EXECUTIVE SUMMARY FOR GLOBAL / COUNTRY STUDY REPORT (Subject Code: 2830003) ON “ WITH RESPECT TO LEATHER INDUSTRY”

SUBMITTED TO MBA-732: SEMESTER-III & IV LDRP-INSTITUTE OF TECHNOLOGY AND RESEARCH, GANDHINAGAR. [In partial Fulfillment of the Requirement of the award for the degree of Master of Business Administration (MBA)] By Gujarat Technological University, Ahmedabad Year: 2013 Semester III & IV Guided By:

Name of Guides email Id Contact Designation No.

Mr. Vinit M. Mistri [email protected] 09998873083 Lecturer Ms. Hemali G. Broker [email protected] 09099012233 Lecturer Dr. Pooja M. Sharma [email protected] 09726480698 Assistant professor Ms. Sejal C. Acharya [email protected] 07698029293 Lecturer Mr. Anand Nagrecha [email protected] 09824090958 Lecturer

Student’s Declaration

We hereby declare that the Global/ Country Study Report titled “GLOBAL / COUNTRY STUDY REPORT (Subject Code: 2830003) ON“PAKISTAN WITH RESPECT TO LEATHER INDUSTRY” in ( PAKISTAN ) is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged. If I/we are found guilty of copying any other report or published information and showing as my/our original work, or extending plagiarism limit, I understand that I/we shall be liable and punishable by GTU, which may include ‘Fail’ in examination, ‘Repeat study & re Submission of report’ or any other punishment that GTU may decide.

Place: Gandhinagar Date: All Students undersigned below.

Enrollment Number NAME OF THE STUDENT signature

117320592001 SHAH PUJABEN PRAVINKUMAR 117320592002 ABHILASHA PANCHAL 117320592003 CHAWLA JUHI MAHENDRA 117320592004 PANDIT DIPIKA DEVAKINANDAN 117320592005 YADAV ANNU SURAT SINGH 117320592006 DUDHAT RINKAL VINODRAY 117320592007 DOSHI PARTH ASHOKKUMAR 117320592008 GALANI KUNAL MOHAN 117320592009 DAVE MILAN UMESHKUMAR 117320592010 DODIA RAHUL VARJANGBHAI 117320592011 GODWAN I PARESH MOHANLAL 117320592012 PATEL HIRENBHAI VASUDEVBHAI 117320592013 DHAKAN BHAVIN JITENDRAKUKMAR 117320592014 RANA LUCKYRAJ KRIPALSINH 117320592015 SENJALIYA BHADRESH HIMMATBHAI 117320592016 PALKHIVALA NIYATI CHANDRAHASBHAI 117320592017 PATEL RITU JAYANTIBHAI

2

117320592018 DOULTANI RENU SAWALDAS 117320592019 TRIVEDI SHRUTI ALKESHKUMAR 117320592020 SALUJA KAVITA SANAJAN 117320592021 PATEL MONIKA KANUBHAI 117320592022 THAKKAR DAXESH PARSOTTAMBHAI 117320592023 MESWANIA SHEFALI BHARATKUMAR 117320592024 TRIVEDI NISHTHA SUDHIRCHANDRA 117320592025 AJU MATHAI 117320592026 PATEL HETALBEN MAHENDRABHAI 117320592027 BAJAJ KOMAL BRAKMDUTT 117320592029 RATHOD NAYANKUMAR ANILBHAI 117320592030 SONI NIMESHKUMAR RAVINDRABHAI 117320592031 THAKKAR PANKAJKUMAR ASHOKBHAI 117320592032 KAPOOR MILAN SHASHIKANT 117320592033 VORA MIHIR MANUBHAI 117320592034 RATHOD HARSH MAHENDRABHAI 117320592035 JADAV RAJNIKANT AMBARAM 117320592036 JOSHI RUTVI RAMLAL 117320592037 GOSWAMI VIVEK JAYENDRABHARTHI 117320592038 PATEL PARASBEN NARSINHBHAI 117320592039 SHEKH ASIM MOHAMMAD ISHAK 117320592040 SATPUTE PRASHANT RAMESHBHAI 117320592041 SENGUNTHAR MUDALIAR SHIVAKUMAR 117320592042 BHATTI SHEEFA RAJAKBHAI 117320592043 PAHONCHIYA AZAZAHMAD ISHAKBHAI 117320592044 SURANI AMEE SHARADBHAI 117320592045 THAKOR VIKRAMJI KANTIJI 117320592047 PATEL HINAL ARVINDBHAI 117320592048 PATEL KRUNALKUMAR BALVANTBHAI 117320592049 PATEL DHAVALKUMAR NARSINHBHAI 117320592050 TIWARI ANKITA SHIVENDRA 117320592051 SHARMA SURAJ BAJAJBUSHAN 117320592052 KANZARIYA BHAVESH PARBATBHAI 117320592053 PANCHAL KOMALBEN MAHENDRABHAI 117320592054 PRAJAPATI ANIKET MAHENDRAKUMKAR 117320592055 CHAVDA KOMAL RAMESHBHAI 117320592057 BAIDVA ARVINDKUMAR DAHYABHAI 117320592058 PARMAR NIKITA NAVINBHAI 117320592059 PATEL HITESHKUMAR DASHRATHBHAI

117320592060 SHETH KRUTI HARESHKUMAR 117320592061 PANCHAL SONALI KANUBHAI 117320592062 DILLU PATEL

3

Institute’s/Guide’s Certificate

[Please attached singed and scanned copy of this certificate]

“Certified that this Global Country Study and Report Titled “ GLOBAL / COUNTRY STUDY REPORT (Subject Code: 2830003) ON“PAKISTAN WITH RESPECT TO LEATHER INDUSTRY” is the bonafide work of attached student list with enrollment numbers, who have carried out their research under my/our supervision. I/We also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate. I/we also have checked the plagiarism extent of this report which is ……… % and the separate plagiarism report in form of html / pdf file is enclosed with this.

Signature of the Faculty Guide/s

(Name and Designation of Guide/s)

Signature of Principal/Director

[Note: Institutes should attach the Scanned copy of this certificate]

4

WEBSITE: http://smallseotools.com/plagiarism-checker /

1. AS PER THE RULES PLAGIARISM FOUND 20% WHICH IS BELOW THE GCSR REPORT GUIDELINE I.E 30%)

2. 80% SHOWS ORIGNALITY OF THE WORK.

5

PREFACE

Expansion of domestic business perspective to international business perspective among the corporate, increasing awareness and demand for global products on the other side, development of information technology, transportation, warehousing and logistic facilities at international level gradually removing geographic barriers the single most key driver to speed up the development process of any country.

Economies of the world are classified in the main three categories namely developed, developing and under developed counties. Pakistan is one of the SAARC (South avian association of regional coordination) member and Asian country. We selected Pakistan for the GLOBAL / COUTRY REPORT as per the guideline of Gujarat Technological

University, Ahmedabad where students are required to work on various component of country study provided by the University. As a part of the curriculum we really enjoyed working on Pakistan by understanding various aspect of the country study such as political, legal, economic, social factors etc. we also worked out on various industry related and trade related aspect in the further study as per the guideline. A GLOBAL /

COUTRY study report work on Pakistan was not at all possible without the support and keen interest of all the faculties of the MBA DEPARTMENT (732). We are first thankful to Gujarat Technological University, Ahmedabad for providing an opportunity to look beyond the national boundaries for business STUDENTS: MBA-II/SEMESTER-IV

6

ACKNOWLEDGEMENT

Globalization of world economy is the single most key driver to speed up the development process of any country. Economies of the world are classified in the main three categories namely developed, developing and under developed counties. Pakistan is one of the SAARC (South avian association of regional coordination) member and Asian country.

We selected Pakistan for the GLOBAL / COUTRY REPORT as per the guideline of Gujarat Technological University, Ahmedabad where students are required to work on various component of country study provided by the University. As a part of the curriculum we really enjoyed working on Pakistan by understanding various aspect of the country study such as political, legal, economic, social factors etc. we also worked out on various industry related and trade related aspect in the further study as per the guideline.

A GLOBAL / COUTRY study report work on Pakistan was not at all possible without the support and keen interest of all the faculties of the MBA DEPARTMENT (732). We are first thankful to Gujarat Technological University, Ahmedabad for providing an opportunity to look beyond the national boundaries for business opportunities We are very thankful to all the faculties of MBA DEPARTMENT OF LDRP-INSTITUTE OF TECHNOLOGY AND RESEARCH, GANDHINAGAR for providing their valuable insight from the beginning to the end of this grand work.

At the end we all the student of MBA are thankful to all those who helped directy or indirectly in the accomplishment of this report.

STUDENTS: MBA-II/SEMESTER-IV

7

CONTENT PART-1 [MBA-SEMESTER-III] SR. EXECUTIVE SUMMARY PAGE NO NO 1 An Overview Of Political And Legal Environment Of 12 Pakistan 2 Economic Overview Of Pakistan 19 3 Demographic Profile Of Pakistan 30 4 Social And Cultural Overview Of Pakistan 37 5 Overview Of Industries Trade And Commerce Of 47 Pakistan 6 Overview Of Different Economic Sector Of Pakistan 55 7 Overview Of Business And Trade At International 65 Level 8 Present Trade Relations And Business Volume Of 67 Different Product In 9 Overview Of Ecological Environment(Natural 76 Environment) Of Pakistan 10 Overview Of Technological Environment Of Pakistan 84

8

PART-2 [MBA-SEMESTER-IV] SR. EXECUTIVE SUMMARY PAGE NO NO 1 Introduction of the selected Company /Industry / 95 Sector and its role in the economy of specified country. 2 Structure, Functions and Business Activities of 104 selected Industry / Sector /Company 3 Comparative Position of selected Industry / Sector / 120 Specific Company /Product with India and Gujarat 4 five forces analysis 139 Conclusions and Suggestions 5 Policies and Norms of selected country for selected 160 Industry/company for import / export including licensing / permission, taxation etc 6 Policies and Norms of India for Import or export to the 179 selected country including licensing / permission, taxation etc 7 Present Trade barriers for import / Export of selected 192 goods(if any) 8 Potential for import / export in India / Gujarat Market 210 9 Present Position and Trend of Business (import / 223 export) with India / Gujarat during last 3 to 5 years 10 Business Opportunities and threats analysis for 238 conducting business in future

List of tables 9

SR.NO PARTICULAR PAGE NO 1 Table-1 Main changes in trade-related legislation, 2001/02 to 50 end-September 2007.

2 Table: 2 trading of Pakistan with india 69 3 Table: 3 Pakistan shares in global Hides and skins production 105 4 Table:4 % share in global export 111 5 Table: 5 Structure of Leather Industry 111 6 Table :6 List of leather companies in pakistan 114 7 Table:7 five years export figures Pakistan 161 8 Table:8 import data Pakistan 166 9 Table 9. country wise import 167 10 Table 10. Exports Performance of Selected Asian Economies in 176 leather Products 11 Table 11. Growth in the Value of leather products Exports 177 12 Table12: Sector wise employment profile 180 13 Table 13 The figures of bilateral trade between India and 187 Pakistan during the year 2005-2006 onwards are given below 14 Table 14 Top ten items of import from Pakistan into India during 187 April-July 2008 (2008-2009) 15 Table 15: ist of Pakistan's main trading partners as of 2011. 193 16 Table :16 Global Trade in Leather Sector 207

10

List of charts SR.NO PARTICULAR PAGE NO 1 Structure of Leather Industry in Pakistan 109 2 Value Chain in Leather Industry 112 3 Manufacturing process &support functions 113 4 Figure 4. Growth of Leather Exports: 177 Comparison of Pakistan, India and China 5 Figure 5. Leather 178 Exports as % of Total Exports

11

1. EXECUTIVE SUMMARY ON POLITICAL AND LEGAL ENVIRONMENT OF PAKISTAN

The purpose of our study is to analyze the political of Pakistan and the legal environment of the country at the present and in the future. We started our analysis with a brief background section generally, before familiarizing the reader with Pakistan’s ancient history. Pakistan is a democratic parliamentary federal republic with as the . The first was adopted in 1956 but suspended by Ayub Khan in 1958. The Constitution of 1973—suspended by Zia-ul-Haq in 1977 but reinstate in 1985—is the country's most important document, laying the foundations of the current government. The bicameral legislature comprises a 100 member senate and a 342-member National Assembly. The president is the head of the state and the commander-in-chief of the armed forces and is elected by an electoral college. The prime minister is usually the leader of the largest party in the National assembly.

Each Province has a similar system a government, with a directly elected Provincial Assembly # in which the leader party or alliance becomes Chief Minister. Pakistan's foreign policy Focuses on security against threats to national identity and territorial integrity, and on cultivation of close relations with Muslim countries. Pakistan maintains good relations with all Arab and most other Muslim countries. Since the Sino-Indian War of 1962, Pakistan's closest strategic, military and economically has been China. The relationship has survived changes of governments and variations in the regional and global situation. Pakistan and India continue to be rivals. The conflict remains the major point of split. Pakistan has had mixed relations with the . As an anti-Soviet power in the 1950s and during Soviet-Afghan War in the 1980s, Pakistan was one of the closest allies of the US, but relations soured in the 1990s when the US imposed sanctions because of Pakistan's possession and testing of nuclear weapons. The US war on terrorism led initially to an improvement in the relationship, but it was strained by a divergence of interests and resulting mistrust during the war in and by issues related to terrorism. Violent in the south-western province of Baluchistan between various Baloch separatist groups, who seek greater political autonomy, and the central . The government of Pakistan has

12

shifted among various forms of parliamentary, military, and presidential governments in pursuit of political stability. The 1973 constitution, as amended in 1985, provides for parliamentary system with president as head of state and popularly elected prime minister as head of government. Pakistan has had difficulty developing considerably stable, cohesive political organization because they have suffered long periods of repression. Further, political parties, with few exceptions, have been founded as a vehicle for one person or a few individuals, or to achieve specifically defined goals. Pakistan's established political parties have failed to successfully reform on their own accord. Political parties are seen as personality driven and disconnected from the electorate, with little public awareness of party platforms and little faith that the parties can help solve the most pressing problems facing the country. Constituencies of Pakistan are demarcated by population, administrative boundaries, and other factors. In 2002 there were 357 constituencies for the National Assembly and 728 constituencies for provincial assemblies. So, sixty seats in the national assembly and 128 in the provincial assemblies are reserved for women.

GOVERNMENT AND POLITICS After death of General Mohammad Zia ul-Haq in 1988, Return of democracy and open political debate were arising. Politics characterized by varied and volatile mix of ethnic and regional alliances. Provincialism and ethnic rivalry continue to slow down progress toward national integration. Major political parties of Pakistan include Pakistan People's Party (PPP), Pakistan Muslim League ( faction), Muhajir Qaumi Mahaz (MQM), , Jamaat-i-Islami (JI), Jamiat-ul-Ulama-i-Islam (JUI), Jamiat-ul-Ulama-e-Pakistan (JUP), and Solidarity Movement (Tehrik-i-Istiqlal). Supreme Court, provincial high courts, and other lesser courts exercise civil and criminal jurisdiction. decides if a civil law is disgusting to injunctions of Islam. Pakistan is in relation with many foreign countries like, Member of United Nations, Commonwealth of Nations, Economic Cooperation Organization, South Asian Association for Regional Cooperation, and numerous other international organizations. Relations of Pakistan with United States are historically close but turbulent. Hostile relations with India and fallout from Soviet occupation of Afghanistan (1979-89) have been defining factors in recent foreign policy. Pakistan has had faced difficulties in

13

developing stable, cohesive political organizations because they have suffered long periods of authoritarianism. Political parties have been founded as vehicles for one person or a few individuals for the achievement of specific defined goals. When these individuals die or abandon their parties, or after party goals have been met, many organizations have lost their raison d'être and have lacked the ability to carry on. Just because of personal and class rivalries Pakistan political parties have been handicapped.

The Muslim League was founded in 1906 for the protection of the interests of in British, India and to counter the political growth of the Indian National Congress, founded in 1885. Under the leadership of Mohammad Ali Jinnah, the Muslim League adopted the Resolution in March 1940 and successfully spearheaded the movement for the creation of an independent homeland for Indian Muslims. At the time of independence, Muslim League was the only major party in Pakistan and claimed the allegiance of almost every Muslim in the country. After the deaths of two principal leaders, Jinnah and Liquate Ali Khan, the party failed to develop a coherent, post- independence ideology. The Muslim League gradually came under the influence of West Pakistani, and particularly Punjabi, landlords and bureaucrats which is giving more concentration in increasing their personal influence than with building a strong national organization.

GROW OF POLITICAL PARTIES IN PAKISTAN

In 2002 Pakistan's current president, introduced a new amendment to Pakistan's constitution, prohibition prime ministers from serving more than two terms. This disqualifies Bhutto from ever share the office again. This move by people, who were themselves on shaky democratic ground, was widely considered to be a direct attack on former Prime ministers Benazir Bhutto and Nawaz Sharif and exhibits the military establishment's insecurities about its own political power. Pakistan's political system is broken: its political parties are ineffective, functioning for decades as instruments of two families, the Bhuttos and the Sheriffs, two clans, both corrupt. The Bhutto-Zardari axis may be considered "left leaning," while the Sharif brothers may be

14

considered "right leaning." The Sheriffs are much closer to Pakistan's military and to Pakistan's Muslim fundamentalists. Punjabi, the Sharif represent Pakistan's major ethnic bloc, and the devout Sunni Sharif has an advantage over the Bhuttos. Apart from the Mohajir Qaumi Movement (MQM) in , the class character of all other political parties is feudal. Pakistan has not dismantled old feudal structures. The Bhutto family alone owns over 20,000 acres; a scale of land ownership is common. Pakistan, like the United States has many differencing political parties on the bases of a variety of issues. However, unlike the United States, Pakistan has next to no campaign finance laws making it easy to finance either. At individual candidate or political party to whatever extent to individual (s) or corporation (s) wish's too each is competing for the 272 seats in the National Assembly and 100 seats in the Senate along with a president and prime. In 2008, 49 political parties applied for poll symbols with the Election Commission. Here, we have selected 10 political parties of Pakistan. Which are highly influential in the country? We have shown their history, background, working, victories, and name of leaders. There were other serious problems with the framework and conditions in which the elections were held and a level playing field was not provided during the campaign, primarily as a result of abuse of state resources and bias in the state media in favor of the former ruling parties. A number of political parties promoted a boycott of the process, in particular in Baluchistan. As a result, the overall process fell short of a number of international standards for genuine democratic elections.

LEGAL SYSTEM OF PAKISTAN

In this section we have presented the legal system of Pakistan. Pakistan is an Islamic republic. Islam is the state religion, and the constitution requires that laws be consistent with Islam. The country has as area of 310.527 square miles and a population of 170 million. Official figures on religious demography, based on the most recent census taken in 1998, showed that approximately 97% of the population was muslim. The Majority of muslims in the country are Sunni, with a shi's minority ranging between 10 to 20 percent. The Penal Code incorporates a number of Islamic law (Shari'a) provisions. The judicial system encompasses several different court systems with overlapping and sometimes competing jurisdictions that reproduce differences in civil, criminal, and Islamic jurisprudence. The Federal Shari'a Court and the Shari'a bench of the Supreme 15

Court serve as appellate courts for certain convictions in criminal court under the Hudood Ordinances; judges and attorneys in these courts must be Muslim. The federal Shari'a court may overturn any legislation judged to be inconsistent with the tenets of Islam. In March 2005, however, the Supreme Court Chief Justice ruled that the Federal Shari'a Court had no jurisdiction to review a decision by a provincial high court even if the Federal Shari'a Court should have had initial appellate jurisdiction. The legal system is derived from English common law and is based on the much-amended 1973 constitution and Islamic law (sharia).

The Supreme Court, provincial high courts, and other courts have jurisdiction over criminal and civil issues. The 1973 constitution Guarantees freedom of speech, press, and religion as well as the right to bail, counsel, habeas corpus, representation, appeal, and Numerous other protections. However, the government has constitutional authority to limit civil liberties according to dance with Islamic doctrine, national security, and other circumstances. Pakistani courts can impose the death penalty, and some crimes are punishable by stoning, lashing, or amputation, although these punishments rarely occur outside of tribal areas. Pakistan's Rule of Law development has suffered from decades of military rule with only short lived and intermittent experience with democratic governance. Since much of the law derives from the British colonial system, it is seen by many as lacking legitimacy. There is thus tension between the inherited common law system and the Islamic law based on the Quran, especially in outlying provinces and regions. In Spite of 13 different reform commissions Devoted to förbättra the justice system two dthe assistance of the asian development bank since 2002, while some progress had er made, for the most part the judicial system did not function well, further in mining Any faith in the rule of law. From the outset, politics and religion not have been intertwined botheration conceptually and practically in Islam. Because the Prophet has set up a government in Medina, precedents of governance and taxation exist. The process of Islamization that has taken place in Pakistan, especially in the Zia years, raised considerable concern about criminal law. In February 1979, President Zia promulgated a new legal code for Pakistan based on Islamic law and created the Federal Shariat Court hearing Appeals Arising from the new code. The Federal Shariat Court also has extensive other Powers (see Role of Islam, ch. 4). It lies operation on Discretion of the court of first instance two Decide whether to try a case under civil or 16

sharia law. If the laughter, then the Appeals process goes to the Federal Shariat Court, rather than the two High Courts.

