return on equity ratio has slightly increased in 2015 which is a good sign for the SBP. This
shows that SBP is earning more profit than last year.
Return on Asset (ROA) (amount in 000)

Years Net income Average Total assets ROE
2014 50,109 49,419,422 0.001
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2015 50,491 50,830,502 0.001

Return on Asset (ROA) has same value in 2014 & 2015. This shows that there is no net increase
in return because, if, average profit is increased then assets are also increased
3.2 SWOT Analysis
Strengths
Strong Check and Balance
The configuration of verification, authorization, checking and counter checking of transactions is
very sophisticated, reliable and strong. This is the major reason why fraud and false payment
cases are rare in SBP-BSC.
Job security and attractive Salary
Employees of SBP-BSC enjoy good salary packages and benefits. For example interest free
loans are given for building house and buying car etc. employees feel secure because of the
permanent nature of job. Therefore young and talented candidates opt for SBP-BSC posts. Senior
employees enjoy more benefits in the form of recognition and other fringe benefits which work
to retain them.
Strictly follows Rules & Regulations
The employees at SBP are strict followers of rule & regulation imposed by bank.
The disciplined environment at SBP bolsters its image and also enhances the overall
output of the organization.
Healthy Environment
The working condition in the SBP Karachi is very good each and every employee has
its own cabin to work with devotion without any disturbance and its office environment can
be compared to any multinational organization. There is canteen for employees that
cover a large area.
a. Weaknesses
Technological backwardness
Unlike most of the Central Banks of other countries SBP-BSC is not updated in technology.
They are using old Pentium processor computers and CRT monitors. The GLOBUS software
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used is not updated. Computers and GLOBUS software was introduced in 2003 and they are in
the same form, not updated. This causes system freezes and hang ups and hence time wastage.
Staff is not well trained in IT
SBP-BSC employees in general and imputers should be trained at least for improving their
typing speed. It will speed up the payment process and entry system.
Over Burden of work and No Backup Staff

In many units of SBP-BSC lack of staff caused over burden of work on employees working in
that particular unit. Due to the unavailability of backup staff, when an employee is not present in
that unit, all the work for which he is responsible is not operating. Therefore, the unit may face
trouble in flow of work.
b. Opportunities
Investment in IT and latest technology
There is a great opportunity for SBP-BSC to invest in latest technology. By replacing the present
system of physical movement of cheque for clearance with image based clearance system like
Cheque Truncation System (CTS) SBP can enable commercial banks to offer new products and
services. It could be a source of earning for SBP and would also help achieve its goal of
providing a facilitating financial market.
d) Threats
Political instability and pressure can harm the operations of SBP
Frequently changing governments and their policies harm the functionality and consistency of
SBP-BSC policies.
Excessive Government Borrowings
Excessive borrowings of the present government is making difficult for SBP to maintain foreign
exchange reserves.
Data Theft
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The bank is currently dealing from data theft and the present technology in Pakistan is notthat
effective and others are very costly in providing a safe place on internet away from domestic
and international hacks which threaten the environment of the bank.
PESTEL Analysis
a) Political Factors
Political situation is a critical determinant of macroeconomic outcomes. The current period of
political stability in Pakistan is expected to continue. This stability will be essential for SBP, the
Government and its agencies to be effective and mutually supportive of each other in achieving
the macroeconomic targets established in Pakistans Vision 2025. The key enablers identified in
the Vision 2025 include shared vision, political stability, continuity of policies, peace and
security, rule of law, and social justice. These enablers are also relevant to the strategic direction
set by SBP and other government organizations.
The recent political stability has been emphasized by harmony amongst political parties in
support of the fight against terrorism, which is a historic move towards a secure Pakistan. A
secure Pakistan will encourage more domestic investment and attract greater foreign investment.
The political stability extends to an ambitious reform agenda which will boost public confidence
in public sector institutions, including SBP.
b) Economic Factors
The average annual rate of inflation is significantly below target. The external sector has
stabilized as reserves continue to accumulate and there has been a marginal uptick in real GDP
growth. Investor confidence is improving as international ratings agencies have improved their
outlook for Pakistan. Current macroeconomic stability, achieved through domestic policies and
favorable external developments, have allowed policy makers to focus on economic growth in
the medium term. Over the course of SBP Vision 2020, the outlook for the economic
environment is cautiously optimistic.
c) Social Factors
The National Financial Inclusion Strategy 2015-20 (NFIS) envisions access and use of a range of
savings, credit, insurance and payments services to meet the needs of the person of Pakistan with
dignity and fairness. The NFIS will diversify the range of basic payments/remittances and saving
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products. It will increase financing opportunities for urban and rural micro, small and medium-
sized enterprises. It will help develop housing finance products, expand Islamic finance, and
deepen the penetration of insurance services. These initiatives will be accompanied by
improvements in financial awareness/literacy programs designed to increase consumer
protection. Delivery of the NFIS will be the central element in SBPs goal to increase financial
inclusion.
d) Technological Factors
Technology both globally and in Pakistan is changing the landscape of financial markets and
payments systems. Technological innovations have become a driver of automation and efficiency
in banking operations, financial market development and greater access to financial services
through alternative payments platforms. As a regulator, SBP needs to balance the benefits of
accommodating innovation and new technology against the need to preserve the security and
stability of the financial system.
e) Environmental Factors
Environmental factors such as climate change and natural disasters can affect the efficiency and
productivity of agriculture, industry, and financial services. Growing awareness about climate
change, for example, is affecting how businesses operate in Pakistan. Concepts such as energy
conservation, green banking, renewable energy, and corporate social responsibility towards a
sustainable environment, have started gaining traction in Pakistan.
Unforeseen events, such as droughts, floods, earthquakes, or other natural calamities, not only
affect the performance of the agricultural sector but, through linkages, can also affect financial
stability and achievement of the objectives.
f) Legal Factors
Pakistans finance and administrative laws need to keep pace with financial markets and
economic developments. SBP is a body corporate established under the SBP Act, 1956. The law
defines the function and powers of SBP that are exercised through the Central Board, the
Governor and SBPs senior management. SBP has proposed certain amendments to the law,
aimed primarily at strengthening SBPs autonomy. These proposed changes include full
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operational independence in the pursuit of its Strategic Goal to enhance the effectiveness of
monetary policy. These amendments are now under consideration by the Legislature.
3.4 Suggestions for Concerned Division