COMPARISON OF PAKISTAN AND INDIA

India and Pakistan are five Decades of sin independence. Since the partition, the relationship is Uneasy and characterized by a set of Paradoxes. There is a mixture of love and hate, a tinge of envy and admiration, bouts of paranoia and longing for coop ration, and a fierce rivalry but a sense of proximity, too. There are in fact only two extreme types of reactions on each page. Either there are those who always get the attention grass is greener on the other side of the pasture or those who are totally dismissive of the accomplishments of the other side. This report tries two married an objective, empirically-based and balanced view of the economic achievements and failures of botheration countries during the span of the last five Decades. The strict comparison becomes somewhat problematic because of the separation of East from in 1971 but, the analysis and conclusions drawn by and large are valid. ‹ Despite the Prophets of gloom and doom both side of the fence, botheration India and Pakistan to have succeeded in more than doubling the per capita incomes. This is a remarkable feat consider at population is Closer four fold in case of Pakistan and three fold in India Food production kill not only kept pace with the rise in population, men has surpassed it. Both Norden, leaving aside annual Fluctuations due two weather conditions, are self-sufficient in food. (Pakistan exports sin surplus rice but imports small volumes of wheat). ‹ The cracks in the dualistic nature of the economy - a well-developed modern sector and a backward traditional sector - are appearing almost in both the countries. A buoyant middle class is emerging. The overall record looks mixed. Pakistan scores high on income and consumption growth, poverty reduction and integration with the world economy. India has done very well in developing its human resource base and excelled in the field of science and technology. But there is positive on important and perceptible shift in most of the indicators of India since the 1991st Export growth rates have almost doubled, GDP growth is averaging 6 to 7 percent. In recent years, current account deficit is down and foreign capital flows for investment have raised several fold That Pakistan has gained 17

the edge over India in most of these indicators until 1990 is eroding fast. . We have made a head start and easily we not lose this momentum by narrow-minded and purely self-serving intercessor. The destiny of a nation depends upon the hard work, discipline and internalizes Cohesion of ITS people and the vision of ITS leaders. Let our future generation not blame our leaders for failing to leave a legacy of Prosperity and hope for themselves.

18

2. EXECUTIVE SUMMARY ON AN ECONOMIC OVERVIEW ENVIRONMENT

Introduction to economic environment of Pakistan The Global Country Project Report is designed to give some general information on economic overview about Pakistan.Pakistan was one of the few increasing countries that had achieved an average growth rate & Poverty had decline.The country made major economic achievements but with disappointing social improvement. The silent features of Pakistan’s economic history are self satisfactory in most food production, increasing of per capita income, successful and leading producer of cotton and cotton textiles, increasing physical infrastructure network like gas, power, roads and highways, ports and telecommunication facilities.Economic sanctions were imposed against Pakistan by the western administrations. By the late 1990s Pakistan had went into almost a critical state of paralysis and stagnation in its economy particularly in its outside sector. There was a important drop in workers' remittances, export growth was negative, IMF programmed and World Bank assistance were deferred, bilateral donors had terminated their aid while debt payments due were in far excess of the liquid foreign exchange resources the country owned.

The is the 32nd largest in the world in nominal terms and 27th largest in the world in terms of purchasing power parity (PPP). Pakistan has a semi- industrialized financial system, which mainly chemicals, food processing, includes textiles, agriculture and other industries. The economy has bear in the past from decades of internal political arguments, a fast growing population, mixed levels of foreign asset, and a costly, ongoing argument with neighboring India.

Past and present of Pakistan economy

In 1947, when it gained independence from UK, Gross Domestic Products growth rates were 6.8 percentages in the 1960s, 4.8 percentages in the 1970s, and 6.5 percentages in the 1980s. Average annual growth fell to 4.6 percentages in the 1990s with significantly lower growth in the second half of that decade.

19

During the 1960s, many countries sought to emulate Pakistan's economic planning strategy. financial mismanagement in common, & fiscally irresponsible economic policies in exacting, caused a large augment in the country's public debt and led to slower growth in the 1970s & 1990s.The financial system recovered during the 1980s via a policy of deregulation, as well as an augmented inflow of foreign aid and remittances from expatriate workers. The economy confirmed to be unexpectedly flexible in the face of multiple adverse events like Asian economy crisis, global recession, military tensions with India concentrated into a four-year (1998-2002) period. Recently GDP is increasing 1.71 % & 59.86 Pakistani Rupees in exchange of US Dollars. Government revenues have greatly improved in current years, as a result of economic expansion, tax reforms - with a broadening of the tax support, & more efficient tax collection as a result of self-assessment schemes and corruption controls in the Central Board of Revenue - and the privatization of public utilities & telecommunications. Pakistan is forcefully cutting tariffs and assisting exports by developing ports, roads, electricity supplies and irrigation projects. The Pakistani government is now following an export-driven model of economic growth successfully implemented by South East Asia and now highly successful in China.

The economy then & today: At the partition of British India in 1947 resulting in the formation of the independent nations of India and Pakistan, Pakistan was an agrarian financial system in which a small number of powerful landowners with large holdings conquered the countryside. In 1947, Pakistan had almost no industry. In 1949 a clash over exchange rates halted the flow of goods between Pakistan & India, disturbing the balancing nature of their economies that had developed under British imposing rule. Pakistan achieved rapid economic growth. From FY 1951 to FY 1986, the GDP growth rate measured at a stable FY 1960 factor averaged 5.2%. Rates of growth averaged 3.1% in the 1950s (when agriculture stagnated) but rose to 6.8% in the 1960s. They fell to 3.8% between FY 1971 and FY 1977 but rebounded to 6.8% between FY 1978 & FY 1986.From FY 1987 to FY 1991, expansion averaged 5.8%, and a rate of 7.8% was achieved in FY 1992. Rapid expansion significantly altered the structure of the financial system. During the mid-2000’s, Pakistan experienced a period of massive growth, averaging 7 percentages yearly GDP growth between 2003 – 07. From the beginning of 2008, Pakistan's financial point of view has taken stagnation.Pakistan’s local currency

20

debt rating was lowered to B- from BB-. Credit agency Moody’s Investors Service cut its point of view on Pakistan’s debt to negative from stable due to political insecurity, though it continued the country’s scoring at B2.

Stock market: Pakistan’s first and one of the oldest stock exchanges is The (KSE) in appearing markets. KSE was created in 18 September 1947 just two Months after Pakistan became a self-governing state. The other exchanges in Pakistan, The (LSE) & the (ISE), were Established in 1974 & 1997 respectively. The KSE-100 index & capitalization of market dropped in 1998 as a result of sanctions on Pakistan over the issue of nuclear tests. Since 2001, the market has seen a rapid expansion in capitalization and trading volume. The International Finance Corporation (1992) said that it was ranked third according to % increase in the local stock market index in ‘91. More newly in 2002 Pakistan was accounted to be the best performing market in the world according to the US news magazine Business Week. This performance is constant in the following three years even if to a lesser degree. Mounting inflation & current account deficits resulted in the sudden decline of the Karachi Stock Exchange. Accordingly, the corporate sector of Pakistan has declined dramatically in recent times. However the market bounced back strongly in 2009 and the trend continues in 2011.

Manufacturing & finance: Pakistan's manufacturing sector has experienced double- digit growth in recent years, from ‘00 to ‘07, with large-scale manufacturing growing from a minimal 1.5 percentages in 1999 to a record 19.9 percentages in 2004–05 and averaged 8.8 percentages by end of 2007. The achievements have been quiet successful as State participation in the sector has decreased from 80 percentages to 20 percentages & banks have doubled their total assets since 2000. The profits of banks have enhanced with the banking sector posting some of the highest returns in its history (2.1% for return on assets (ROA) and 24.2% on return on equity () for the year 2006). On a whole, health & stability of the banking sector have improved considerably and the financial sector is considered as one of the main driving forces of economic growth. Middle class: In Pakistan, the size of the middle class is bound to increase in the country. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by 21

only 12.8%, according to an Asian Development Bank Report on Asia's increasing middle class released recently. An Asian Development Bank Report on Asia's growing middle class released on that month in 2010 confirms that Pakistan’s middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class. From 2011, according to the Time Magazine, the amount of the Pakistani middle class, under existing economic conditions is estimated at 20 million, out of a people of 180 million. This Represents 11 percentages of the population of the country. In late 2006, the Central Board of Revenue estimated that there were almost 2.8 million income-tax payers in the nation. Poverty levels have decreased by 10 percentages since 2001 Foreign Companies which provide for Pakistani middle classes have been very successful. Poverty alleviation expenditures: In the late 1970s, , particularly in its rural areas, was at least high; around one-third of the rural people were below the poverty line. While urban poverty remains a challenge in Pakistan, poverty is largely calculated a rural phenomenon, because around 70% of the poor live in the countryside. The poverty decline strategies in the rural areas for the last three decades 1980 to 2010 can be broadly grouped into the subsequent categories; land reforms, agricultural growth, rural developments programs, non-farm sector development and urbanization, human development, and net or income transfer programs to the poor. In 1980, although 60% of the rural households were cultivators, only 38% owned some land. More than one-third of the country’s total farms were reported to be smaller than 5 acres, and these farms occupy only 7% of the total farm area. Only 3% of farms were 50 acres or more, and the total area under them was 24%. Pakistan government spent over 1 trillion Rupees (about $16.7 billion) on poverty reduction programs during the past four years, cutting poverty from 35 percentages in 2000–01 to 24 percentages in 2006. Rural poverty remains a pressing issue, as expansion there has been far slower than in the major urban areas. Demographic: Pakistan's approximate population in 2011 is over 187 million making it the world's sixth most-populous country. For the duration of 1950–2011, Pakistan's urban population extended over sevenfold, while the total population enlarged by over fourfold. In the past, the country's people had a comparatively high growth rate that has

22

been changed by moderate birth rates. The people expansion rate now stands at 1.6 percentages.

During 1990–2003, Pakistan continued its historical lead as the second most urbanized nation in with Remarkable social changes have led to quick urbanization and the emergence of megacities.

Employment: Pakistan’s labor market is undergoing structural changes, as reflected in the growing share of the industry & the declining share of agriculture in total employment and in Gross Domestic Products. In Pakistan, the unemployment rate, measured on the basis of the standard definition of International Labor Organization. In 2006-2007 it reached to 5.1%, showing a 2.1% point reduction since 1999-2000. Though, in 2010-2011, unemployment rate increases to 5.7% with an increase of 0.4% point from previous year, despite the increases in labor force involvement since the beginning of the decade. Tourism: has been stated as being the tourism industry's "next big thing". Pakistan, with its different cultures, people & backgrounds has fascinated 0.7 million tourists to the country, approximately double to that of a decade ago. Revenue : The (FBR) is the semi-autonomous, supreme federal agency that is responsible for auditing, enforcing & collecting revenue for the government of Pakistan. The Federal board of Revenue collects approximately 95 percentages of the entire national revenue. Currency system

A monetary system is a set of policy equipment and institutions throughout which a government provides money and controls the money supply in an economy.

Rupee

The basic unit of currency is the Rupee; ISO rules PKR and shortened Rs, which has introduced all new blueprint notes of Rs. 5, 10, 20, 50, 100, 500, 1000, and 5000 value, while the blueprint work of Rs.10000 note is in progress.

23

Foreign exchange rate

Pakistan is maintaining a floating rate. Under this exchange rate system, each bank quotes its own rate depending on its short and long positions. Strong competition, however, means the exchange rates differ little among the banks. Under the established Exchange Control Act, the on application may authorize any person or institution to deal in the foreign exchange market.

Foreign exchange reserves

Foreign-exchange reserves (also known as Forex reserves) in a definite sense are only the foreign-currency deposits held by central banks and monetary authorities. Pakistan maintains foreign reserves with State Bank of Pakistan. The currency of the reserves was only US dollar incurring speculated losses after the Dollar prices cut down during 2005.In October 2007, Pakistan raised back its Foreign Reserves to $16.4 billion. Pakistan's operate deficit was at $13 billion, exports grew to $18 billion, revenue generation increased to become $13 billion and the country involved foreign investment of $8.4 billion. In July 2011, the State Bank of Pakistan reported reserves to hit an all time high of $18.25 billion.

Structure of economy

The economy of the Islamic Republic of Pakistan is suffering with high inflation rates well above 26 percentages. Over 1.081 patent applications were filed by non-resident in 2004 revealing a new-found assurance. Agriculture Accounted for about 53 percentages of Gross Domestic Product in 1947.Pakistan's principal natural resources are land and water. Agriculture financial records for about 23% of GDP and Employs about 44% of the labor power.

Manufacturing by province

Pakistan's industrial sector accounts for about 24 percentage of Gross Domestic Product. Industries: textiles (8.5% of the GDP), fertilizer cement, oil refineries, dairy goods, food processing, beverages, construction resources, clothing, paper products,

24

.Industrial production growth rate is 6% in 2005 year. Large-scale manufacturing growth rate is 19.9% in 2005 year.

SME sector

SMEs in Pakistan have a significant contribution to the total GDP of Pakistan. Small & medium scale firms represent nearly 90% of all the enterprises in Pakistan and employ 80% of the non-agricultural labor force..

Automotive industry

The total donation of Auto industry to GDP in 2007 is 2.8 percentages. Auto sector presently, contributes 16 percentages to the manufacturing sector is expected to increase which thus 25 percentages in the next 7 years.

CNG industry

As of 2010, Pakistan is one of the largest users of compressed natural gas in the world.

Cement industry

In 1947, Pakistan had inherited four cement plants with a total capacity of 0.5 million tons. The country had to resort to imports of cement in 1976-77 and continued to do Sun till 1994-95.

IT industry

Pakistan's IT industry has been rising progressively since the last 3 years. By 2009, Pakistan had enhanced its rank by the places to reach 20th. India ranks first with a total score of 6.91 against Pakistan's 5.11.

Textiles

The Textile Industry is conquered by . 3 percentages of United States imports regarding clothing and other form of textiles is covered by Pakistan. Textile exports were dollars 5.2 billion in 1999 and rose to become dollars 10.5 billion by 2007 Textile exports managed to increase at a very decent growth of 16 percentages in 2006. In the period July 2007 - June 2008, textile exports were U.S. dollars 10.62 billion.

25

• Mining

Pakistan is endowed with significant mineral resources and is emerging as a very promising area for prospecting / exploration for mineral deposits. In the recent past, exploration by regime agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidized sector underlain by supplied zones in the shield area of the Punjab province, covered by thick alluvial wrap have opened new vistas for sharp minerals exploration.

• Service

Pakistan's service sector financial statement is about 53.3 percentages of GDP. Pakistan is trying to promote the information industry and other modern service industries through incentives examined as long-term tax holidays.

Communication

After the deregulation of the telecommunication industry, the sector has seen an exponential expansion. Pakistan Telecommunication Company Ltd has emerged as a successful Forbes 2000 conglomerate with over U.S. dollars 1 billion in sales in 2005. During 2007-08, the Pakistani communication sector alone received $ 1.62 billion in Foreign Direct Investment about 30 percentages of the country's total foreign direct investment. Pakistan is ranked 4th in terms of broadband Internet growth in the world.

Railway

A massive rehabilitation plan worth $ 1 billion over five years for has been announced by the government in 2005.

Aviation

Pakistan International Airlines, the flagship airline of Pakistan's social aviation industry, has turnover more than $ 1 billion in 2005.

26

Wholesale and retail trade

The Federal Bureau of Statistics temporarily valued this sector at Rs.1, 358.309 million in 2005 Malthus registering over 96 percentages growth since 2000.

Banking, finance and insurance

A decrease in the fiscal deficit has resulted in less government borrowing in the domestic money market, lower interest rates, and to expansion in private sector lending to businesses and consumers. Foreign exchange reserves sustained to reach new levels in 2007, supported by robust export enlargement & steady worker remittances.Pakistan has been ranked 34 out of 52 countries in the World Economic Forum's first Financial Development Report, Which was released in 2008 in Pakistan through the Competitiveness Support Fund (CSF) in December.

Ownership of dwellings

The property sector has expanded twenty-threefold since 2001, above all in metropolises similar to Lahore. The Federal Bureau of Statistics provisionally esteemed this sector at Rs.185, 376 million in 2005, registering over 49% growth Malthus since 2000.The statement noted that the present housing stock is so rapidly aging and to estimate suggests that more than 50 percentages of stock is over 50 years old. Public administration and defense The Federal Bureau of Statistics conditionally valued this sector at Rs.389, 545 million in 2005, registering over 65% growth Malthus since 2000.

Social, community and personal services

The Federal Bureau of Statistics conditionally valued this sector at Rs.631, 229 million in 2005, registering over 78% growth Malthus since 2000.

Electricity

For years, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unanswered matter. Foreign trade remittances, aid, and investmentPakistan is now the most investment-friendly nation in South Asia. Business systems have been profoundly overhauled along laissez-faire lines, especially since

27

1999.This was definite by the World Bank's Ease of Doing Business Index report published in September 2009 ranking Pakistan (at 85th) well ahead of neighbors like China (at 89th) and India (at 133rd).In the six months to Dec. 2003, Pakistan recorded a current account surplus of $ 1,761 billion, roughly 5% of GDP.The trade deficit has enlarged by 14.5 % and current account deficit has swelled by $ 3.39 billion although the fact that the country received $ 10.8 billion in workers remittances' in 10 months of the current financial.

Exports

Pakistan's Exports improved More than 100% from $ 7.5 billion in 1999 to stand at $ 18 billion in the financial year 2007-2008.It exports rice, Mangoes, Oranges, furniture, cotton fiber, clothing, leather goods, sports goods (well-known for footballs / soccer balls), cement, tiles, marble, textiles, cutlery, electrical appliances, software, carpets and rugs surgical instruments , powdered milk, Ice cream, livestock meat, chicken , wheat, (especially shrimp / prawns), vegetables, processed food items, Pakistani-assembled Suzuki (to Afghanistan and other countries), protection tools (submarines, tanks, Radars) onyx, Salt, engineering goods, and many other items. As of April 2011, Pakistan exports position at U.S. $ 25 billion.

External imbalances

From the time when the Beginning of 2008, Pakistan's financial outlook has taken a spectacular downturn. Safety Concerns stemming from the Nation's Role in the War of Terror have created great volatility and led to a decline in FDI from a height of approximately $ 8bn to $ 3.5bn for the current fiscal year.

Economic aid

More recently the Government of Pakistan Received an financial aid of U.S. $ 5BN Dollars Out of Which the U.S. Pledge of $ 1BN was described as a down-payment on the previously Announced $ 1.5bn already promised to Pakistan for each of the next five years.

28

Remittance

The remittances of Pakistan living abroad have played significant Role in Pakistan's economy and foreign exchange reserves.

Government finances

Pakistan has a low tax; GDP ratio, which it is trying to get better. The current tax-to- GDP ratio is estimated to be 8% -9%. Government expenditures were $ 25 billion (2006 EST.).

• Challenges to Pakistan’s economy V We consume less and save more. V We import more and export less. V Government expends more than it earns as Revenues. V Our Share in the World Trade is minimizing. V We Lag Badly in Social Indicators. V We Face the Energy and Water shortages. V Cost of Doing Business is high. V Crisis of Governance & Implementation Weaknesses. V Unpredictability and Uncertainty Due to Lack of Continuity. V Political Stability, Law & Order Security.

• Prospects/solution to improve economy V Change in National Psyche and Mindset. V Building up of Human Capital. V Use of Technology. V Young Labor Force V Governance, Devolution and Decentralization V Impact of globalization in Pakistan’s economy

29

3. EXECUTIVE SUMMARY ON DEMOGRAPHIC ENVIRONMENT OF PAKISTAN

The Pakistan is in the midst of an unprecedented demographic transition. While, on the one hand, population policies and programs have contributed to a modest decline in fertility; on the other, the changing demographic scenario has brought into focus a host of emerging issues that need to be addressed in coming years. With the results from the Pakistan Demographic and Health Survey 2007 showing that the contraceptive prevalence rate is stagnant at about 30 percent and the unmet need for contraception still stands at 25 percent, it is clear that Pakistan is not going to meet its population stabilization goal on the time frame as set in the Population Policy of Pakistan 2002 until some extraordinary measures are adopted. Pakistan’s population 34.0 million in 1951 has increased from 132.3 million in 1998 (Census Report of Pakistan, 1998) to 173.5 million in 2010. Pakistan is the sixth most populous country of the world. The Pakistan Demographic and Health Survey (PDHS) 2007 and the Pakistan Demographic Survey (PDS) 2007 showed a much slower decline in fertility between 2001 and 2007, and practically no increase in the contraceptive prevalence rate (CPR) during this period. According to the latest projections by the Planning Commission, the country’s population is currently growing at an annual rate of 2.05 percent, which is among the highest in the region and the world. According to United Nations Population Division’ report 2008, Pakistan’s PGR is 2.2 percent.

Although various programmatic constraints and other supporting factors have slowed down the pace of progress, the important ones include: weak political commitment; inconsistency in population policies and programs; lack of provincial ownership of the program; weak capacity and commitment of program personnel; and inadequate allocation of resources. In 2010, Pakistan stands at a crossroads, having reached a stage in the demographic transition where changes in age structure are potentially favourable for the society. For example, reduced dependency ratio, due to an increasing proportion of the young population in the labour force and a decreasing proportion of the children in the total population, can contribute to sustainable human development 30

through enhanced opportunities for economic productivity and savings, and by putting lesser demands on household consumption patterns.