There should be awareness programs that can make person and particularly the small
business understand the importance of Exports. They should also be informed about the
necessary requirements and noteworthy points of this scheme.
There should be proper attention on small exporters. SMEs must be encouraged by giving
incentives and enhancing SMEs quota at bank level for financing.
Documentation should be reduced in Part-1 and modify it like Part-2 in which one time
documentation is maintained. Exporters feel burden to submit documents all the time. So,
SBP should have to take step in this regard.
There is a communication gap between SBP & exporters. It should be fill up by providing
proper communication to the exporter. This is the way to encourage them and to enhance
the export level.
3.5 Recommendations (if you were manager there)

Followings are suggestion to enhance the performance of State Bank of Pakistan.
Public awareness should be creates.

Black marketing of notes should be fully discouraged.
The benchmarks should not short-term market expectations, but their appropriateness should be
reviewed regularly.
Forge note section should provide suggestions to improve security.
Allocation of funds for credit lines in commercial banks.
The most effective way of delivering institutional support is to focus on selected sectors with
growth potential and make it time-limited.
SME policy must set up an effective mechanism to address the distinct requirements of micro
(informal), small and medium firms in addition to meeting the general needs of the sector
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Risk exposures should be monitored continuously to determine whether exposures have been
extended beyond acceptable limits.
There must be the possibility regarding increase and also progress, irrespective of most routine
function, by means of conducting workshops, laid-back celebrations and so forth
Active risk management is good approach to mitigate the risk than passive risk management
practice.
3.6Final Conclusion
The banking activities are now being monitored through a system of off-site
surveillance and on-site inspection and supervision. Off-site surveillance is conducted by the
State Bank through regular checking of various returns regularly received from the different
banks. On other hand, on-site inspection is undertaken by the State Bank in the premises of
the concerned banks when required.
I attained treasured material about significant matters associated to finance. Throughout the path
of my training period I erudite a lot about the applied working of BSC and it is the chief break
for me to yield the practical understanding of the academic base. I am self-assured that this
prized practice would subsidy me in my professional lifespan.
My internship at State Bank of Pakistan BSC-Multan demonstrated highly cherished and also
upsurges my applied and academic facts about the working of State bank BSC. The training
period facilitated me to progress my operational expertise for the accomplishment of my goals..
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WHAT INCENTIVE GOVERNMENT GIVING TO INCREASE EXPORTS: .......................... 40

At my stay at SBP, I was accommodated in Developing Finance Division (FEOD) and a

I am thankful to all members of Foreign Exchange Operations Department for their

1.1Background of State Bank of Pakistan (SBP)

1.BANKING SERVICES 2. NATIONAL INSTITUTE OF

Banking Services Corporation (BSC) National Institute of Banking and

SPB-BSC Field Offices

Karachi Office Lahore Office

Islamabad Office Peshawar Office

Rawalpindi Office Quetta Office

Hyderabad Office Faisalabad Office

1.2Vision, Mission & objectives

The mission and vision of SBP is as under.

1.3 State bank of Pakistan (BSC-Multan) culture

Organizational culture represents a common perception the organizations members hold. We

SBP (BSC-LHR) Hierarchy

DEPUTY CHIEF MANAGER(OG-4)

1.4 Divisions of SBP

Prize Bond and Saving Certificate Dept.

1.5 Organizational Organogramof SBP

1.6 Products and Services:

Handbook of corporate governance

What I have learnt

Development finance division

1 AFU Access to finance Unit

2 RSU Refinance Scheme Unit

Focus group is again consists of mainly people from banks, Governmentrepresentatives of

EFS Export finance Scheme

For limit allocation

For performance evaluation

FFSAP Financing Facility for Storage of Agriculture Produce

FSPPRE Finance facility for Power plant Renewal of Energy

Currency Research and system division

Currency management is basically involved in provision of issuable quality notes to banks

II. Outward Remittances

printing the fresh notes

2.1 Destruction and sorting of notes

2.2 Clean Note Policy implementation

3 Currency research and system division

3.1 Forged Notes

Procurement and asset management

PBU Prize Bond Unit

Here is the detail of printing and distribution of Prize Bonds

Indent the printing of prize bonds

Freshly printed Prize

This whole process of payment is summarized below

5.2 Profit bearing

5.3 Transferable and hypothecation

Project Report at State Bank of Pakistan

Export Potential of textile made ups in Multan

Textile Value Chain Process:

History of Textile in Pakistan

because the export of cotton was controlled by the CEC.

PERFORMANCE OF TEXTILE INDUSTRY IN PAST FEW

Export of Pakistan Textiles (US$ Millions)

Cotton & Cotton

Source: Ministry of Textile

Comparison of pakistan textile Exports

Textile Total Exports

Ancillary Textile Industry

Cotton Spinning Sector

Value (M.US$) 1581.174 1685.264 -6.18