Demographics are statistical characteristics of a population. These types of data are used mostly in sociology , public policy, and marketing. Generally demographics include gender, race, age, abilities, mobility, home possession, employment status and location also. Demographic tends to describe the historical changes in demographics in a population over time. Both distributions and trends of values within a demographic variable are of interest. Demographics are very important about the population of the area and the culture of the public there. This report is about the demographic features of the people of Pakistan, including population density, ethnicity, and education level, health of the public, economic status, religious affiliations and other aspects of the population. Pakistan has a multicultural and multi religious society and hosts one of the largest refugees’ populations in the world as well as a young population. Pakistan‘s difference is visible Pakistan's diversity is more visible along cultural differences and less along with the different languages.

Pakistan is the federal state. It consists of many types of people living together along with many religions. It has so many states where the different languages matter. The Islamic population is the sixth more population among the world. Population among 153 or more million. The health rate currently is due to the higher population growth rate and it leads to the problem of safety measures of the Pakistan. There is generally population of younger people is more compare to other people. Population affects the country’s growth and development. It leads to more on learning, welfare, and economy of the country. Ages affect the country’s political matter as if there are more number of people of higher age than country has to develop more health centre and less to other. The report states that population from age group of 0-14 has increased considerably and population of age group of 15-64 has also increased this shows that people of middle age has more and this leads to the country’s development as more number of people are engaged to work.ang the age group of 65+has now tends to decrease this shows the old age people are decreasing and also shows the health facility of the country.

31

Population of Pakistan has increasing day by day as the results shows from the graph as stated. pakistan is the developing country and it is developing and leads to increase in the urbanization in the Pakistan. Nearly 36%of the Pakistan’s population is residing in the urban areas and this shows the development of the Pakistan. Pakistan also differentiated the gender ratio as males are more compare to female and this shows the discrimination among the people. Pakistan is the open country and during the time of war many people of other states and country were migrated from one country to another and this leads to the increasing the migration ratio of the people and increasing in the population. From the coming year net migration ratio has increase considerably and this leads to increase in the population well enough. Pakistan is a country of different languages and religions. People of the different religions and languages are living with peace. Many languages are running in Pakistan but there are basic languages which are famous in Pakistan like Islam, sind.people of Islamic religion are more because mostly people follow the Islamic religion. The official language in Pakistan is English and the primary language is . Mostly people in Pakistan speak Urdu as their national language. Most Pakistanis can speak or understand at least two to three languages and almost all Pakistanis speak or understand the national language, Urdu. There are many languages such as English, Urdu, Punjabi, and many other out of these English is the official language, being commonly used within the government, by the civil service and the officer ranks of the military. While Urdu is the national language of Pakistan, although only about 7.5% of Pakistanis speak it as their primary language as per the survey. Punjabi is a regional language spoken as a first language. Other languages are hind co, Kashmiri, Persian, , and Turkic which are mostly used by people.

Pakistan is of many religions following in the state like Islam, chirstanity, hindusim and others. But the state religion of Pakistan is Islam. And the constitution of Pakistan is also written in English which gives all people right to confess, follow any religion, practice and spread their religion subject to law, public order, and morals. Only Muslims are allowed to serve as judges in the central, which has the power to strike down any law deemed un-Islamic. Other than Islamic population there are more Christian people nearly about 28 lakhs which are second in Pakistan religion residing there in Pakistan. Islam to some extent concretized with pre-Islamic influences, resulting in a religion with 32

some traditions distinct from those of the Arab world. There are also followers of in Pakistan. According to the last survey 93% of live in eastern , 5% in Punjab and nearly 2% in Baluchistan.sikism is also spreads in the Pakistan well. There are a number of living in different areas of Pakistan today; estimates differ, but the number is thought to be on the order of 20,000.other religions which doesn’t follow more in Pakistan are Zoroastrianism, Kalash, Jainism, , Judaism and others. In the earlier times constitution of Pakistan doesn’t differentiate but now days with they increase in number of religions the constitution differs. The original constitution of Pakistan did not distinguish between Muslims and non-Muslims. The Pakistani government does not limit religious publishing for each. However, it limits the right to freedom of speech with respect to religion.

Speaking in resistance to Islam and publish an attack on Islam or its other factors are prohibited. This penal code holds life custody for not following Quran, and up to 10 years' custody for insulting another's religious beliefs with aim to anger religious feelings. All the things are available freely but the condition is not to resists the law and the religion. Education is most important part of any country’s development. It frames the country’s future and leads to increase the country’s development. The educational institutions are the responsibility of the provincial governments whereas the federal government mostly assists in curriculum development, official approval and some financing of research. Here also Pakistan females are more interested in learning than the males. The Primary education is divided into the following three stages. Pre-Primary Education is an important component of Early Childhood Education. A raise of 2.6 % in Pre-Primary enrolment (8.434 million) in 2008-09 over 2007-08 (8.218 million) has been observed. Primary Education raise of 0.6 % in Primary enrolment (18.468 million) in 2008-09 over 2007-08 (18.360million) has been observed and in 2009-10, it is estimated to rise by 1.3 percent as per the survey. Middle Education seen a reduction of 0.2 % in middle enrolment (5.414 million) in 2008-09 over 2007-08 (5.426 million) has been observed and in 2009-10, it is estimated to rise by 0.6 percent as per the survey. Secondary begins from grade 9 and lasts for four years. An increase of 2.9 % in middle enrolment in2008-09 over 2007-08 has been observed and during 2009-10, it is estimated to rise by 5.6 percent as per the survey. Tertiary Education an enrolment of 1.147 million is estimated in 2009-10 over 1.074 million in

33

2008-09 and 959,690 in 2007-08. 3,291 Higher Secondary Schools / Inter Colleges with 76,184 Teachers are useful. Many Master's degree programs only require one and a half years of study. In order to increase higher education, four new universities have been set up during the year 2009-10 making the total number to 132 universities with 50,825 Teachers in both Private and Public Sectors. As the population of the country increases the education and their levels are also increasing and students are more interested in learning and for the degrees.

In Pakistan, gender discrimination with regards to education occurs amongst the poorest households but is non-existent amongst rich households. Only 18% of Pakistani women have received 10 years or more of schooling. This shows the gender discrimination of male and female in education also. In spite of increasing in the development of the country Pakistan but there is not increase in the health facility there is greater number of fertility rate and death ratios because of lack of facilities. Pakistan is having the highest population growth rate in the world, and poverty are further complicated and worst situation. pakistan is facing a huge shortage of doctors and nurses. To overcome health issues and provide better health service facilities in private and public sectors, the government started the Benazir Income Support Program as the study says. Pakistan is referred according to the rates say fertility rate, death rate, birth rate, mortality rate and others in order to see whether the country’s health facility is good or not and this gives the proper survey. Survey shows that overall the fertility rate is decreasing in the country which is good for the country as the population would be control and control population. Birth rate gives the value per 1000 and gives the value correct in the survey. Birth rate was declining till 2011 which is good for controlling the population as population is big problem for the developing countries. Pakistan is at the third highest rank in the world with the number of maternal deaths according to the reports of Pakistani is said that women’s dies from the preventable complications related to pregnancy and delivery. Death rate is not decrease considerably and this shows the lack of facility in the health sector.

The lack of health performance Pakistan leaves behind from the prevention of infants deaths. The study of Pakistan indicates that (at 63 per 1000 live births) and the less

34

than 5 years mortality rate is at 86.5 per 1000 live births. Deaths rates don’t goes down on the basis of unhealthy dietetic food habits, water bear diseases, under nourishment and rapid population growth. Infant mortality rate is highest in Pakistan which is at 70 deaths per 1000 live births. Pakistan reports views that one child dies every minute from the victims of diarrhea, acute respiratory infection. Infant mortality decreasing this shows the better facility in the health matters and increasing the facilities.

Pakistan is having the highest population growth rate in the world, and poverty are further complicated and worst situation, said the study which gives economic indicator for the year. A distribution of Rs16.9 billion was made for 82 projects in the Public Sector Development Programmed during 2010-11, which is not enough when compared with the increasing population and desires of health services, the study said. The country is facing a huge shortage of doctors and nurses. According to the learning, by 2010, there were 144,901 physicians, 10,508 dentists and 73,244 nurses serving a population of well over 170 million people. In Pakistan there were 972 registered hospitals across the country with 104,137 beds, 4,842 stores and 5,344 basic health units. To overcome health issues and provide better health service facilities in private and public sectors, the government started the Benazir Income Support Program. Pakistan is having the trend of decreasing fertilities rates and mortality rates and this shows that population is growing its development and growth. Due to the lack of health performance Pakistan leaves behind from the prevention of infants deaths. The study of Pakistan indicates that (at 63 per 1000 live births) and the less than 5 years mortality rate is at 86.5 per 1000 live births. Deaths rates don’t goes down on the basis of unhealthy dietetic food habits, water bear diseases, undernourishment and rapid population growth. Income is the basic purpose of all the human being and income is the only source of people living and Pakistan is getting income from the different sources and this all includes in the GDP. this shows the real income of the Pakistani people and shows the development and growth of the Pakistan. That higher per capita income is in the year 2005 and after 2005 the per capita income shows the decreasing phase. Purchasing Power Parity (PPP) of Pakistan is $ 545.6 billion. And It is 27 th largest in the world. That income of the people increasing year by year and this the good position of the Pakistan.

35

Employment to population ratio is the percentage of a country's population that is employed. Ages 15-24 are generally considered the youth population. This page includes a historical data chart, news and forecasts for Employment to population ratio; ages 15-24; total (%) in Pakistan % of employment in different year is shown from 2002 to 2010 in 2006 percentage of employment is very high during this period after that employment is decrease because of recession and from 2008 it start increase again. Employment of Pakistan is increase year by year and compare to that employment of India is decrease year by year and this shows that better position of the Pakistan in relation to the occupation of the people.

Demographics are very important about the population of the area and the culture of the public there. Pakistan’s population is increasing year by year as we has concluded in the project .and the population of young generation is growing as the education level is growing day by day. Different age groups has different priorities as the young generation is investing more on education while the old age group likes to invest more on health. We have concluded that in Pakistan males are more than female’s compare to 1000 per males. We have concluded that in Pakistan males are more than female’s compare to 1000 per males. People speaks different languages in Pakistan such as sindhi, Urdu, Punjabi, Pashto etc. but Pakistani speaks more Urdu as their national language and after that sindhi as we have concluded from the chart. The state is Islam, which is practiced by about 95-98% of the 187,343,000 people of the nation. Mostly Pakistani people prefer Islam as their religion.

36

4. SOCIAL AND CULTURAL OVERVIEW OF PAKISTAN

The social cultural environment consists of the whole range of behaviors and relationships in which individuals engage in their personal and private lives, including the characteristics of the population, its values and attitudes, lifestyles and relationships. Population of Pakistan comprises of seven ethnic groups. 95% of the Pakistani population is Muslim. They have two foods customs, one they do not eat pork and the other is; during the month of Ramadan fasting is a daily activity. Pakistan’s long and rich history is reflected in the Socio economic framework. Pakistani culture is having different characteristics and values. The culture of this country is very diverse; it is actually a part of the contemporary Islamic civilization. Pakistan comprises of four Regions. All of these parts have their own languages. Urdu is the national language of Pakistan. Urdu is the only official language of Pakistan. English is referred as informal official language of Pakistan. Pakistani culture is mixture of different cultures like Punjabi, Sindhi, Kashmiri, Hindu and Pathan etc. Pakistan is also having rich literature. Pakistani society is prevailed by male members. Different region’s people wear different clothes and it looks very attractive. Pakistanis also celebrate different festivals. They also have interest in sports. Pakistan enjoys great distinction in handicrafts at international level. The enthusiasm for poetry exists at a regional level. Poetry is a highly respected art and profession in Pakistan. Pakistani flag was designed and officially adopted by Assembly in July 1947. Pakistanis celebrate different festivals. The main and very important festival is Ramadan. The other festivals are Chand Raat, Eid celebration, Muharram, Jushn-e-Baharan and many more. On August 14, the people of Pakistan celebrate the day when Pakistan gained its independence from British India, and formed an independent state for Muslims. September 6 is another patriotic day, when the Army of Pakistan is put on display for the general public to show Pakistan arms. Government-owned radio and television traditionally have been used in an attempt to harness folk cultural traditions for political and nonpolitical purposes. In the early 1970s the National Film Development Corporation was formed to use film to make people aware of social and cultural values.

37

Society, culture and business are inter-related. There are two main impact of this, one is social-cultural impacts on business and another is business impacts on culture and society. In order to grow economically, Pakistan has the potential to gain larger share of the international agriculture trade market. With help of this Pakistan can cope with poverty also. Different policies failed to boost exports. As export decreases poverty increases. Poverty, unemployment and food insecurity have been rather on the rise for the last two decades. Pakistan's major exports consist of cotton, textile goods, rice, leather items, carpets, sports goods, fruit, and handicrafts. Major imports consist of manufacturing equipment, vehicles, iron ore, petroleum, and edible oil. Trade partners consist of the Hong-Kong, Japan, United States, United Kingdom, and the United Arab Emirates. An estimated 54.69 million acres (22.14 million hectares) of land are used for agriculture. The major crops are cotton, wheat, rice, and sugarcane. Forty- eight percent people are in the service sector, Twenty- seven percent people are in industry, and Twenty- five percent are in agriculture.

Pakistan is a poor country and its economic outlook is bleak. It relies heavily on foreign loans and grants, and debt obligations take nearly 50 percent of the government's expenses. The average per capita income per person in Pakistan is estimated at $460 (U.S.). A large number of Pakistanis, estimated at 35 percent, live below the poverty line. A large percentage of the commercial activities include the sale of handicraft items such as the carpets for which Pakistan is well-known Most important industries of Pakistan consist of textiles, cement, fertilizer, steel, sugar, electric goods, and shipbuilding. Forty-eight percent people are in the service sector, Twenty- seven percent people are in industry, and Twenty- five percent are in agriculture. In Pakistan poverty is related with agriculture. Those whose main business is agriculture lives generally in poverty. A large number of farmers were reported to be living in poverty and are in hopeless situation due to enormous social pressures. Rural poverty is increasing in Pakistan at an alarming rate. Main problems being : high cost of production, lack of guidance, irrigation water debt pressures, insecurity in the market, deteriorating state of food security, decrease in families farming income, deteriorating law and order situation, rising tensions, growing displacement, shrinking space for women farmers, growing hopelessness are other problems faced by Pakistani farmers, Communities of farmers,

38

are valuable section of the society and it is advocated that they should be given due value in national policies. The Government must realise the increasing exposure of little grangers under the World Trade Organisation authorities.

In order to grow economically, Pakistan has the potential to gain larger share of the international agriculture trade market. With help of this Pakistan can cope with poverty also. Different policies failed to boost exports. As export decreases poverty increases. Poverty, unemployment and food insecurity have been rather on the rise for the last two decades. Pakistan is a great supporter of trade liberalisation and is among the pioneer members of GATT (General Agreement on Tariff and Trade) and the World Trade Organisation. At the policy stage, Pakistan conceives that trade liberalisation will solve all economic ills and eradicate poverty in the country. That's why export repelled development has been the primary focus in the last thirty years. Wide terms, the social- cultural environment contains mostly everything that is not included economy or the political system. Economic life is organized generally through a market in which individuals comprehend one another as buyers and sellers and the purpose is production. Individuals relate to one another as citizens in political life and the basic purpose of it is making collective decisions and rules. The economic and political systems compose the conditions “goods, services and rules” which we all need in consideration of live the lives that we choose. Pakistan is a big country which consists on a base of four provinces; one is the Federally Administered Tribal Areas (FATA) and Federally Administered Northern Areas (FANA). All of these elemental parts have their own regional languages. As such Punjabi, Sindhi, Pashtu, Balochi, Barohi and Kashmiri are very famous and regional languages. However, Urdu is the national language of Pakistan which is speaking and understood in all region of the country. Practically speaking Pakistani culture is a beautiful composite of the Punjabi, Sindhi, Pathan, Baluchi, Barohi, Kashmiri and Seraiki cultures which is very impressive. In addition, the presence of Hindu community in Sindh gives touches of dance and music in the Sindhi region area.

Pakistani culture is rich in the literatures of different type of languages in that we can include: Urdu language, , , Pashtu language, Baruhi language, and Baluchi and Kashmiri languages. Pakistani culture is rich in variety of

39

their dressing : The people of Punjab, the Pathans of afghanisthan, the Baluchi people and the Sindhis wear their own distinct dresses. These dresses are very colorful and important and give attractive look during the national fairs and festivals of the country. The has great tradition of Fairs and festivals. These fairs are held in different parts of the country. Annual of great saints are held to commemorate their anniversaries. On these occasions, fairs are also held in which people take part in huge numbers. Out of these the Horse and Cattle shows of Lahore, Sibi and Mianwali are famous where as the Polo festival of Gilgit is important and famous at national and international level. Moreover annual of, Hazrat Daata Ganj, Madhu Lal Hussain, Baths, Baba Farid Gunj Shakar, Baba Bulhay Shah, Baba Gulu Shah, Abdul Latif Bhitaii, Pir Jamaat Ali Shah, Hazrat Noshah Ganj Baths, Bari Imam, Bahauddin Zakriya and, Lal Shahbaz Qalandar are celebrated with the great passion.

Pakistan is very famous for great distinction in handicrafts at the international level. sports goods of , Wooden furniture of Chiniot, and embroidery of and Hyderabad is world-famous. Urdu is closely similarly to Hindi but it is written in an extended Arabic alphabet instead of in Devanagari. Urdu also has more loans from Arabic and Persian than the Hindi . Many other languages are spoken in Pakistan, including Siraiki, Punjabi, Pashtu, Sindhi, , Balochi Brahui, Burushaski, Khawar, Balti, Gujrati and other languages with smaller numbers of speakers.Poetry is a very highly valued in the pakistan as an art and also as profession. In Pakistan the pre- eminent form of poetry almost always originates in Persian, due in a part to the long standing affiliation the region had with the Empire of Pershia. The variety of Pakistani music ranges from diverse provincial folk music and traditional styles of music like Qawwali and Ghazal Gayaki to modern forms fusing traditional and western music, such as the synchronization of Qawwali and western music by the world renowned great Nusrat Fateh Ali Khan. In addition Pakistan is home of many famous folk singers such as the late Alam Lohar, who is also very popular in Indian Punjab. The arrival of Afghan refugees in the western provinces has rekindled Persian and Pasto music and established. is a hub of Afghan musicians and a distribution center for Afghan music abroad. Kathak is a classical dance which developed in the Royal courts of the Mughals. Folk dances are still very popular in Pakistan and vary according to region such as: Bhangra Luddi, Sammi- Punjabi dance , Jhumar-Saraiki and

40

Balochi folk dance, Lewa, Chap - Jhumar-Saraiki and Balochi folk dance Culinary (Cooking) art in Pakistan comprises a mix of Middle-Eastern, Afghan, Iranic, Turkish, and Indian influences that reflect the country's history as well as the variation of cooking practices from across the surrounding regions.In an urban areas of the country there is offer an amalgamation of recipes from all different parts of the country, while food with the specific local ingredients and tastes is available in rural areas and villages. Besides the main dishes of salan, which can eat with or without meat and cooked with vegetables or lentils, there are some special foods such as karahi, biryani, and tikka,it is also available in various type of forms and flavors, eaten alongside a variety of breads such as naan, chapati, and roti. There are also local forms of grilled meat or kebabs, desserts, and a variety of hot drinks and cold drinks.

Ramadan is the holiest month of the Islamic Calendar, Muslims are fasting in this month from sunrise to sunset, and this festival is broadly observed in Pakistan. Muslim Pakistanis roughly around 97% of the population doing fast, attend mosques with custom, and recite Quran. Chand Raat is very special occasion for Muslims. It is celebrates in the Islamic month of Ramadan. Chand Raat celebrates the night before Eid day celebrations, showing the end of the month of Ramadan. In Ramdan Eid there is national holiday for celebrate Eid. In Pakistan which is a Muslim country, there are three days off for all businesses and government offices. At the last roja eve, people search for the new moon to sign the end of Ramadan and arrival of Eid. The Eid day starts with morning prayers, males goes to mosques and females do the same in home, then males returning home for a large breakfast with family. Pakistani society is dominated by great male persons of the country. Each family is headed by the senior most male member who is responsible for arranging the bread and butter of the family. Throughout Pakistan, as in most agrarian societies, family organization is strongly patriarchal and the most people live with large extended families, often in the same house or family compound. The eldest male, whether he is the father, grandfather or paternal uncle, is the family leader and makes all significant decisions regarding the family and its members. Traditionally, a woman’s place in society has been secondary to that of the men , and she has been restricted to the performance of domestic chores and to fulfilling the role of a dutiful wife and mother. In wealthy peasant and landowner households and in urban middle-class families, the practice of keeping women in

41

seclusion is still common; on the rare occasions on which women set foot outside their houses, they must be veiled. Among the rural poor, women have duties on the farm as well as in the house and do not customarily observe purdah. Houses of those who practice purdah have a men’s section ( mard ānah ) at the front of the house, so that visitors do not disturb the women, who are secluded in the women’s selection in the rear. Women’s subordinate status in Pakistan also is evident in the practice of “honor killings” in which a woman may be killed by male relative if she is thought to have brought dishonor on the family or clan.

Among the wealthiest Pakistanis, Western education and modes of living have eliminated purdah, but, in general, even among that group, attitudes toward women in society and the family often have been viewed by outsiders as antiquated. Change has occurred most rapidly among the urban middle income group, inspired by increasing access to the west as well as by the entry of women into the workforce and into government service. An increasing number of middle-class women have stopped observing purdah, and the education of women been encouraged. Some women have gained distinction in the professions; some of Pakistan’s leading politicians, journalists, and teachers have been women, and a woman has served as prime minister and as speaker of parliament. In traditional parts of Pakistan, social organization revolves around kinship rather than around the caste system that is used in India. The (ber ādar ī; patrilineage, literally “brotherhood”) is the most important social institution. Endogamy is widely practiced, often to a degree that would be considered inappropriate in Western society; the preferred marriage for a man within many Pakistani communities is with his father’s brother’s daughter, and among many other groups marriages are invariably within the baradari . styles are similar in many ways to those found in India. The shalwar kamiz combination—a long knee- length shirt ( kamiz , camise) over loose-fitting pants ( shalwar )—is the most common traditional form of attire. As a more formal over garment, men wear a knee-length coat known as a sherwani women frequently wear a light shawl called dupatta. Among conservative

42

Pakistan’s long and rich history is reflected in the number of fine museums found there. The Lahore Museum (1894) has splendid collections of arts and crafts, jewelry has a splendid collection of arts and crafts, jewelry and sculpture from various historical periods. The National museum of Pakistan, in Karachi (1950), has number of galleries, which include display of objective from the, Indus civilization. There are a number of archaeological museums and several private museums with specialized exhibits. The institute of Asian Civilizations (founded 1997) was merged administratively with Quaid-i-Azam University in Islamabad in 2007. The National College of Arts (founded in 1872 as the Mayo School of Industrial Art) in Lahore is the only degree-granting institute of fine arts in the country. There are several private art galleries located in larger cities.

There are so many dance and music performance arts in Pakistan—many unique to the ethnic culture of the performer—that they are almost considered common rather than unique. Dance and music are done in the both classical and folk form. Usually the performer wears a costume that features ethnic design.Just as the costume worn by the performer identifies the tribe or ethnic group, so does the music or performance. There is the Jhoomer in Baluchistan which involves spinning around at top speed, as men do on dark nights by the light of flickering torches. The women of Punjab do the jhoomer in what is referred to as a romantic fashion. Also in Punjab, the juddi starts with girls singing to the beat of a drum; then they join in a circle and start to dance. Still another dance of Punjab is the bhangra which is described as being like rock and roll and which is always done at the beginning of the harvest season. The Ho jamalo originated in Sind but is popular throughout Pakistan. It’s a dance that is performed as part of a victory or celebration. There are four main families of musical instruments in Pakistan and more than six hundred Pakistani musical instruments; the most well known are the sitar, veena, rabab, surmadal and tanpur. In the social sciences one of the major concerns is the low rate of literacy in Pakistan efforts are being made and outside the educational establishment to address and another is that frequently young children must work most often in carpet manufacturing jobs to supplement the family’s income and sometimes to provide the sole income in family. As a result the children don’t have time attend the school. Its hard work made to address this problem has often involved trying to find work for the parents. In the physical science one of the largest problems is that because of ever increasing population growth natural recourses are often misused with land 43

being lost to desertification water logging and the soil erosion, and it’s increasing contamination of groundwater and surface water from agricultural chemicals as well as from industrial and municipal wastes. Because of the important role of agriculture of the country, agricultural production is and will continue to be greatly threatened by land degradation unless solution can be found rapidly.

The rich and developed societies, the products of business growth, afford their members vastly increased lifestyle choices and opportunities. Here we can provide the example of, the quick and fast development of information and computer technology has transformed the way we communicate with each other, consume cultural products such as music, and gain access to information. Cultural trends are driven powerfully by product innovations spurred by business’s competitive pursuit of profit. To the contrary critics point to the negative impacts of business on culture and society. The rich and unique culture of Pakistan has preserved established traditions throughout 5000 years of history. Many of these cultural practices, foods, monuments, and shrines were inherited from the rule of Muslim Mughal and Afghan emperors. With IT revolution making its presence alien’s culture is prevailing. In today 's date Pakistan has more than11.5 million. It is quite evident from the survey that people are using Internet for office and personal works Internet is now the indispensable part of a communication system but to the contrary here are some important lifestyle behavior to note that people these days have no time to spend with their families, reading newspapers magazines or books, playing outdoor games and watching T.V. the Internet is taking its toll over the place for communication with friends and families because of its ease and cheaper access. people also agreeing that the usage of Internet is creating many negative impacts on their cultural values, due to easy accessibility of pornographic materials. internet is steadily become ubiquitous everywhere, in pakistan today especially in the cities. But following the IT revolution alien’s culture is prevailing. In Pakistan the Internet users are more than11.5 million. It is quite evident from the survey that people are using Internet for office and personal works Internet is now the integral part of a communication system Majority of Pakistanis are unable to truly reap the benefit of the revolution, which internet offers. Due to illiteracy and ignorance. One of the least secure countries on the planet is ‘Pakistan’. As a reflection of its obsession with security, Pakistan today spends close to $4 billion per year on defense, which 44

ranks 28th highest in the world. More tellingly, it ranks 19th in the world in terms of military expedite percent of GDP (at just 5 percent).the Pakistan has one of the world's largest and best equipped armed forces, indicators of military capability show which of course possess a steadily growing arsenal of nuclear weapons and ballistic missiles. Emerging out of British colonial India as a homeland for a sizeable portion of the region's Muslim population, one could say that Pakistan was born insecure. Formed as an Islamic nation in the year 1947, Islam continues to be the religion of approximately 95 percent of the population of Pakistan. There are also small groups of Buddhists, , Parsis, and Hindus. The Muslim religion was Houses in Baltit. Pakistan's landscape includes snowcapped mountains and valleys such as this, as well as sunny beaches. Founded by the prophet Muhammad in the seventh century, when, according to Islamic belief, he received messages from God and wrote them down in what became the Qur'an, the Islamic book that instructs Muslims on how to conduct their lives.

Pakistan upholds the culture of Male ‘superiority’ and dominance over females and the subordination and submissiveness of females are commonly practiced social norms in Pakistan. This concept can be witnessed in all segments of the pakistani society (urban, rural, literate and illiterate), though with slight variations. Some of the manifestations of this concept include: extremely strict observance of dress code (which is most often against the will), forcedly arranged marriages, submissive attitudes and behavior, low social participation (education, professions, business etc.). In rural or illiterate segments of the society however, the concept is carried too far. The origins of these attitudes, values and norms are often cited in religion, however in reality, it is clearly a non- religious cultural phenomenon rooted in tribal and feudal cultures. But conscious association of such norms with Islam, have made these practices long lasting, and “hard to change”. Political atmosphere of Pakistan is highly affected by its Islamic leaders. It is often used as a political shield by governments and the oppositions, the motive being to exploit the soft corner about Islam that exists among the general public. The consequence (among many others) is nationwide hypocrisy. About two centuries ago, the terms maulvi, maulana and allama , were used for great scholars, and learned men. These men were considered learned in both religious and worldly affairs (many of those maulvis and allamas, like Maulana Johar and Allama Mashraqi were in fact Oxford

45

graduates). Today these terms reflect a very narrow view of religion and education. There is an increasing tendency towards extremism in religion and this tendency is also reflected in religious education. So Islam, a religion (or culture) that initiated an intellectual revolution worldwide, and established a “scientific society” 1400 years ago, is widely regarded today as a mark of conservatism and extremism. Emotionalism, ignorance and extremism have continued to dominate the institution of religion in Pakistan. Add to it, the politicization of religion. This trend has led to , both within Muslim sects, and towards other religions. Many religious groups (that often seek cover under their “political wings”) are widely known for violent activities against people of other sects. Thus Islam, historically a symbol of peace and tolerance, is now a “hot spot” for human rights issues. The institutions that were historically regarded as “schools of thoughts”, in Islam, are today treated as opposing sects, worthy of contempt, hatred, and at times killings. Thus the primary function of religion, namely social integration, is suffering from an institutional dysfunction in Pakistan.

A majority of the Pakistanis are religious people (one way or the other), and look upon religion for guidance in moral issues. But Pakistan is ranked among the most corrupt nations in the world, has a very bad reputation in human rights, and does not reflect a great social picture. So despite having deep roots and influence in the society, the religion (Islam) in Pakistan, has failed to perform its moral function. An Islamic country where killing oneself are considered criminal offenses suicide and attempted suicide are understudied subjects in Pakistan. A South Asian developing country Pakistan has a population of approximately 164 million, with 98% Muslim population. Some provinces of Pakistan though having many educational institutes have still failed to survive just because of the terrorist acts that are happening in Baluchistan. According to the survey, 8.6 percent out of the 10,381 educational institutions in the province are in an ‘endangered’ condition. About 24.7 percent of these require major repairs while 36.6 percent require minor repairs. Only 30.2 percent are in satisfactory conditions. Baluchistan literacy rate is GPI 0.46 .So suggestions is that Pakistan’s Government should focus on this Province so that in future it will not create any type of hurdle for it to succeed in future.

46

5. OVERVIEW OF INDUSTRIES TRADE AND COMMERCE OF PAKISTAN

As Pakistan's previous TPR, constitutional changes since 1999, General trade policy objectives have focused on reduced protection, achieving a more outward-oriented trade regime, increased market access for exports, and greater global integration, aimed at increasing economic efficiency, competitiveness, and export-led growth. The main institutional changes in the area of trade policy have been the replacement of the Export Promotion Bureau by the Trade Development Authority, and the restructuring of the National Tariff Commission to become an effective trade defence body focused on contingency protection. It pursues these goals through unilateral, multilateral, and, increasingly, regional or bilateral initiatives. Trade and investment liberalization is seen as contributing to economic efficiency, competitiveness, and export-led growth. This is a key government priority that includes traditional (textiles and clothing) and non- traditional goods. Government recognizes the inefficiencies of import substitution, and aims to achieve a more liberal trade regime, to gradually expose producers to greater international competition; provide continuous raw material supplies, and to facilitate machinery imports.

Strategy :

Government’s Rapid Export Growth Strategy (REGS), announced in July 2005, are to reduce costs of doing business; upgrade skills and technology; comply with social, environmental, and security concerns; encourage export-oriented foreign investment; develop region-specific policies, including through regional preferential trading arrangements; strengthen trade promotion and modernize infrastructure; promote higher-value-added exports; and diversify export products and markets. 1 In particular, REGS has focused on raising exports of leather products, engineering goods, chemicals and pharmaceuticals, towels, denim, and services.

Vision:

1 Government of Pakistan (2005). 47

In May 2005 , aims to achieve a developed, industrialized, just, and prosperous country by 2030 through rapid and sustainable development in a resource-constrained economy, by deploying knowledge imports, to , raise productivity and international competitiveness as well as the share of manufacturing in GDP and total exports.

Implementation :

For implementation, the Government resumed five-year plans and adopted the Medium Term Development Framework (MTDF) 2005-2010 to assist in implementation. Development plans contain the Government’s broad trade policy lines, and the Planning Commission, the apex body for policy formulation, is actively involved in setting trade policies, including export promotion and trade development. It also releases with the Budget Annual Plans, which review economic developments and reinforce the planning process for achieving the Vision and the MTDF, and formulates Export Plans. The current plan, for 2006-13, targets raising exports from 13% of GDP (US$16.4 billion) to 15% (US$40-45 billion). Its strategic thrust is focused on creating an enabling policy environment, including consistency and stability, as well as providing tax and investment incentives; human resource development; revamping physical, scientific, and technological infrastructure; improving logistic chains; trade facilitation; production of quality products; aggressive regional marketing, including negotiating preferential trade arrangements for enhanced market access, especially in China, the United States, the EC, Latin America, and the Central Asian republics; and trade and social compliance, especially with WTO and bilateral arrangements. The plan’s sectoral growth strategies concentrate on manufacturing, including additional investment totalling US$65 billion in textiles and clothing (US$20-23 billion), steel and engineering (US$13-16 billion), chemicals and pharmaceuticals (US$5-8 billion), leather and leather products (US$3-6 billion), sports and surgical instruments (US$3-5 billion), gems and jewellery (US$2.5-4 billion), marble (US$2-3 billion), rice (US$2-3 billion), and and (US$1-2.5 billion).

ADVISORY BODIES:

The Government also receives formal and informal advice from the private sector. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) is the apex body

48

of trade and industrial chambers and associations representing specific products and/or industries. Importers and exporters must belong to a Chamber of Commerce or a relevant trade association. this requires a national identity card and national tax number. Mandatory import/export registration certificates from the former Export Promotion Bureau were abolished in 2006. New legislation and rules governing the regulation and registration of trade organizations are aimed at rationalizing the large number of chambers and associations, which often have overlapping membership (Trade Organisations Ordinance, 2006 and Trade Organisations Rules, 2007). They must be FPCCI members to be licensed and registered.

Main trade laws and regulations Laws, regulations, ordinances and most administrative guidelines or rules are published in the Government . Trade-related measures are contained in laws, ordinances, and regulations, including statutory regulatory orders (SROs). The Ministry of Commerce issues its Trade Policy annually, at budget time, after Federal Cabinet approval. Customs legislation has been amended substantially since the last Review of Pakistan, including in the 2007/08 Budget, to facilitate trade: it has introducing automatic/electronic clearance and improved post-entry auditing practices; customs regulations enter into force when posted on the CBR website. All legislative changes, including to customs and taxation provisions, are incorporated at budget time in the annual Finance Act to be passed by Parliament. Certain changes have been made to the trade-related legislation .Regulatory arrangements, including legislation, implementing rules, and regulations, have been strengthened mainly in certain key services covered by sectoral regulators, such as energy and telecommunications.

49

Table-1 Main changes in trade-related legislation, 2001/02 to end-September 2007

Area Legislation Customs Amendments to Customs Act, 1969 Import and export Import Policy Order 2007-08; Export Policy Order 2007- regulations 08; Presidential Ordinance on Trade Development Authority, 2006 Standards (imports and Import Policy Order, 2007-08; Export Policy Order 2007- exports) 08; Cotton Standardization Ordinance, 2002 Government Presidential Ordinance, 2002 procurement Sanitary, phytosanitary Import Policy Order 2007-08; Export Policy Order 200-08; and quarantine Animal Quarantine (Import and Export of Animal and measures Animal Products) Ordinance, 1979, Amendment Ordinance, 2002 Marketing and labelling Import Policy Order 2007-08; Export Policy Order 2007-08 Contingency measures Safeguard Measures Ordinance 2002 Domestic taxes Federal Excise Act, 2005 Intellectual property Import Policy Order 2007-08; Export Policy Order 2007-08 protection Oil and gas Oil and Gas Regulatory Authority Ordinance, 2002 Electricity NEPRA Eligibility Criteria for Consumers of Distribution Companies, July 2003; Interim Power Procurement (Procedures and Standards) Regulations, 2005 Financial services, Securities Act, 2005 including insurance Telecommunications Pakistan Telecommunication Authority (Functions and Powers) Regulations, 2004; Pakistan Telecommunication (Amendment) Ordinance, 2005 Broadcasting and Pakistan Electronic Media Regulatory Authority audiovisual Ordinance, 2002

Source: WTO Secretariat and Pakistani authorities.

50

INDUSTRY POLICY OVERVIEW

The making of industrial policy in Pakistan has a history. Industrial policies were made as either part of the medium-term development plans or in response to some crisis. Five industrial policies or distinct approaches have left a lasting impression on the structure of industry in the country. The first was made in 1948, soon after Pakistan gained independence, and was developed further as a consequence of the Indian decision in 1949 to place a trade embargo on Pakistan. The second was embedded in the Second (1960-65) and Third (1965-70) Five-year Development Plans adopted by the government headed by President Ayub Khan, the county’s first military ruler, the third was adopted by the administration of President (later Prime Minister) Zulfikar Ali Bhutto, the fourth was formulated by the several democratic governments that held office in the eleven year interregnum, 1988-1999, between two long rules by the military, and the fifth was adopted by the government of President Pervez Musharraf, the fourth military ruler.The first generation of Pakistani leaders was extremely concerned with the Indian attitude towards the country they had created. in 1949, Pakistan chose not to follow other countries. India retaliated by launching a trade war against its neighbor. Pakistan at that point was dependent on India for the supply of basic goods of consumption; a significant proportion of its imports came from India and a significant proportion of its exports went to that country. The government responded by adopting a series of policies that were to have a lasting impact on the development of the country’s industrial base.Karachi, at that time, the capital, focused on private leadership in the process of industrialization, provided incentives to private sector, gave the protection from external competition. This resulted in the rapid growth of the industrial sector and rapid increase in the rate of increase in industrial output. The government of Ayub Khan continued with this approach but with two differences. It used the industrial licensing policy to bring about a wider dispersal of industrial ownership. And, it used development finance companies such as the Pakistan Industrial and Commercial Investment Corporation (the PICIC) and the Industrial Development Bank of Pakistan (the IDBP) to influence the scope of industrialization. PICIC and IDBP received generous financial support from the World Bank. Textile spinning and weaving sectors were most affected by this policy. 51

Ayub government was to introduce considerable inefficiency in the sector, a development that has continued to keep the textile industry relatively backward.

The third approach towards industrialization, headed by Zulfikar Ali Bhutto. His decision to nationalize large scale industries suddenly increased the presence of the public sector in industry and finance. The democratic administrations that held office in the 1990s took some initiatives to bring back the private sector as the leader in economic development by privatizing some of the state’s economic assets, in particular large banks and large industries. While the government was stepping back from direct involvement in industrial management, large private sector industrialists were not prepared to let go the hand of the government. They were not prepared to step back but wished to stay close to the government. From our perspective, the most important policy initiative of this period was the establishment of the Small and Medium Enterprise Development Authority, the SMEDA. This was set up in October 1998, as a federal corporation with four regional offices, The corporation’s mandate was to facilitate the development of small and medium-sized enterprises by helping them to improve their line of products, introducing the entrepreneurs to new technologies, introducing them also to new ways of doing business and new management practices, helping them to do cost benefit analysis of the investments they were contemplating to make, and making them aware of the opportunities available in both internal and external markets. However, it was only under President Pervez Musharraf that the private sector acquired a very prominent role. This was the fifth approach to industrial policymaking in the country’s history. Under it, the pace of privatization quickened as did deregulation and the opening of the economy to the outside world.This is the brief ’s industrial development. The frequent changes in industrial policy noted above have kept the industrial sector relatively backward compared to the developments in other large Asian economies. INDIA-PAKISTAN TRADE RELATION:

Trade between India and Pakistan amounts to only $2 billion, but has the potential to reach multiples of that amount in the next few years provided the barriers to trade are removed . Political tensions coupled with tariff and non-tariff barriers enforced in both

52

countries have prevented India and Pakistan from benefitting from each other’s diverse markets and from their respective comparative advantage. This year, India and Pakistan began moving toward a more open trade relationship with Pakistan’s promise to accord India Most Favored Nation status. Commerce and industry ministers from both countries have met to discuss customs agreements, new trade routes, and enhancing people-to- people business ties. Joint business conferences have been held and mechanisms to deal with business-related grievances have also been setup.

Strategic trade policy :

The Strategic Trade Policy would leverage the Textile Policy through its diverse measures and policies directly and indirectly. The Ministry of Commerce would lend its support to the Ministry of Textiles towards an efficient implementation of Textile Policy . In this regards, the following Initiatives would be taken, • Promotion of new investment and modernization of machinery • For diversification of exports mix, custom duty may be zero rated on import of Man Made Fibers other than Polyester Staple Fiber. • Customs duty on import of sizing chemicals may be withdrawn. • Establishment of warehousing in major markets, requiring direct to Store Delivery. Trade policy introducing initiative in many sectors to promote the product diversification, which are as follows:

• Extra cost on inland transportation erodes export competitiveness of a range of developmental products. It has been decided that a scheme may be launched to compensate inland freight cost to exporters of cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble/ granite/ onyx products. • All final use products do require continuous research and development for enhancing competitiveness either by technology up-gradation, skill development or by improved management systems. A fund dedicated to support these activities named Technology, Skill and Management Up-gradation Fund of Rs. 3 billion is being established. • The manufacturing in surgical instruments, sports goods and cutlery sectors is largely done under the brands of foreign companies, and that result in lower prices for 53

manufacturers in these sectors. It has been decided that surgical instruments, sports goods & cutlery sector would be granted 25% support on brand development activities. • Shortage of well-trained skilled manpower is impeding growth of surgical instruments manufacturing industry. It has been decided to establish a center of excellence for catering to the training, designing, research & development needs of surgical instrument sector at Sialkot. • The Engineering Sector in Pakistan is very dynamic but it is fragmented. This sector has shown promising growth during 2008-09 with an export growth of 32 %. In order to increase the sophistication level and realize true potential of this sector, a special Fund of Rs 2.5 Billion is being created for product development & marketing for light engineering sector. • Leather apparel industry needs to adapt to changing trends for which they need expert input for improving quality and efficiency. The Leather sector would be able to avail the following facilities from the Export Investment Support Fund:

54

6. OVERVIEW OF DIFFERENT ECONOMIC SECTORS OF PAKISTAN

An economic sector of any country refers to as a division of that country's population based upon the economic area in which that population is employed

Population demographics:

Sixth most populous country with 164 million.The majority of southern Pakistan’s population lives along the 97% of the Country’s population is Muslim, making Pakistan the 2 nd largest Muslim country in the world and an important member of the Organization of the Islamic Conference.

INTERNATIONAL_TIME: International time of Pakistan is GMT + 5.

LANGUAGE

Pakistan’s national language is Urdu, but comparatively few people use it as their mother tongue. Punjabi is the most general language followed by Sindhi, Pashto,etc.

CURRENCY

• The currency of this country is Rupee and the acronym used for the currency is PKR.

THE CONSTITUTION AND LEGAL SYSTEM

The constitution of the Islamic Republic of Pakistan of 1973 provides for Parliamentarian form of Government and the Prime Minister is the head of Government and the President (collectively elected by the National Assembly and the Senate & the Provincial Assemblies) is the head of the federation

Pakistan’s legal system is based on English common law and adapted for the needs of an Islamic state. High Court & Supreme Court of Pakistan are the highest forum of judiciary at regional and national level, respectively.

55

HIGHLIGHTS OF THE ECONOMY

In 2006-2007 Pakistan's real GDP at factor cost grew by 7% and inflation remained around 7.9%.Wheat, Cotton, Rice and Sugarcane are Pakistan’s main crops while main industries of these Country are cement, power, textiles, telecommunications, commercial& investment banking, agro-based produce, surgical goods, leather & leather goods, oil & gas, sports goods, and cutlery.

GROWTH AND STABILISATION:

From 1952 until 2012, Pakistan GDP Growth Rate averaged 4.98 %reaching an all-time high of 10.2 %in June of 1954 and a record low of -1.80 %in June of 1952. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy.

V The commodity producing sector has performed quite better in outgoing fiscal year as compared to last year; the current year growth rate is 3.28%in compared with 1.47 %last year. V Minor Crops growth declined by 1.26 %, because of rains affect in Sindh. V Industrial sector contains 25.4%of GDP. Sub sectors: manufacturing, mining & quarrying, construction, electricity and gas distribution.

V Manufacturing Sector registered growth at 3.56 %compared to the growth of 3.06%last year.

V Small scale manufacturing maintained its growth of last year at 7.51 %and slaughtering growth is estimated at 4.46 %against 4.38 %last year.

The Services sector has registered a growth rate of 4.02 %in 2011-12 against the growth of 4.45%in the last year.

56

EDUCATION

The Pakistan Social and Living Standard Measurement (PSLM) Survey indicates that literacy remains much higher in urban areas than in rural areas & much higher for men than for women and Province wise data suggest that Punjab leads with 60% literacy followed by Sindh with 59%, with 50% and Baluchistan with 41%.

In this country the overall number of enrolments during 2010-‘11 were 39900.30thousands as compared to 38202 thousands during the same period last year. This shows an increase of 4.4%. It is estimated to increase to 41596.50 thousands during 2011-‘12. The number of institutes stood at 227.80 thousand during 2010-‘11 as compared to 228.40 thousand during the same period from2009 to 2010. In Pakistan the number of teachers during 2010-‘11 were 1409.40 thousand as compared to 1386.10 thousand during the same period 2009-‘10 showing an increase of 1.7%. This number is estimated to increase further to 1445 thousand during the year 2011-‘12.In Pakistan the total of 134,118 youth received vocational and technical training under the President’s Funni Maharat Programme and Prime Minister’s Hunermand Pakistan Programme. In these country HEC is also playing its role in running different scholarship programmers to enhance the academic qualification at various levels on merit basis in line with requirement. In Pakistan during the period 2008-12 a number of 3996 scholarships were awarded under different programmes,3572 scholars proceeded to avail these programmers on merit basis and a number of 1650 scholars completed their studies.

MONEY & CREDIT

The monetary policy of Pakistan intends to a stabilizing economic growth by a series of channels. The predicted economic and inflation activities are affected by the same.

Recent Monetary & Credit Development of Pakistan has been shown from the following. • Broad Money (M2) witnessed an expansion of 9.09% during July-11th May, 2011-12 as compared to 11.47% during the same period in 2010-11.

57

• Net Domestic Assets (NDA) during July to 11 th May, 2012 stood at Rs 880.90 billion against Rs 481.60 billion during the same period last year, reflecting an increase of 14.90% over the last year.

• On the other hand, Net Foreign Assets of the banking system during the period under review declined to Rs 272.20 billion as compared to an increase of Rs 181.10 billion in the same period of 2010-‘11.

• The credit to private sector witnessed a net increase of Rs. 234.8 billion during July 2011-11 th May, 2012 as compared to Rs 107.8 billion in the same period last year.

• The weighted average lending rate (including zero mark-up) on outstanding loans stood at 12.80% while the weighted average deposit rate (including zero mark- up) stood at 6.98% in March 2012.

• Government borrowing from the banking system for budgetary support and commodity operations stood at Rs 1,003.30 billion during July to 11 th May, 2011- ‘12 as compared to Rs. 506.50 billion in the comparable period of the last year. Government has borrowed Rs.442.30 billion from the State Bank of Pakistan, while Rs 642.10 billion borrowed from the scheduled banks.

TRANSPORTATION & COMMUNICATION

In Pakistan there are 96% roads of inland merchandise and 92% of passenger traffic and definitely the backbone of Pakistan’s economy. Current road network of Pakistan is about 2,60,000 km which caters services to 11 million automobiles of all type and also NHA roads network is around 12,000 km, which is merely 4% of the overall road network but takes 80% of Pakistan’s commercial traffic. There are 52 new design passenger coaches were imported from China at a cost of Rs. 4.1 billion. Remaining 150 passengers’ coaches will be manufactured at Pakistan railways carriage factory Islamabad by 30 th June 2013. All the 46 development projects include construction of roads, river Bridger, tunnels, flyovers, interchanges. 58

In Pakistan NHA has completed 12 projects of bridges, flyovers, interchanges& road up gradation during the last one year at a cost of Rs. 19.60 billion. International Airlines Corporation of Pakistan earned increased revenue amounting to Rs. 116 billion in year 2011 as compared to 107 billion last year. A purchase agreement of 5 Boeings 777 has been signed. In Pakistan Karachi port trust handled cargo 27.8 million tons during the first 9 months current fiscal year. Large Scale Manufacturing

The industrialized sector grew at an average rate of 8% from the sixties to the eighties, but fell to 3.9% during the nineties. This was largely caused by lessening in investment levels due to lack of permanence and consistency in policies. During the first 9 months of the current fiscal year 2011-12, Large Scale industrialized posted a growth of 1.05% as compare to growth of 0.98% during the same period last year. Items wise contribution in Large Scale Manufacturing indicates growth in Generating Sets (143.9%), Blankets (109.9%), Electric Transformer (31.2%), Heavy Machinery &equipment’s (21.0%), Sugarcane Machine (19.2%), Sugar (15.3%), Liquids/Syrups (14.1%), Tea blended (13.3%), Tablets (10.7%), Jeeps & Cars (8.8%), Footwear (6.2%), LPG (3.4%), Cement (2.9%) and Sugar (15.3%).The textile has a total conventional spinning capacity of 1550 million kgs of yarn, weave capacity of 4368 million square meters of fabric and concluding capacity of 4000 million square meters. The industry has a manufacture capacity of 670 million units of garments 400 million units of knitwear and 53 million kgs of towels.

Fiscal Development

Fiscal Policy Developments Pakistan’s fiscal deficit for the financial year 2011-12 is report 4.0% as compare to 5.9% in fiscal year 2010-11. Revenue Measures V 15% surcharge on income and move forward taxes. V Increase in the rate of special excise duty from 1% to 2.5%, however special excise duty was abolished in 2011-12. V Extraction of special regime of assessable price for levy of GST at 8% on actual value of sugar.

59

V Removal of SRO based exemption from fertilizer, pesticides, tractor and removal of zero rating from machinery, plants and equipment. V Constraint of zero rating to register person for export of textile, leather, carpets, sports goods and surgical goods. FBR Tax Collection V Tax collection by the FBR was targeted at Rs 1952.30 billion for fiscal year 2011- 12. Revenue collections of FBR stood at Rs 1426 billion during July-April 2011- 12, thereby shimmering 24.0% growth over Rs 1149.8 billion self-possessed during the analogous period last year. Among the four federal taxes, the maximum growth 33.7% has been recorded in sales tax receipts, followed by civilization 17.7%, and direct tax 22.6%. It does not include Rs. 19 billion together by Sindh province on GST on Services.

V Indirect taxes grew by 24.9% during July-April, 2012 and accounted for 62.9% of the total FBR tax revenue. Net compilation was estimated at Rs.897.20 billion. Fiscal Performance: July-March, 2011-12

V Total spending of Rs. 3721.2 billion was predictable for the full year, comprise of Rs.2976.3 billion of current disbursement (80% of total), and Rs. 744.9 billion of expansion disbursement and net lending (20% of total).

V During July-March, 2011-12 total expenditures amounted to Rs 2641.90 billion against Rs 2262.60 billion in the same period last year. Current expenditures stood at Rs 2154.10 billion and enlargement expenditures and net lending recorded at Rs 428 billion during July to March, 2011-12. 7. Energy V The total consumption of petroleum foodstuffs in the power sector was 8,139 million tons compared to 8,814 million tones last year which in a weak position the growth in this sector, thus redeployment negative growth of 5.20% in this sector in this country. V In the gas sector of Pakistan provide increased by 4.9% in July-March 2011-12 as the average manufacture of natural gas was 4236.06 million cubic feet per

60

day during this period while it was 4,050.83 million cubic feet per day in analogous period last year. V There is a total contribution of Hydel in electricity generation increased to 33.6% in 2010-11 in this country. V In Pakistan Water and Power expansion Authority (WAPDA) remain the main contributor to electricity generation with 48.7% coming from this source. 8. Agriculture

V The total geographical area of Pakistan is 79.6 million hectares. About 27% of the area is currently under cultivation of this area, 80% is irrigated and in this regard, Pakistan has one of the highest proportions of irrigated cropped area in the world and also the cultivable waste lands offering good possibilities of crop production amount to 8.90 million hectares. Growth in cropped area is very impressive: from 11.60 million hectares in 1947 to 22.60 million hectares in 1997.

Factor 2010-2011 2011-2012 Increase/Decrease in% age

Overall Growth 2.4% 3.1% 0.7%

Cotton ( in bales ) 11,460 13,595 18.6%

Wheat ( in thousand tons ) 25,214 23,517 -6.7%

Rice ( in thousand tons ) 4,823 6,160 27.7%

Sugarcane ( in million tons ) 55.3 58.0 4.9%

Inflation in Pakistan :

The Government remained focused on maintaining macroeconomic stability, growth, mobilizing domestic resources and increasing exports, balanced regional development and providing safety nets for the vulnerable groups. Despite numerous challenges, the economy performed better in 2011-12 than many developed and developing economies. These included sharp increase in fuel and commodity prices, recessionary trend globally and weak inflows. Domestically, economy was struck by heavy rains in Sindh and parts of costing $ 3.7 billion. Notwithstanding these challenges,

61

the Gross Domestic Product growth this year is estimated at 3.7 percent as compared to 3.0 percent last year. Inflation is a rise in the general level of prices of goods and services in an economy over a period of time and when the general price level rises each unit of currency buys fewer goods & services. Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply Views on which factors determine low to moderate rates of inflation are more varied and low inflation may be attributed to fluctuations in real demand for goods & services, or changes in available supplies such as during scarcities as well as to growth in the money supply. Monetary Policy

The economy seems to have settled at an unenviable equilibrium of high inflation and low growth and the protracted energy crisis and weak fiscal fundamentals are the main reasons behind this outcome. The government borrowings from scheduled banks have reached Rs 437 billion during July 1 to September 21, 2012 of the financial year 2012- 13, while the outstanding amount of liquidity injections by the central bank has increased to Rs 611.5 billion by the end of the first quarter. The monetary policy pointed out that an effective overhaul of the governance structure of the energy sector is important for the revival of private credit, investment, and sustainable medium to long- term economic growth. A declining interest rate environment should lead towards a rethink of this strategy, it said and added that the scheduled banks will have to step up efforts to go back to their basic intermediary role and channel loanable funds to the private sector. The main factors that have significantly dampened the demand for credit by private sector businesses are persistent electricity and gas shortages, security conditions, and a challenging political environment and in these circumstances businesses are avoiding significant commitments in terms of expansion and long-term investments.

Employment Regulation

The labour policy issued by the Government of Pakistan lays down the parameters for the growth of trade unionism the protection of workers’ rights also, the settlement of industrial disputes, and also the redress of workers’ grievances and also the policy also provides for the compliance with international labour standards ratified by Pakistan and

62

at present, the labour policy as approved in year 2002 is in force.The Constitution of the Country also protects the rights of children and states:“No child below the age of fourteen shall be engaged in any factory or mine or in any other dangerous employment and all forms of forced labour and traffic in human beings are prohibited.” An Employees Social Security scheme was introduced in Pakistan under the provisions of the Provincial Employees Social Security Ordinance (ESSO), 1965. The main objective is to provide comprehensive medical cover to the protected workers and their family members including parents and to provide financial assistance in case of sickness and employment injuries.

TRADE AND PAYMENT The bulk of Pakistan’s trade is with countries outside of South Asia and this reflects in part Pakistan’s specialization in products that are also exported by its neighbors, and also this low level of trade also stems from a half-century of protectionist policies and political-military tensions in the region and recent analysis commissioned by the World Bank indicates the potential for greater trade with India notably in light manufactured products (e.g., bicycle components and fans). If we see overall, we can say that exports have been increased 0.1% in past 10 months and imports have been increased 14.5% in the same period of time. Worst thing is that exchange rate of Pakistan rupee depreciated by 3.4% during July-April 2011-12.

In other sectors,Pakistan’s condition is not sound say whether it is worker’s remittances or current account deficit or foreign exchange reserves. At no place Pakistan stood in the right position.

CAPITAL MARKET Capital formation is net addition to the existing stock of capital in the economy. The lack of an advanced and vibrant capital market can lead to underutilization of financial resources. The developed capital market also provides access to foreign capital for domestic industry. Thus the capital market definitely plays a constructive role in the overall development of an economy. There mainly two criteria’s in capital market as follows: A. Pakistan Equity Markets B. Capital Market Developments 63

1) Pakistan Equity Markets The Karachi Stock Exchange (KSE) is the biggest and most liquid exchange in Pakistan with an average daily turnover of 254 million shares and market capitalization of US $ 41 billion as of the 1 st week of May, 2012. 2) Capital Market Developments The investment by foreign investors in the capital markets during the period from July, 2011 to March 2012 depicted a net outflow of US$ 176.3 million. This reflects that present bullish sentiments in the equity markets are due to restoration of the confidence of the local investors. The Pakistani Stock markets performed well during the current fiscal year as compared

64

7. OVERVIEW OF BUSINESS AND TRADE AT INTERNATIONAL LEVEL

The sixth most populous Country of the world, Pakistan has a current population of approximately 164 million, with a growth rate of 1.828% (2007 estimates). Themajority of southern Pakistan’s population lives along the Indus River; in the north, most of the people are concentrated in the cities of , Lahore, / Islamabad, and Peshawar. Karachi, the capital of the Sindh province and the largest city in Pakistan, is, by virtue of being a sea-port, the financial and commercial centre. With a population of over eleven million, Karachi is also the fifth most populous city of the World. Ninety seven percent of the Country’s population is Muslim, making Pakistan the second largest Muslim country in the world and an important member of the Organization of the Islamic Conference (OIC). Hinduism and Christianity form the leading minority religions; other religious groups include Sikhs, Parsees, and a small number of Buddhists. The constitution defines Pakistan as an Islamic nation and Islamic Shariah is the supreme . However, the freedom of religion is guaranteed by the constitution.

Pakistan is a federal republic with four provinces, capital territory (Islamabad) and territory consisting of tribal areas. Pakistan also administers and the Northern Areas, portions of the Jammu and Kashmir region. The constitution of the Islamic Republic of Pakistan of 1973 provides for Parliamentarian form of Government. The Prime Minister (elected by the National Assembly) is the head of Government and the President (collectively elected by the National Assembly, the Senate and the Provincial Assemblies) is the head of the federation. The National Assembly (also called lower house) and Senate (also called upper house) are the legislator institutions. The National Assembly has 342 members who are elected from all provinces, the capital territory and tribal areas on the basis of population. The Senate derives equal representation from all the four provinces and has a total membership of 100. Pakistan’s legal system is based on English common law, adapted to the needs of an Islamic state. High Court and Supreme Court of Pakistan are the highest forum of judiciary at provincial and national level, respectively. Additionally, the Shariah court is responsible for ensuring that the Country’s laws are as per Islamic injunctions.In 2006-2007 Pakistan's real GDP at factor cost grew by 7 % and inflation remained around 7.9 %. During that period, there was a considerable increase in the level of FDI. 65

Total exports amounted to US$17.011 billion 2006-2007, growing by about 3.4 % and crossing the $17 billion mark. Imports amounted to US$30.54 billion during the same period increasing by about 8.22%. Major exports are textiles (garments, cotton cloth, and yarn), rice, leather, sports goods, and carpets and rugs. United States of America, United Arab Emirates, , Germany and Hong Kong are the main export partners, while major import commodities are petroleum, petroleum products, machinery, chemicals, transportation equipment, edible oils, pulses, iron and steel, tea. The major import partners are United Arab Emirates, Saudi Arabia, Kuwait, United States of America and China. Karachi Stock Exchange (the Exchange) is the biggest and most liquid exchange and has been declared as the “Best Performing Stock Market of The World For the year 2002”.All exchanges have their own regulations which are largely similar. The Securities and Exchange Commission of Pakistan (Commission) grants the approval for the public offer and after such approval a company may obtain listing for its equity and/or debt securities according to the regulations of the Exchange.

66

8. PRESENT TRADE RELATIONS AND BUSINESS VOLUME OF DIFFERENT PRODUCT IN INDIA

TRADE RELATION

It is an international agreement on conditions of trade in goods and services or an agreement resulting from collective bargaining between two parties. Any contractual arrangement between states concerning their trade relations, Trade agreements may be bilateral or multilateral, that is, between two states or more than two. For most countries international trade is regulated by unilateral barriers including tariff nontariff barriers, and government prohibitions. Trade agreements aim to reduce such barriers and thus provide all parties with the benefits of increased trade.

RECIPROCITY is a necessary feature of trade agreements, since neither state will be willing to sign the agreement unless it expects to gain as much as it loses. MOST - FAVORED -NATION clause provides against the possibility that one of the parties to the current agreement will later offer lower tariffs to another country. Agreements often include clauses providing for “national treatment of nontariff restrictions,” meaning that both states promise not to duplicate the properties of tariffs with nontariff restrictions such as discriminatory regulations, selective excise taxes, QUOTA s, and special licensing requirements. General multilateral agreements are sometimes easier to reach than separate bilateral agreements, since the gains to efficient producers from worldwide tariff reductions are large enough to warrant substantial concessions. The most important modern multilateral trade agreement was the

GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT ), which reduced world tariff levels and greatly expanded world trade and Such agreements continue under the aegis of the WORLD TRADE ORGANIZATION (WTO), which replaced GATT in 1995.

INDIA PAKISTAN TRADE RELATIONS

There should be normalization of trade relations between India and Pakistan, In last one year there has been some robust developments in reducing the limitation and carry on better trading relations. Academic consent has now spill out over to the business

67

community and a majority of the businessmen on two sides of the border appear convinced that liberalization of bilateral trade would be in their common interest. Finally, the policymakers, for a variety of internal circumstances, seem to have beat their reservations and a momentum has been built up in the last several months to move the course of action forward. Pakistan and India decided to promote their trade and economic relations for the benefit of business community and consumers of the two countries. In a joint declaration following talks between the two, both Pakistan and India spoken satisfaction that the transition process for complete normalization of the trading of goods and services, including investment, has started, Pakistan and India expressed their approval at the joint and coordinated efforts that had been made to make new gates at the Attari Integrated Check post (ICP) functional for trade. They expect that new arrangements would help make more competent movement of trucks across the border and enhance the flow of trade through the land route. As a first step and perhaps the most important one India and Pakistan need to normalize trade with each other on an MFN basis. It is essential to move from a positive list approach to a negative list approach It is significant for the two countries to have a common harmonized system of codes and greater transparency. As new firms enter into India–Pakistan trading they need to be facilitated through better information exchange on commodities and quantities to be traded. Establishing Web portals toward this end would perhaps be the easiest method in terms of implementation. Information on domestic policy environments in India and Pakistan should be disseminated to traders. Such information should be made available on government Web sites. Improving information flows between the two countries will reduce the search costs for trading.

Normalization of the trade and visa speedup There has been agreement made between the member nations to strengthen the trade relations in terms of commerce and industry and textiles, suggestion too have been exchanged in terms of nuclear trade between the two nuclear armed nations. Pakistan has granted the trade status of most favored nation to India to add to trade between the two countries

68

India Pakistan manages trade relations

Pakistan understands that the liberalization of bilateral trade will not only benefit both economies but also remove barrier to regional mixture within South Asia For Pakistan the potential advantages from broader regional economic adding up seem quite significant Its economy holdup behind others But with the signing of an FTA Pakistan’s markets and producers have already familiar to cheaper imports Thus the threat of Indian products overflow Pakistani markets and move domestic industries no longer brings much substance Still there are several major risks that could yet interrupt the liberalization process they will require ongoing awareness with steps taken to take the edge off each one.

Business trade opportunities

Having a large and developed economy of India Pakistan looks ahead towards making use of the Indian market giving easy market access to Pakistani products to the Indian companiesThe Indian delegation hopes to get access to Pakistan market as both countries work towards normalized relations for better regional progress.

TRADING OF PAKISTANI PRODUCTS IN INDIA

There is a sectoral negative list of 1209 items which cannot be imported from india to Pakistan and positive list of 1075 items which can be importable from india to PakistanSome of the items which are allowed to be traded by pakistan in india are as follows

Table: 2 trading of Pakistan with india

Natural calcium phosphate. Natural barium sulphate (barytes). Natural barium carbonate (witherite). Crude or in irregular pieces, including crushed pumice (bimskies). Other. (Pumic sto ne). Flint. Macadam of slag, dress or similar industrial waste. Tarred macadam. Other (Natural magnesium carbonate (magnesite); fused magnesia; dead -burned (sintered) magnesia, whether or not containing small quantities of other oxides added before sintering other magnesium Oxide whether or not pure). 69

Amber. Strontianite other than strontium oxide. Fuel gas. Vegetable waxes Cocoa shells, husks, skins and waste. Of sago. Extracts essences or concentrates of tea or mate and preparation b ased on such extracts, essences. Concentrated extracts for beverages. Soyabean meal. Metal ores including metallic concentrates (other than precious metals) roasted iron pyrites, excluding pigment ores. Mineral products. Natural graphite in pow der or in flakes. Clay and -alusite Kyanite etc., excluding expanded clay of heading NO. 68.06. Natural calcium phosphate. Natural barium sulphate (barytes). Natural barium carbonate (witherite). Crude or in irregular pieces, including crushed pumice (bimskies). Other. (Pumic stone). Flint. Macadam of slag, dress or similar industrial waste. Tarred macadam. Other (Natural magnesium carbonate (magnesite); fused magnesia; dead -burned (sintered) magnesia, whether or not containing small quantities of other oxides added before sintering other magnesium Oxide whether or not pure). Amber. Strontianite other than strontium oxide. Fuel gas. Gas in cylinders. Bituman and asphalt, natural; bituminous or oil shale and tar sands; asphaltites and asphaltic rocks.. Electrical energy. As the list of the products are wide some of the items have been specified in accordance to the list the detail list of the products have been mentioned in page no 36 of the main project report.

Trade complimentary index

The two countries need to assess their trade complimentary. The T.C.I measures how the export pattern of one country is getting matched to the import pattern of the other country. The graph shows in 2003 India’s TCI with Pakistan was 50% while Pakistan’s TCI with India was only 14%, India to Pakistan TCI was highest in 2007 and Pakistan

70

TCI to India was highest in 2010.

Level of trade between india and pakistan: The level of trade between India and Pakistan has averaged less than $ 1 billion in the past decade Pakistan’s share in India’s trade averaged less than one per cent Not only is the overall trade level low but also much of the official trading takes place in an exceptionally narrow band of commodities

GOVERNMENT INTERVENTIONS OF TRADE BETWEEN PAKISTAN AND INDIA

Intervention- An initiative taken by the government of respective country

Economic interventionism (sometimes state interventionism ) is an economic position favoring interventions in the market for the public interest on behalf of the government Types of intervention

Economic interventions common in contemporary market-based economies targeted taxes, targeted tax credits, minimum wage legislation, union shop rules, contracting preferences direct subsidies to certain classes of producers and price supports with price caps and production quotas import quotas and tariffs, Demand management and Keynesian economics (helicopter money) are sometimes cited as mild forms of economic planning designed to overcome recurring instability inherent in market economies or to make market economies function properly in a desired fashion.

Government intervention on trade of Pakistan & India

Pakistani rice exporters have expressed serious reservations over government plans to intervene in rice trade and they caution that government plans to help farmers could boomerang in the form of reduced exports and loss of foreign exchange. The Rice Exporters Association of Pakistan said that instead of helping farmers any intervention by the Trading Corporation of Pakistan will harm rice exports leading to huge losses to foreign exchange earnings. They have serious reservations over the demands of buying rice to stabilize the paddy rice prices. The association has drawn the government’s interest to the competition rice exporters in Pakistan face from those in India due to the 71

devaluation of Indian Rupee versus the dollar India lifting a four-year ban on non- basmati rice exports targeting 2 million tons of non-basmati rice exports and the 20 to 30% decrease in world basmati and non-basmati rice export prices. If the government proceeds with any intervention it will be contrary to government's pledge to the rice exporters where Reap has achieved export targets of over $2 billion now on a consistent basis.

TRADE BARRIERS

• MFN Status to Pakistan but Low Levels of Trade from Pakistan to India Persist • Travel Restrictions • Inadequate Infrastructure • Extreme Red Tape • nonstop Political Opposition • Customs Clearances • HS Coding • Invisible Barriers to Trade: • Nontariff Barriers • Visas • Communication • Investment • Lack of information • Lack of Adequate Banking Relations • Application of standards • Visa Restrictions • Communication Problems • Trade Logistics

PRESENT SENERIO OF INDIA PAKISTAN TRADE

India’s advancing economy has turned it into the 2 nd economic giant (after China) in the South Asian region Pakistan’s economic growth on the contrary is becoming Increasingly stagnant Pakistan clearly does not enjoy an alternative and it must move forward vigorously to secure economic collaborations with India and It must be realized that trade is the most significant factor which governs the relations between any two countriesTrade between Pakistan and India amounts to US $ 2.7 Billion per Year till 9 N0V. 2012As of 2011 $ 1.47 Billion/Year of this trade is in favor of India In 1995 when 72

India granted MFN (Most Favored Nation) Status to Pakistan the trade-off between Pakistan and India was US $ 53 Million/Year in favor of India this rose to US $ 168 Million/Year in 1996 and has continued to increas Although Pakistan and India signed the Customs Cooperation Agreement the Mutual Recognition Agreement and the ‘Redressal of Grievances Agreement in February 2012 India continues to impose strict safeguard restrictions and quality criteria on its imports which makes it difficult for Pakistani products to have greater access to the Indian market Agriculture and Textile products which are exported from Pakistan to India are subject to Composite Tariff This means that Pakistan’s products are charged with a special fee besides the regular ad- valorem tax. Pakistan’s exports to India largely comprise of Agriculture Textile and Garment Products. These 3 sectors are subject to the highest tariff rates in India. Cotton is charged at Rs. 108/kilogram Tariff on the Dairy Products is from 40-60% Garments are charged at Rs. 85/piece Agriculture Items at a Tariff of 35%. These rates are generally considered to be unfairly high. Pakistani exporters complain that India continues to exercise country-specific NonTariff Import Barriers in Pakistan’s case India argues that these NTBs (Non-Tariff Barriers) are the same for all of its trading partners Pakistan itself does not have a standardized import regime Indian exporters therefore have to deal with fewer restrictions of product quality and specifications In August 2012 India lifted its ban on Pakistani businesspersons to invest in India

SUGESSTIONS TO IMPROVE THE INDO PAK TRADE

Trade on MFN Basis • As a first step, and perhaps the most important one, India and Pakistan need to normalize trade with each other on an MFN basis. It is essential to move from a positive list approach to a negative list approach. It is important for the two countries t o h a v e a common Harmonized System of codes, and greater transparency.

Information Exchange • As new firms enter into Indo-Pak trading, trade needs to be facilitated through better information exchange on commodities and quantities to be traded. Establishing web portals towards this end would perhaps be the easiest in terms of implementation.

73

• Information on each other’s policy environments should be disseminated to traders. Such information should be made available on Government websites. Improving information flows between the two countries will reduce the search costs for trading.

Transport Routes

• New rail and road links e.g. the Khokrapar-Munabao link and the Srinigar- Muzaffarabad link (for goods transportation) should be opened.

Transport Bottlenecks • Abandoning the positive list approach would allow goods to move freely on the direct routes thereby lowering transaction costs. • The rail protocol should be amended such that restriction on wagon balancing is removed and wagon availability is improved. • Measure/As such as simplifying border procedures and introduction of EDI facilities should be introduced at the land borders. • The shipping protocol should be amended so that third country and non- national flagships can ply on the Mumbai-Dubai sea route. This would help in lowering shipping costs.

Banking • As there is evidence of anonymous transacting between trading partners, payments through formal channels assume a greater role. Currently, the payments system is formalized through the Asian Clearing Union which is inefficient as payments are often delayed. The two countries need to have an institutional arrangement so that the state, private and foreign banks can participate freely in banking transactions. • There needs to be greater transparency to address problems related to confirmation of L/Cs and to payments. Non-tariff Barriers • A more rigorous system on application of TBT and SPS Standards by Pakistan needs to be put in place. India would need to address barriers

74

related to security considerations so that transaction costs of importing from Pakistan are lowered. Visas • Visa restrictions should be eased by eliminating city specific visas prior to entry and police reporting on arrival.

Communication • Uninterrupted telecommunication links between the two countries would facilitate trade between the two countries Investment • Currently there are no Indo-Pak joint ventures. As several Indian companies are showing an interest in having joint ventures in Pakistan, it is important to understand the nature of such investment and provide timely facilitation. • Governments of India and Pakistan should set up an institutional mechanism that would guarantee each other’s investments. The two countries should work together to enhance and facilitate trade and investment. The suggested roadmap should serve as an important tool for policymakers of the two countries.

• There should be no quantitative restriction in the guise of security reasons (e.g. restriction on Molasses) • Pakistan is exporting food and agri. products all over the world, India should accept SPS certificate issued by Pakistani authorities • There cannot be a single bullet solution to deal with the most complicated issues between the two countries. • Businessmen should be allowed visas without restrictions on number of cities • Pakistan should ask India to compensate for the benefits that it gets from Afghan-transit facility by allowing e.g. transit facility to Pakistan for via Bombay • Strengthen institutions dealing with trade defense and related issues (e.g. NTC and CBR) • Expedite the process of opening up of Bank branches • Insist on opening up of land routes for trade

75

9. OVERVIEW OF ECOLOGICAL (NATURAL ENVIRONMENT) ENVIRONMENT OF PAKISTAN An overall view of Ecological Environment of Pakistan. It shows the international time of Pakistan. In this project we are study the economy of the Pakistan. Its currency, constitution and legal system, environmental issues, pollution, forests of Pakistan, management of industry

What is Ecology?

Ecology is the study of the distribution and abundance of organisms and their environment, and structure and function of ecosystems.

Why is Ecology Important?

The purpose of ecology is to provide knowledge about the way the world works and provide evidence on the interdependence between the natural world and people. A better understanding of ecological systems will allow society to predict the consequences of human activity on the environment.

Current issues : Water pollution from raw sewage, industrial wastes, and agricultural runoff; limited natural fresh water resources; a majority of the population does not have access to potable water; deforestation; soil erosion; desertification. In 1992 Pakistan's National Conservation Strategy Report attempted to redress the previous inattention to the nation's mounting environmental problem. Pakistan is a land of diverse ecologies. In the north there are high mountains interspersed with valleys. Southwards there is the Pothwar Plateau followed by fertile Indus Plain, which is 1287 km long and 322 km wide, with a 1.0 percent gradient from north to south. The western part mainly comprises Baluchistan Plateau, bordered by high to low mountains on the north-east. There are two sandy deserts in the Indus Basin; the Thal desert in the upper part and the The desert in the south-east. Marshy areas occur in the Ran of Kutch, along the southern most border of the country.

76

LOCATION

Home to one of the world’s cradles of civilization, Pakistan shares its eastern border with India and north-eastern with China, with Afghanistan running along the northwest and in the southwest. Along the southern boundary of Pakistan runs the with 1,064 kilometres of coastline. Roughly twice the size of California, Pakistan covers an area of approximately 803,940 square kilometres.

POPULATION DEMOGRAPHICS

The sixth most populous Country of the world, Pakistan has a current population of approximately 164 million, with a growth rate of 1.828% (2007 estimates). The majority of southern Pakistan’s population lives along the Indus River; in the north, most of the people are concentrated in the cities of Faisalabad, Lahore, Rawalpindi/ Islamabad, and Peshawar. Karachi, the capital of the Sindh province and the largest city in Pakistan, is, by virtue of being a sea-port, the financial and commercial centre. With a population of over eleven million, Karachi is also the fifth most populous city of the World.

INTERNATIONAL TIME

International time of Pakistan is GMT + 5.

CLIMATE

Pakistan has a continental type of climate, characterized by extreme variations of temperature. During the winter season, temperature falls to -5 in the northern areas of Pakistan. Temperatures on the Baluchistan plateau are somewhat higher; maximum temperature goes to 52C mainly in the Sibbi (located in the Baluchistan Province). Along the coastal strip the climate is tempered by sea breezes. In rest of the country temperatures rise steeply in the summer and hot winds blow across the plains during day. Daily variation in temperature may be as much as 11C to 17C. Winters are cold with minimum mean temperature of about 4C in January.

77

LANGUAGE

The national language of Pakistan is Urdu, but comparatively few people use it as their mother tongue. Punjabi is the most widely spoken language, followed by Sindhi, Pashto, Saraiki, and Baluchi respectively. English is extensively used by educated people and is the official language of Pakistan.

CURRENCY

The currency of Pakistan is Rupee and the acronym used for the currency is PKR.

THE CONSTITUTION AND LEGAL SYSTEM

Pakistan is a federal republic with four provinces, capital territory (Islamabad) and territory consisting of tribal areas. Pakistan also administers Azad Kashmir and the Northern Areas, portions of the Jammu and Kashmir region.

ENVIRONMENTAL ISSUES

Current issues :-

Water pollution from raw dirt, industrial wastes, and agricultural runoff; limited natural fresh water resources; a majority of the population does not have access to potable water; deforestation; soil erosion; desertification

Pollution

The National Conservation Strategy Report has documented how solid and liquid excreta are the major source of water pollution in the country and the cause of widespread waterborne dieses. Because only just over half of urban residents have access to sanitation, the remaining urban excreta are deposited on roadsides, into waterways, or incorporated into solid waste. Additionally, only three major sewage treatment plants exist in the country; two of them operate intermittently. Much of the untreated sewage goes into irrigation systems, where the wastewater is reused, and into streams and rivers, which become sewage carriers at low-flow periods. 78

Consequently, the vegetables grown from such wastewater have serious bacteriological contamination . Gastroenteritis, widely considered in medical circles to be the leading cause of death in Pakistan, is transmitted through waterborne pollutants.Motor cycles and scooters are major polluters in the cities.

FORESTS OF PAKISTAN The forests of Pakistan reflect great physiographic, climatic and contrasts in the country. Pakistan is an oblong stretch of land between the Arabian sea and Karakoram mountains, lying diagonally between 24° N and 37° N latitudes and 61° E and 75° E longitudes, and covering an area of 87.98 million hectares. The country has a continuous massive mountainous tract in the north, the west and south-west and a large fertile plain, the Indus plain. The northern mountain system, comprising the Karakoram, the great Himalayas, and -Kush, has enormous mass of snow and glaciers and 100 peaks of over 5,400 m. in elevation. K-2 (8,563 m.) is the second highest peak in the world. The mountain system occupies one third of this part of the country .

TYPES OF FOREST IN PAKISTAN 1) Littoral and Swamp forests: 2) Tropical dry deciduous forests: 3) Tropical thorn forests 4) Sub-tropical broad-leaved evergreen forests 5) Sub-tropical pine forests 6) Himalayan moist temperate forests 7) Himalayan dry temperate forests: 8) Sub-alpine forests: 9) Alpine scrub:

Present situation of forest of Pakistan

Forest area of Pakistan reported in different official documents has varied over the years with administrative and political changes in country as well as with changes in methods of reporting data. Different government departments have been publishing different forest statistics since 1947 when Pakistan was created as an independent country. Most recently,data of land use including forest area have been reported by 79

Forestry Sector Master Plan Project in 1993, with the help of Landsat Satellite Thematic Mapper Images at a scale of 1:250,000 covering the whole of Pakistan. All the forested area in the country does not have dense tree cover. The FSMP Project gives the following estimates of density of forest/tree area from interpretation of satellite imagery for coniferous forests (coniferous/scrub for Northern Areas), scrub forests, riverain forests, for Azad Jammu and Kashmir (AJK), Balochistan and NWFP (and not Punjab and Sindh), forests and irrigated plantations. Government records for riverain net forest areas in the Punjab and Sindh were also used by the FSMP.

SUPPLY AND DEMAND OF WOOD

Timber Consumption

Fuel wood Consumption

Fishing in Pakistan

Fishery as well as plays a vital role in the economy of Pakistan. Pakistan has total coastline of 1,120 km covering Mekran (Balochistan) as well as the coast of Karachi (Sindh) and a total fishing area of approximately 300,270 sq. km. These areas are highly rich in marine life with a vast variety of species. There are still marine resources remaining to be exploited and developed.

Management of Fishing Industry

Fishing industry is the managed by the Fisheries Development Commissioner (FDC) under the Ministry of Food, Agriculture and Livestock (MFAL) of Government of Pakistan. The organizations that are part of different projects or research and development for industry, fisheries and are:-

• Food and Agriculture Organization (FAO) – Fisheries Department • The Pakistan Agricultural Research Council (PARC) is carrying out the research of the industry. • Aquaculture Technologies Pakistan • Many universities are also involved for research and development of the industry.

80

Coastal Areas

The Sindh coastal region is located in the southeastern part of the country between the Indus border along the Sir Creek on the east, and the Hub River along the Balochistan coast on the west. This coastal region is about 350 km long and can be divided into the Indus.

Water sources of Pakistan

1) Indus valley, cradle of ancient civilization 2) Catchments of Indus river system

Historical perspective

We have entered into 21st century with world's largest and unified irrigation system that consists of three major reservoirs, 19 barrages like Ferozepur, Sulemanki, Islam, Balloki, Marala, Trimmu, Panjnad, Kalabagh, , Kotri, Taunsa, Guddu, Chashma, Mailsi, Balloki, Sidhnai, Rasul, Qadirabad, and Maral; 12 link canals 45 irrigation canals; and over 107,000 water courses and millions of farm channels & field ditches. The total length of main canal system is estimated about 585000 Kilometer and that of watercourses & field channels exceeds 1.62 million Kilometers.

Surface water resources

Irrigated agriculture was, still is, and will remain in future the backbone of Pakistan's economy. Nature has blessed Pakistan with abundant surface and subsurface water resources. These resources had been exploited and utilized for agricultural, domestic, and industrial purposes in the past and will continue to be explored in future. The river Indus and its tributaries provide the surface water. At the time of independence, we had about 67 MAF water available for diversion, this amount increased to about 85 MAF by the year 1960. At this juncture, the right of three eastern rivers (Beas, Sutlej, and Ravi) was given to India under Irrigation Water Treaty 1960, during this period, Indus Basin Project (IBP) was implemented with international assistance of the World Bank.

81

Ground water resources

Annual recharge to ground water system of this Indus plain is estimated around 55 MAF, out of which about 48 MAF is within the commands of Indus basin irrigation system . Presently, 39 MAF is being extracted annually. Ground water is also found in some rain-fed lands, and inter-mountain valleys at depths varying from 100 to 200 ft. During 1950s, large area in the Indus basin became waterlogged and soil salinity increased adversely affecting the agricultural productivity.

Soon after the initiation of the SCARP program

Large-scale development of ground water was started by the private tube wells. According to latest reports issued by the Government of Pakistan, the number of private tube wells has increased from 27000 to over 400000 during period between 1964 and 1995. All of the 400000 private tube wells have been installed in fresh ground water zones and are being used for irrigation purposes. About 80 per cent of these tube wells are located in Punjab and supply around 40 per cent of total irrigation in the province.

Future of water resources and needs

One of the key issues to Pakistan is the growing population pressure, which is responsible for driving its water resource development. It has the world's fastest growing population that has surpassed the 140 million mark by now and is still increasing at an alarming rate of around 2.8%, which needs to be checked, whereas the growth rate in agriculture sector remains somehow lower than the demand due to limiting irrigation water. To keep up the pace of agricultural growth comparable to population growth, we must bring additional lands under cultivation.

• Development potential and future strategies

• Improve surface storage capacity • Conjunctive use of ground water • Increase the efficiency of existing system • Water distribution • Adoption of water conservation techniques Population of the Pakistan

82

Pakistan's population was officially estimated at 131.6 million in January 1996, comprising 47.5% women and 52.5% men. The population growth rate remains as high as 2.8% per annum. Based on a 1993 survey, 46.1% of the population is under 15 years of age and 4.1% over 65 (EIU, 1997). According to the 1981 census, 72% of the population live in rural areas. A 90% of the households are headed by men and most female-headed households belong to the poor strata of the society (ESCAP, 1997). The population density is 106 persons per square km (EIU, 1997). The total fertility rate was 5.4% in 1990-91.

Agriculture of the Pakistan Rural use forests as a source of items essential for survival of their households. Fetching water and collecting fuel wood for cooking and fodder for domestic animals come in the daily routine work of rural Pakistani women. Grazing animals is a very important component of the daily work life of rural women (PARC, 1988).Livestock Environment and climate Women of Pakistan play an important role in environmental conservation. They take care of farmyard manure collection and its application, which has important consequences in soil fertility management. Women posses knowledge of herbs for medicine for both general and reproductive health, food and fodder. They also know the location of pastures and water sources, etc. AGRO-ECOLOGICAL ZONES OF PAKISTAN 1. Physiographic and Climatic Characteristics 2. Soil and land use 3. 2-Southern irrigated plain 4. Physiographic and Climatic Characteristics

83

10. OVERVIEW OF TECHNOLOGICAL ENVIRONMENT OF PAKISTAN

With about 160 million inhabitants, Pakistan is the second largest Islamic nation after Indonesia. The country has considerable potential to develop into a stable, moderate and democratic state, but has not yet fully realised this potential. Although some progress on democratisation has been made by installing an elected parliament in October 2002, army influence is still strong and strengthening democratic institutions and processes remains an important task. Other political challenges include eliminating religious extremism and sectarian violence, addressing regional imbalances and improving the human rights situation. Continuation of the positive trend in relations with India and Afghanistan would greatly contribute to enhanced regional stability. Since 1999 Pakistan has been successfully implementing a macroeconomic reform programme, resulting in some of the best economic indicators in its history. GDP growth registered 8.4% in 2004-05. This was facilitated by good export performance, high remittances and external financial support. However, the reforms have not yet had a major impact on reducing poverty , with one third of Pakistan’s population still classified as poor. In spite of large contributions of official development aid, Pakistan’s human development indicators worsened during the 1990s and social inequalities deepened. The 2004 UNDP Human Development Index ranks Pakistan last in South Asia. If the Millennium Development Goals are to be met a drastic change of approach towards social development will be required. The October 2005 earthquake caused widespread destruction but, according to the IMF, should have no major impact on Pakistan’s economic prospects. Pakistan is facing major environmental problems , including growing water shortages due to demographic pressure, deforestation and degradation of rangelands. There are fears that Pakistan could enter a downward spiral of environmental degradation and poverty. Poor governance remains a key issue and has had a negative impact on social service delivery. While the devolution process has strengthened local political institutions, more needs to be done to address management and capacity issues at local level.

84

In this report, we analyzed about the various technologies of Pakistan. And how this technological environment affecting the growth of the nation. We analyzed various technology like banking technology , medical technology , chemical technology , agriculture technology , automobile technology , textile technology , dairy technology , telecommunication technology , infrastructure technology , mobile technology , internet technology etc.The evolution of electronic banking started from the use of automatic teller machines (ATM) and has passed through telephone banking, direct bill payment, electronic fund transfer and the revolutionary online banking. Computer is introduced in Pakistan though in 1960s but its use was restricted to scientific purpose and to some extent for processing of data relating to traditional accounting, billing, payroll, and inventory control systems in very large organizations. The massive computerization in the country started after 1980s when most of the companies started using computers for their business growth. They started using computer for other functional areas.The internet growth rate in Pakistan is 30%, whereas IT growth rate is estimated at 40% p.a.. Today more than 2.4 millions people of Pakistan can access Internet and other information networks of the entire world. Computer is introduced in Pakistan though in 1960s but its use was restricted to scientific purpose and to some extent for processing of data relating to traditional accounting, billing, payroll, and inventory control systems in very large organizations. The massive computerization in the country started after 1980s when most of the companies started using computers for their business growth. They started using computer for other functional areas. Business demands for data communications began to grow in the early 1970s. At that time the fastest rate at which data could be transmitted was 1200 bits per second Pakistan Telecom Authority (PTA) has shown concerted efforts to make this sector fastest growing in the region. While turning liberation into reality, PTA was faced with a number of challenges. The Authority however was fully prepared to successfully go through this transitional phase. The authority took diversified steps to enhance competition after the implementation of deregulation polices by providing all facilities and conduce environment to private entrance. Keeping in view the huge

85

Untapped potential that this sector offers for growth and encouraged by a vibrant growth and enormous development over the last few years, PTA proposed to the Government to award “industry” status to the telecom sector. The government very positively responded to PTA’s proposals and the sector was declared as an “Industry” in 2005 with the aims to bring certain benefits allied with this status, such as borrowing of foreign companies from local market, no minimum investment requirement for manufacturing, subsidized utilities etc. In the banking industry inter-branch and inter- bank transactions take place electronically. Millions of account holders and thousands of internal users can access and transfer electronic information and make online transactions. Modern technology like IT has completely changed the channels of delivering financial services. The financial services, particularly banking have been the major users of IT and communication technologies. Many successful financial institutions have clearly demonstrated that information systems and technologies can be a powerful competitive weapon that can be used to capture market share, improve customer service, reduce operating costs, and create new products and services. Banks increasingly have turned toward ATM and other computer technology like prepaid cards, loyalty cards, debit cards and even chip cards, to reduce the high costs associated with maintaining traditional “brick and morter” branches staffed by tellers. ATM transactions, along with transactions made by telephone, have replaced transactions formerly made with human teller. Computer Technology is used by commercial banks to reduce costs and survive the competitions. Consumer acceptance of ATM’s and touchtone telephones to make financial transactions has allowed banks to reduce the number of costly transactions made with human teller. Subsequently, banks have reduced the employment of tellers and have converted many of the remaining teller positions into part time jobs. It is common belief among development economists that industrialization is not the only recipe to achieve growth and poverty alleviation; it is in fact intertwined with agricultural growth which involves populations that usually have low education and income levels. Agriculture has been referred to as the backbone of Pakistan’s economy; it is the single largest sector employing almost half of the country’s total workforce and contributing one-fourth to the GDP.

86

There are three major factors affecting agricultural production in Pakistan:

• The total land area of Pakistan is nearly 197 million acres, while the population growth rate was 3.1 per cent annually reported by Alam, 1999, more recently the World Bank Development Indicators (2011) report growth rates at 2.1% in 2009. With a growing population, there is growing pressure on cultivated land. As a result, Pakistan’s current and potential agricultural land is under enormous pressure to grow more from existing land areas.

• It has been estimated that throughout Pakistan, each day approximately 500 acres of farmland is taken out of agriculture by the expansion of settlements, roads, factories and other non agricultural activities. It is predicted that if this trend continues in Pakistan, approximately a million acres or more of arable land would be taken out of agriculture.

• The third factor is the fact that the size of land holdings per family is getting smaller as the land is divided in accordance with inheritance law among the children. The land which used to feed only one family has now been divided among many families and is unable to meet their requirements. Pakistan’s agriculture economy is characterized by an extremely skewed ownership of productive assets, particularly land and water. Of the 6.6 million farm households in Pakistan, 86% are classified as small farmers with the 14% of large farmers having the best access to land and water.

AGRICULTURAL RESEARCH:-

 Resource conservation technologies  Crop harvesting and threshing technologies  Crop drying and processing technologies  Water management/saving technologies

87

Mobile telecommunications industry has grown exponentially over the last five decades. In a country, mobile sector has become a critical indicator of economic development. Mobile technology provides a unique opportunity for the developing countries where telephone diffusion has been very low. Specifically, due to its comparatively low investment requirements, mobile telecommunications allows these countries to take advantage of technology innovations to provide communications services in the areas with limited or no telephone network. With over 2.3 billion subscribers, the user base is still increasing at the rate of about 1 million new subscribers per day. The mobile market has been innovating continuously. By mobile telecommunications market innovation being the research subject of this paper, we means the dynamics in adoption of new technologies by the operators, the availability of new services to the users, and the participation of different players in the with varied roles. The Pakistani automobile industry is a crucial part of our growing economy, the industry started in Pakistan in when the first automobile plant was set up in May 1949 by General Motor & Sales Co. It was set upon an experimental basis, however grew into an assembly plant for Bedford Truck, and Vauxhall cars. Seeing such progress, three major auto manufacturers from the US collaborated with Pakistani business men to set up;Ali Automobiles to manufacture Ford Products in 1955, Haroon Industries to assemble Chrysler Dodge cars in1956, Khandawalla Industries to assemble American Motor Products in 1962, and Mack Trucks Plant in 1963.The absence of technological knowledge, and basic professionalism, led to the demise of these organizations. However towards the end of the seventies all automobile assembly in Pakistan stopped, until 1983 when Pak Suzuki started manufacturing their vehicles in Pakistan. Further Toyota Indus Motors was set up in 1990, followed by Honda. Today it has four major automobile manufacturing industries, these include, Toyota Indus Motors, Pakistan Suzuki, Honda Atlas, and Divan Farooq Ltd. The most recognized are Toyota, Honda, and Suzuki; producing the majority of the light weight vehicles.

88

Pakistan is the 8th largest exporter of textile products in Asia. This sector contributes 9.5%12 to the GDP and provides employment to about 15 million people i-e 30% of the 49 million work force of the country. Pakistan’s share is less than one percent in the volume of total world textile trade of about US$18 trillion per annum. Pakistan is the 4th largest producer of cotton (~12mln bales/yr), with the third largest spinning capacity in Asia after China and India, and contributes 5% to the global spinning capacity. Since the founding of Pakistan, the development of the Manufacturing Sector has been given the highest priority with major stress on Agro-Based Industries. For Pakistan which was one of the leading producers of cotton in the world, the development of a Textile Industry making full use of its abundant resources of cotton has been a priority area towards industrialization. At present, there are 1,221 ginning units, 442 spinning units, 124 large spinning units and 425 small units which produce textile products. Despite these troubles the textile industry total export is around 10.2 billion US dollars. The textile industry contributes approximately 9.5 percent of the country’s GDP and continues to be the mainstay of Pakistan’s exports comprising ~52% of total exports and also represents the principal employment-generating avenue in the organized and large scale industrial segmentAny development in the industrial sectors greatly contributes to the Gross Domestic Product of country. Currently, Textile sector alone contributes 9.5% to the GDP. Development of industrial sector means more investment, employment and production and hence, higher contribution towards GDP.

The dairy sector in Pakistan plays a significant role in the national economy and its value is more than that of the wheat and cotton sectors combined (FAO, 2006a). Estimated annual milk production in 2007/2008 was approximately 42.17 million tonnes, making Pakistan one of the world’s top milk producers (FAOSTAT, 2010). Some 95 percent of all milk is produced from small-scale rural and peri-urban holdings with two to three milking animals. CHEMICAL INDUSTRY in Pakistan is widespread, in organized & unorganized sector. It has approximation of investment in chemical sectors between Rs.550 to 600 billion. The chemical related imports constitute about 17 per cent of the total import bill. 89

Pakistan has a well organized system for imports and exports of chemical materials which are then converted into more than 70,000 various products, for industry as well as the goods of consumers that people depend on in their daily life. Unfortunately the imports are much higher than the exports. Pakistan needs to enhance its chemical exports which would really help in the growth of Pakistan’s economy. If not then it must not rely on the imports and must adopt the policy of self reliance on its own resources.

The Primary chemical industries are refineries, petrochemicals, natural gas, metallurgical and mineral based projects. They also provide feedstock for the secondary chemical industry. The Secondary chemical industries are based on feedstock either derived from Primary industries or other alternative sources of raw material like coal, limestone, gypsum, rock salt, silica, and sulphur. The principal objective of Secondary sector industries is to maintain connectivity between products and materials produced by the Primary industries and are of practical use for the national economy. The chemical industry comprises of companies that produce industrial chemicals which are important for the economy, as it converts raw material into more than 70,000 different products.Consumer products include soap, detergents, and cosmetics are only 10 per cent of the chemical market. Chemical industry in Pakistan is widespread. The chemical imports constitute about 17 per cent of the total import bill. Pakistan has made considerable progress in basic inorganic chemicals like soda ash, caustic soda, sulphuric acid, and chlorine and has acquired sufficient production capacity of these chemicals to cater for the needs of the local industry, while surplus is being exported.

90

FINDINGS:

• Pakistan is facing major environmental problems, including growing water shortages due to demographic pressure, deforestation and degradation of rangelands. • The fundamental shift towards the involvement of the customer in the financial service provision with the help of technology especially internet has helped in reduce costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere with access to an internet connection. • The “digital divide” is merely the latest demonstration of the socio-economic landscape of Pakistan. In Pakistan access to digital media and ICT are provided by mean of dial up network which is used to connect with internet. There is only one network in country who access to dial up telephone service i.e. Pakistan Tele Communication Authority (PTCL). • 80 % of the customers are not willing for online investment because of lack of trust on technology as well as lack of computer knowledge. Mostly military officials and business man (Almost 60%) use bank website for online payments. • The Government of Pakistan is taking very significant steps to develop IT culture in Pakistan and lots of incentives have been given to software houses to start software business. • More than 2.4 million people of Pakistan can access Internet and other information networks of the entire world. • The IT infrastructure covers most part of the country by using fiber optic channels, satellite systems and digital switches to create a strong, permanent and reliable IT infrastructure. This infrastructure will support private players in IT and Internet area. • Pakistan is the 8th largest exporter of textile products in Asia. This sector contributes 9.5%12 to the GDP and provides employment to about 15 million people i.e 30% of the 49 million work force of the country. • Pakistan is the sixth most populous country in the world, with an estimated population growth rate of more than 2 percent per annum.

91

CONCLUSION:

As a Part of study for Student of management, a research on Specific Global Country research, for that propose, we have made above Report. In order to above research we found that, IT related fair or conducting seminar can create maximum awareness and it can increase the number of enquiries. Actually in the research part of Global focus on Specific technological environmental situation and their overall increase the technological changing continue going on now a days in Pakistan. Mostly this research has to based on the Study for the various technological environment how much it increase before some years. In short gradually, technological environment accepted by following sector. Like, Agriculture sector, Diary sector, Chemical industry, and educational sector, etc. accepting now a days major technological environment Pakistan.

92

EXECUTIVE SUMMARY

GLOBAL / COUNTRY STUDY REPORT (Subject Code: 2830003) ON “PAKISTAN WITH RESPECT TO LEATHER INDUSTRY”

SUBMITTED TO MBA-732: SEMESTER- IV

LDRP-INSTITUTE OF TECHNOLOGY AND RESEARCH, GANDHINAGAR.

[In partial Fulfillment of the Requirement of the award for the degree of Master of Business Administration (MBA)] By Gujarat Technological University, Ahmedabad Year: 2013

93

CONTENT PART-2: MBA-SEM-IV SR. EXECUTIVE SUMMARY PAGE NO NO 1 Introduction of the selected Company /Industry / Sector and its role in the economy of specified country. 2 Structure, Functions and Business Activities of selected Industry / Sector /Company 3 Comparative Position of selected Industry / Sector / Specific Company /Product with India and Gujarat 4 five forces analysis Conclusions and Suggestions 5 Policies and Norms of selected country for selected Industry/company for import / export including licensing / permission, taxation etc 6 Policies and Norms of India for Import or export to the selected country including licensing / permission, taxation etc 7 Present Trade barriers for import / Export of selected goods(if any) 8 Potential for import / export in India / Gujarat Market 9 Present Position and Trend of Business (import / export) with India / Gujarat during last 3 to 5 years 10 Business Opportunities and threats analysis for conducting business in future

94

1. Introduction of the Selected Company /Industry / Sector and its role in the economy of specified country.

Textile is the largest export earning industry of Pakistan. The second largest industry in regard to exports is the Leather Industry. Contributing more than $800 million in 2009 to the foreign exchange in Pakistan, this industry has the potential of delivering more and providing a large number of jobs by diversifying product range and improving quality. The leather industry in Pakistan is as old as the history of the country. During the colonial era just a few number of tanneries were working in large cities such as Karachi, Lahore, and New Delhi etc. Out of the seven major exports of Pakistan, Leather is one of the major contributors. Although the industry started it journey way back in the 1947 since then it has moved from exporting raw hides and skins to more value added products. Leather industry’s core products in Pakistan are leather garments, gloves, tanned leather and footwear. Pakistan Leather Industry has the production capacity of more than 100 million square meters and against the production capacity it is producing only 60 million square meters. More than 450 units of leather garment manufacturers in Pakistan are producing approximately 5 million pieces against the production capacity of exceeding 7.5 million pieces. The industry has been facing some challenges which have been slowing down the production process. The main issue is the energy crisis which is endured by all industries in Pakistan. Environmental challenges are faced by the leather industry all over the world. Wastewater, solid waste and air emissions are the main wastes produced during the tanning process. Similarly a key sector in leather industry is the leather footwear industry which is capable of producing 200 million pairs annually and its current production is just 100 million pairs. Pakistan’s share in the global skin and hides production is around 7% annually which can be doubled with just the right amount of time and effort. One can assess that these statistics show the industry’s capabilities which are highly under-utilized. Good quality leather is exported and most of the time is not available for high value finished goods. Lack of proper training for finished-goods producing labor is the main reason that good quality and high value raw material is exported. The leather industry can easily be transformed into a 95

major contributing sector for foreign exchange by focusing on the key production lines like footwear industry, introduction of technology and cutting down production costs which can increase Pakistan’s share in the global hides and skins production as the demand of leather products is increasing each year. PAKISTAN is considered to be the hub of producing high quality Leather and Leather Products, and there are about 800 Tanneries in the country actively engaged in producing best quality finished leather of Cow, Buffalo, and Sheep & Goat skins. Leather manufacturers & exporters are determined to increase export of quality finished leather and leather products. And the industry is playing their positive role in invigorating WTO regime with quality consciousness and full sense of responsibilities to uphold the impeccable image of Leather Industry of Pakistan. Comparative advantage is the term used to describe the tendency for countries to export those commodities that they are relatively adroit at producing, vis-à-vis the rest of the world. In other words, if a country can produce a good at a lower relative cost than other countries, then with international trade, that country should devote more of its scare resources to the production of that good Out of the seven major exports of Pakistan, Leather is one of the major contributors. Although the industry started it journey way back in the 1947 since then it has moved from exporting raw hides and skins to more value added products. n 1990 the leather sector jumped to become the second largest foreign exchange earner for the country by contributing 10.41 percent toward the total export revenue. The increase in tanned leather exports (not even including leather garments) from 1990-1995 alone is astounding. The leather products industry increased its amount of exports from $271 million USD in the 1990-1991 fiscal years to $349 million USD in 1994-95! Pakistan's leather industry is one of the major foreign exchange earners for the country. Almost 80% of production is exported and 90% of these in the finished form. There are 725 tanneries in Karachi, Lahore, Multan, , Faisalabad, Peshawar, , and Sialkot, with the majority of leather production taking place in medium-size tanneries. In Pakistan there are more than 2500 tanneries (registered& unregistered) and footwear manufacturing units running in Pakistan. Located in Karachi, Hyderabad, Lahore, Multan, Kasur, Faisalabad, Gujranwala, Sialkot, Sahiwal, and Peshawar, the increase in the number of tanneries can be attributed to increase in demand of tanned leather in the world markets till the fiscal year 2007-08. The government has announced a number of steps for giving a boost to leather apparel industry in its 3-year 96

strategic trade policy framework 2009-12. On July 26, 2009, include facilities from Export Investment Support (EIS) Fund for procurement of expert advisory services, matching grant to establish design studios/centres and establishment of research and development centres in Karachi and Sialkot.This sector would be able to avail EIS Fund facilities that include sharing 25 per cent financial cost of setting up laboratories and matching grant for setting up of effluent treatment plants. 'Fox Furs' are much in demand abroad. This should be removed from negative items list under import/export order. Export of garments using allowable fox fur trimmings for decoration should also be permitted for boosting export of value added leather garments. The present policy does not provide provision for export of such goods in original and unprocessed form due to cancellation of export order or changes in design/style of the order. The exporters may also be allowed to retain 5 per cent of their export earnings for international advertisements and commission etc. Good quality leather is mostly exported and is not available for high value-added Leather Garments & Leather Products. The high cost of various inputs especially utilities and taxes make our products uncompetitive in international markets. Economies of the most developed countries faced slump after September 11 incident. Consequently, sharp decline was observed in markets for leather garments like Germany, France, Sweden, Denmark, Japan and Russian States. The Leather Garment Exporters Association has demanded of the government to allow refunds of newly imposed Excise Duty of 16.38 per cent on imported chemicals in the federal budget 2002-2003. Pakistan imports leather from Saudi Arabia, Iran, and China, Dubai, Sudan, Kenya, and Italy. The increase of tanneries in Pakistan is causing severe environmental degradation as the untreated effluent used in the tanning process is released into nearby water reservoirs and in the sea. It is observed that about 25% of the chrome that goes into wastewater can be reused. The liquor is almost free of chromium and contains most of the dissolved solids and other impurities. The chrome sludge cake can be dissolved in sulphuric acid to form tanning liquor which can then be reused. To improve quality and increase value addition, recruitment of foreign experts may be facilitated through subsidy by the government or technical assistance programs offered by various international agencies. For growth to be sustainable, time bound policies must be given to the industry. This would create an investment friendly atmosphere to foreign as well as local investment resulting in increased growth. Government may utilize the Global Environmental Facility 97

to obtain credits for effluent treatment plants like the ones in Kasur and Karachi for other dispersed units also. Under the existing situation, the small manufacturers cannot afford to comply with international standards on effluent control. To achieve higher growth, special incentives may be provided for setting up of industries for the manufacture of international quality trimming, accessories and component required by the leather industry.

Technological up-gradation through joint ventures with leading international manufacturing houses. At present, Pakistan produces 7.8 million hides and 38 million skins per annum. Animal skins are generally obtained from the province of Punjab and Sind. Though India remains a major competitor of Pakistan, its leather does not enjoy as good a status in the global markets. Indian cattle have comparatively thinner skins and hides than those of their counterparts in Pakistan. Development of the leather industries in Thailand (the largest exporters of hand bags) and Vietnam (second-largest exporter of footwear after China) is primarily due to these two factors. Failure to magnetize foreign investment and promote tourism will have a negative effect on the leather industry.With the current global incorporation, the world export patterns are changing rapidly as a result of reduction in trade barriers and technological advancements. Pakistan also has great latent for higher growth however the political pressure, socio economic environment and lack of updated technologies are barriers in the way of progress. Leather industry, including leather products, is the second biggest export earning sector after textiles. Currently, this sector is contributing around $700 million a year but has the latent to multiply degree of exports with the improvement of quality and diversification in different range of products, specially garments and footwear. Currently, Pakistan's leather industry is contributing significantly to the national exports and a key foreign exchange earners. About ninety percent of its products are exported in completed form. Pakistan is still leading in quality of finished leather and some of the articles are even better than Italian products, having a number one position at global level. Most of the World Trade Organisation (WTO) signatory competing countries have either imposed very heavy duty on export of wet blue or some of these countries have imposed complete ban on export of wet blue . The wet blue and pickle leather is exported as finished leather which is not only causing loss to the government exchequer by duty evasion but these elements claim export 98

rebate on such consignments. Tanners are second to none at global level having capability to convert this wet blue into highly value-added products. For the last half a decade the growth of leather sector is either stagnant or declining. There are many factors and host of debacles and impediments, which have affected this value added and foreign exchange earning sector of Pakistan. The tanning industry in Pakistan uses machinery which are out dated and believed to be imported from various countries in the 1970’s and 1980’s. Though, the country took advantages of these second hand machines by bringing in a large amount of foreign earnings, it fails to create a friendly environmental atmosphere in the process. Inadequate Knowledge of preservation techniques and lack of sufficiently designed collection and strong facilities may cause problems that are associated with the lowering of the quality and the quantity of raw material hence the need of strengthening training facilities of man power at all levels through hiring experts. For sustainability of already implemented steps and in view of the continuous needs of the leather and tanning sector, PISD will transfer environmental and energy- related Knowledge and technologies to address the on-going issues of Leather sector of Pakistan. Despite world-wide recession Pakistan’s leather industry registered an increase of 21% during the financial year 2007-08. Exports valued at $1.25 billion were recorded, slightly better than government projections for $1.13 billion. Pakistan is planning to capture 5% of the global market in the next 10 years. The increase in exports can be attributed to factors as the advancement in technology, investment in Hi-Tech machinery and improved livestock in the country.

With the help of universities and industry resources the cause of damage to raw hides and skins has been identified and the government is striving hard to eliminate these shortcomings at farm level. Due to the demand of Halal Food the demand for Pakistani Beef and Meat has increased in the Middle East resulting in the establishment of modern slaughter houses all over the country. Under top level hygienic conditions the animals are slaughtered in these newly established abattoirs and large quantities are being exported to U.A.E, Saudi Arabia, Qatar, Bahrain and other countries. With recent findings in Europe that slaughtered animals with maximum blood drain are more hygienic than those carrying leftover blood in the veins of slaughtered animals the demand of Hilal meat has increased. This has opened further opportunities and we see more abattoirs in future. The second major reason for the increase in exports can be 99

attributed to the establishment of combined and individual waste treatment plants. In the World Bank’s final report of Pakistan’s Environmental Assessment it stated: “The leather industry represented by the Pakistan Tanners Association (PTA) has demonstrated tremendous commitment and farsightedness by initiating a number of cleaner production technologies program in Punjab and Sindh. The strong commitment is gauged from the fact that in spite of a weak enforcement climate individual tanneries and the PTA have initiated at least five major projects with technical assistance of Royal Netherlands embassy in Pakistan.”

Huge combined treatment plants were established in the tannery zones of Karachi and Kasur and the most modern tannery zone at 384 acres have been announced at Sialkot. A provision for combined treatment plant has been kept in this tannery zone also. Almost all large tanneries have in-house effluent treatment plants and medium level tanneries have set up primary treatment plants. There are few tanneries working on the concept of Carbon Credit and Zero discharge. Some leading chain stores in Europe and the US have played vital role in educating the tanners about environmental issues and the concept of carbon credits. From this product profile the investment opportunities in leather footwear and leather goods are tremendous. With the present tanning capacity and high-quality leather the investment in footwear and leather goods can be profitable ventures due to the availability of low cost . Some leading labels are negotiating joint ventures with tanners at Lahore and Karachi. The future of the leather sector is bright with excellent prospects. Leather enriches our lives in numerous pleasant ways. The belts and shoes that we wear and the wallets and purses that we carry are made of leather. In the developed countries, almost all of which are located in the frigid North, leather jackets, trousers and suits have long become a status symbol and so are the leather upholstered furniture and lavish interiors available only in top-of-the-line luxury cars. Leather has long outgrown its practical purposes and today is regarded more as a luxury than a necessity, particularly in the affluent West. This transformation is made possible due primarily to the induction of state-of-the-art treatment and tanning technologies to give leather a never-before-possible thickness, unlimited colour variations, luxurious feel and silky touch. This has also turned leather into as comfortable a material to work with as any other fabric for any or all of the uses mentioned above. Leather has long outgrown its practical purposes and today is 100

regarded more as a luxury than a necessity, particularly in the affluent West. This transformation is made possible due primarily to the induction of state-of-the-art treatment and tanning technologies to give leather a never-before-possible thickness, unlimited colour variations, luxurious feel and silky touch. This has also turned leather into as comfortable a material to work with as any other fabric for any or all of the uses mentioned above Including tanned/finished leather, leather garments and footwear — registered a substantial overall increase of 28.43 per cent for nine months ended March over the comparative period the previous year. The collective exports of these three core leather categories increased from $ 392 million to $ 503 million during the period under discussion. Export of tanned leather registered an increase of 29.65 per cent, garments by 28.4 per cent and footwear by 21.81 per cent. Besides the three core categories used to monitor the export performance of leather and products, Pakistan also exports a sizeable volume of leather gloves and 'leather manufactures which include such items as belts, wallets, purses, etc.' the value of which totalled $ 30 million and $ 8.6 million in 1999-2000. However, the two non-core categories are not used to monitor the leather/products exports.

An analysis of the above statistics reveal a worrying pattern: it shows that despite catering to the domestic demand satisfactorily leather footwear industry exported just $ 25.5 million of the most used value-added item much lower than the $ 29.8 million worth of leather gloves. This depicts the complete indifference of value-added footwear sector to make greater penetration in the foreign markets. The observers blame the low footwear exports on the non-availability of quality tanned leather and the lack of value- addition in leather for the footwear industry. The problem is further complicated by the fact that the footwear industry of Pakistan has not developed in the organised sector primarily due to the high capital investment which it requires. Both leather footwear and leather garment industries have a problem of their own — shoe manufacturing, particularly organised requires huge capital investment in terms of plant, machinery, labour and marketing while garment manufacturing requires investment in inventory. For instance it requires about 2.5 square feet of tanned leather to manufacture a pair of shoe; the manufacture of a leather jacket requires some 40 square feet of tanned leather. Earlier this year reports of Foot & Mouth Disease (FMD) in cattle in Britain created a wave of concern across the meat-loving masses of the globe. By May 28 over 101

3.2 million animals were culled in the UK, the memories of whose culling, incineration and collective burial would remain etched in the memories of many of us for good. The culling included over 484,000 heads of cattle, 1.5 million sheep, 2,000 goats and 122,000 swine. FMD is highly contagious and may spread over great distances with movement of infected or contaminated animals, products, objects, and people. That explains the disinfected mats at the airports in the US and the ban of all meat imports from the UK. Though humans cannot be infected by eating meat of an infected animal, they can be infected through skin wounds, oral mucosa by handling the infected stock, the virus in the laboratory or even by drinking infected milk. However, the human infection is temporary and mild and as such FMD is not considered a public health problem.FMD is highly contagious and may spread over great distances with movement of infected or contaminated animals, products, objects, and people. That explains the disinfected mats at the airports in the US and the ban of all meat imports from the UK. Though humans cannot be infected by eating meat of an infected animal, they can be infected through skin wounds, oral mucosa by handling the infected stock, the virus in the laboratory or even by drinking infected milk. However, the human infection is temporary and mild and as such FMD is not considered a public health problem.

The leather tanning units of the country as a whole are utilising only between 70-80 per cent of their production capacity despite the fact that many big export-oriented units are operating at their maximum capacity round the clock. The Pakistani tanning industry has the capacity and the capability to make real inroads in the UK by using the collective production capacity, a substantial portion of which remains unutilised presently.The top tanned leather exporters including , Hong Kong, Italy, Germany and others use the Pakistani exports to produce quality value-added products which help them earn substantial earnings in exports. The enhanced leather garment manufacturing and exports would mean the same for Pakistan. By any standard this has been a welcomed transformation for the leather exports of Pakistan.he transformation is all the more welcomed when one realises that leather garment exports registered a substantial growth despite the absence of domestic market for these value-added products. This has been due primarily to the fact that tropical climate does not encourage the mainstream demand of leather garments and whatever little demand which is there comes from only the small circle of the fashion conscious upper classes.Pakistan has a 102

large population of livestock — cattle (cows and bulls), buffalo, sheep and goat — which is constantly increasing — from 107.9 million in 1996-97 to 116.2 million in 1999-2000 depicting an eight per cent increase. The populations of cattle, buffalo, sheep and goat are all on the increase and there were 22 million cattle, 22.7 million buffalo, 24.1 million sheep and 47.4 million goats by end 1999-2000.The large population of cattle, buffalo, sheep and goat gives Pakistan an edge in the international markets of leather and products which are backed by induction of latest tanning technologies to produce quality leather for the manufacture of many value-added products. Though India remains a major competitor of Pakistan its leather does not enjoy as good a reputation in the international markets as it is naturally inferior to that of its Pakistani counterpart. While about three-fourth of the leather demand of Pakistan is met through domestic skins and hides the rest is met by imports from other countries such as Saudi Arabia, Kenya, Sudan, Australia, New Zealand, Brazil, etc. Duty free import of raw hides and skins is allowed for re-export purposes strictly. Pakistani leather industry, despite many natural disadvantages, is an a far better position to benefit from the spread of FMD and the resultant culling of cattle in the UK. Though India houses the top cattle population — 20 per cent of goat and 6 per cent of sheep — and has an abundant supply of raw material — skins and hides — its share in the global leather and products trade is a low 3.5 per cent. India is also one of the top four exporters of leather garments and thus is a direct competitor of Pakistan, particularly in value-added products. Despite these disadvantages, Pakistan enjoys an excellent position to compete with India as the quality of its skins and hides are much better in natural qualities. Despite a much bigger cattle population, Indian cattle are capable of producing a comparatively less thick skins and hides than that of their counterparts in Pakistan. India also trails behind Pakistan in term of tanning not able to produce thick leather with quality surface finishing necessary for the manufacture of quality and high-priced value-added products. So is the leather industry of Pakistan understands the potential of the benefits of FMD to make a real penetration in the UK market. Is it aware of the spill over of the benefits of the FMD in the months to come to make a real presence in the UK market and to take measures to sustain it in the years to come?It should not underestimate the increased demand of tanned leather and manufactures in the UK but should also be vigilant about the prospects of increased joint ventures to capitalise on the foreign investment.

103

2. Structure, Functions and Business Activities of selected Industry / Sector /Company

Leather & Leather products sector is one of the important sectors among the various constituents of the manufacturing sector in Pakistan, mainly due to its contribution towards employment. It is one of the distinctive sectors which have the advantage of the both value addition and export possible. It also donates significantly to total manufacturing output and exports from the country. The Pakistan leather industry comprises of both organized and unorganized and organized sector. The organized manufacturing sector broadly consists of tanning and dressing of leather manufacture of handbags saddler, luggage, harness & footwear. Currently unorganized sector plays a dominant role in the entire production. The leather sector contributes around 5% to GDP and 7% to the total exports of the nation. Major leather manufactured goods produced in Pakistan include footwear, leather gloves, leather garments, handbags, purses, key chains, wallets etc. Around 60% of domestically produced leather is consumed by footwear industry and another 30% is shared equally by leather garments and upholstery industry. The remaining 10% is consumed in leather bags, gloves etc.

History

The history of leather industry in Pakistan is as old as the nation itself. At the time of independence there were only a few tanneries producing sole leather and that too at a very little scale. However, since then this industry has been flourishing and has never looked back. In the early days of independence some tanneries were well-known in Karachi. In 1950's some were recognized in Lahore and adjoining areas. The 1960's saw the installation of more units in other parts of the country like Multan, Sahiwal, Kasur, Gujranwala and Sialkot. These units were well-equipped with the latest and modern facilities. More advanced units were established in the 1970's and Pakistan started production of finished leather. The era of 1980's saw a period of improved quality production. Pakistan is considered to be the hub of producing high quality Leather and Leather Products, & there are about 800 Tanneries in the country actively 104

engaged in producing best quality finished leather of Cow, Buffalo, & Sheep and Goat skins. Following are the recent five year records of hides & skin Production.

Table: 3 Pakistan shares in global Hides and skins production:

Pakistan Rest of the world Buffalo 90.10% 9.90% Cow 99.30% 0.70% Goat 87.50% 12.50% Sheep 97.20% 2.80%

Leather Industry

Introduction

Leather industry, including leather products, is the 2 nd largest sell abroad earning sector after textiles. Currently, this division is contributing around $800 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of manufactured goods, specially garments & footwear.

Leather is one of the most valuable and important international selling products. In 1999 the international leather trade value was above US$ 41 billion which can be divided into five major types i.e. leather garments, finished leather, leather footwear, leather goods & leather gloves. Major exporters of leather consist of Italy, China & the Republic of Korea exporting up to 43% of the total international market of leather. The leather industry has been on a decline, for the last five years1 with an average growth rate of – 2%. On the international horizon 1999 was the worst year for leather products (7% decline in international exports) which could be attributed to a high slaughter of cows in Europe, which were infected from what is called the mad cow disease.

Pakistan’s share in the international market is hovering at about 1.5% from the last five years, earning an average foreign exchange of US$ 681 million per annum. According to Federal Bureau of Statistics data, Pakistan exports for the year 2010 were about US$ 763 million. Out of total leather exports, leather footwear accounts for 50.93%, which makes leather footwear extremely significant.

105

Global Perspective:

The global export market in leather has been valued at nearly $21 billion. The five year trend shows negative growth (-3% for the last 3 years) for leather and in 1999 exports fell by 7% while its share as a sub commodity of leather has increased from 47% to about 51%. Thus even though there has been lower trade in leather as whole, leather industry has not declined significantly.

Activities Of Leather Industry

There are about 596 tanneries in Pakistan in the formal sector and more than 90% of their product is exported. Leather production uses unrefined material in the form of cow and buffalo hides and goat and sheep skins and a number of imported chemicals. The raw material is locally gathered. About 130 different types of elements are used in leather manufacturing which ranges from common salt (sodium chloride) to very expensive Chrome Sulphate. Leather manufacturing engages following major ACTIVITIES/STEPS:

1. Pre-Process 2. Pre-Tanning Process (Tanning hides and skins) 3. Tanning Processes (Currying hides and skins) 4. Wet Finishing Process (Finishing hides and skins) 5. Dry Machining (Dyeing furs) 6. Finishing (Finishing furs)

In pre-processing skins/hides are received and salt is applied on the flesh side of the skins/hides. Skin trimming is done to remove unnecessary parts. After pre-processing, pre-tanning process starts with the soaking process in which skin are made flaccid by soaking them in water. After soaking hair is removed, lime is used to make hair loose. Unnecessary flesh is removed with the help of fleshing machines after liming process. To make limed fur for tanning, the skins are delimed using Ammonium Sulphate and then skins are washed. Bating is done for additional cleansing of hide. After that degreasing is done with the help of detergents. Tanning procedure starts with pickling which is the treatment of skin with acids and salts to bring it to desired level of pH.

106

Tanning may be described as the treatment of skin for preservation. Chrome tanning utilizes Chromium Sulphate as tanning agent. Tanning procedure stabilizes the collagen network of skin. Later than tanning skins are called wet blue and are stored for some time and then they are sorted out according to excellence. If hides of cows or buffaloes are being used for leather producing, then after this they are sliced to give desired thickness. This procedure is not carried out on the skins of goats or sheep. After this the hair sides of the wet blue are shaved to give the desired thickness.

STRUCTURE OF LEATHER INDUSTRY

An industry structure consists of activities such as task allocation, coordination & supervision, which are directed towards the achievement of organizational goals. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.Industries are a variant of clustered entities. An industry can be structured in many different ways, depending on their purposes. The structure of an industry will determine the modes in which it operates and performs.Industries’ structure allows the expressed allocation of responsibilities for different functions & processes to different entities such as the branch, department, workgroup & individual.Industry structure affects managerial action in 2 big ways. First, it provides the basis on which standard operating procedures & routines break. Second, it determines which individuals get to participate in which decision-making processes, & thus to what extent their views shape the industries’ actions.Corporations use organizational structures that place key positions over the situational needs of the industrial operations. Many manufacturing firms separate industrial organizational structure by departments within a single capability. For some companies, the diversity of products dictates a need for departments to oversee product groups. Other business organization structures provide the geographical location of various facilities with branch divisions.Organizational change is the process by which organizations alter their strategy and structure to improve performance. While organizational structure provides the overall framework for strategy accomplishment, it is not in itself enough to ensure successful execution. Within the organizational structure, individuals, groups, and units are the mechanisms of organizational action, & the effectiveness of their achievements is a major determinant of successful implementation. Therefore, after formulating a

107

organization's strategy, management must make designing the structure its next priority for strategy can only be implemented through organizational structure. Activates of organizational personnel are meaningless unless some type of structure is used to assign people to tasks and connect the activities of different people or functions as follows:1) Management chooses how to distribute decision - making authority in the organization.2) It chooses how to divide labor in the organization and group organizational tasks.

For this reason, Strategic managers must design the organization correctly if it is to be effective for a particular strategy. Because many problems arise when organizations become too tall and the chain of command becomes too extended. Strategic managers tend to lose power over the hierarchy, which means that they lose power over their strategies. On the other hand, implementing a policy successfully depends on selecting the right structure and control system to match a organization's strategy. The basic tool of strategy implementation is organizational design. Designing the right mix of structure and control at the business level is a continuation of designing a organization's functional departments through integration1 and differentiation2. Together the two process determine how on organizational structure will operate and how successfully managers will be able to implement their chosen strategies (Simon, 1957, 19). Having the implemented right structure and control system for each individual function, the organization must then implement the organizational arrangements so that all the functions can be managed together to achieve business-level strategy objectives. Organizations must match their structures and control systems to their business level strategies if they are to survive and prosper in competitive environments.

108

Shareholder

Board of directors

CEO

Managing Director

President

Vice-President

General Manager

Finance Marketing Human Production R & D dep. dep. resources dep. dept. dept.

Marketing Human Production Researcher & Finance Manager Manager Resources Manager Developer Manager

Controller Material Product RESEARCH & Mngt. Marketing Payroll Research Planning Development Performa nce Accounting Purchasing Advertising appraisal Treasurer Warehouse /Promotion Recruiting Distribution Training & Selling Development

Structure of Leather Industry in Pakistan

109

The leather industry has developed progressively since Pakistan's independence. Following partition from India, there were few tanneries and hides and skins were imported. However, the leather industry today has developed into an indigenous industry that is the second biggest export-oriented industry in the manufacturing sector and third in the overall exports of Pakistan. Although the production of hides and skins used in the tanning industry-- cattle, goat, sheep, and buffalo--has been steadily increasing, the supply has not been able to keep pace with demand. Leather and leather products play a significant role in Pakistan economy. Pakistan leather industry is the second largest foreign exchange earner after textile. As the country is predominantly agricultural, it possesses natural advantage in the area of live stock population. The leather sector contributes around 5% to GDP and 7% to the total exports of the country. Major leather products produced in Pakistan include footwear, leather garments, leather gloves, handbags, purses, key chains, wallets etc. Around 60% of domestically produced leather is consumed by footwear industry and another 30% is shared equally by leather garments and upholstery industry. The remaining 10% is consumed in leather gloves, bags etc. The leather and leather product industry is employing around 250,000 workers. Pakistan's leather industry is one of the major foreign exchange earners for the country. Almost 80% of production is exported and 90% of these in the finished form. During the year 2002-03, the total exports of leather and leather manufactures were of $ 694 million and it is about 7% of total exports. The recent growth of the industry is mainly due to export of value added finished leather and leather manufactures like garments gloves, footwear and sports goods. The share of Pakistan in the global leather market is around $ 0.6 billion (3%) out of the total $ 20 billion; China is the leading exporter of leather with $ 8.0 billion exports as shown in the following table.

110

Table:4 % share in global export Country % Share Export Value

China 40% 8.0 billion

India 10% 2.0 billion

Turkey 8% 1.6 billion

Italy 8% 1.6 billion

Pakistan 3% 0.6 billion

Others 31% 7.2 billion

There are 725 tanneries in Karachi, Kasur, Lahore, Multan, Faisalabad, Peshawar, Gujranwala, and Sialkot, with the majority of leather production taking place in medium size tanneries.

Table: 5 Structure of Leather Industry

Commodities No. of Industrial Total Capacities Units

Tanneries 725 Nos 90 Mln. Sq Mtrs

Leather 461 Nos. 7 Mln. Pcs Garments/Apparel

Footwear 524 Nos. 10 Mln. Prs

Leather Gloves 348 Nos. 200 Mln. Prs

Source: EAC, 2004.

111

Functions of Leather Industry

Chart-2Value Chain in Leather Industry

Resourcing and Production of

recovery of raw Hide processing Other Inputs leather materials Production

Design and Dairy / Draught Art Footwear animals Tanning Garments

Slaughterhouses Leather Goods chemicals Finishing Meat animals Saddlery

Leather

Non Leather Cloth components

The leather industry utilises the by-products of slaughterhouses and transforms the raw material into various types of leather and manufactured end manufactured goods. The leather production chain has three processing stages, each requiring different mixtures of objects, inputs, labour & capital. The first stage is the recovery of raw materials that has direct links with animal manufacture activities. Hides & skins are recovered from draught animals, dairy or animals from slaughter houses. The second stage is leather tanning & finishing, which engages capital intensive process. The third stage is the manufacture of leather products, which is a labour intensive action. These three processing stages are connected to key commercial components of the chain, such as 112

the marketing of intermediary inputs, components & end products, trade & consumption. The various inputs to the chain without which the chain cannot operate competitively are qualified labour, design & art centres, components production, technical, access to chemicals, & administrative support institutions, R&D, training & a set of adequate policies.

Manufacturing process Finished leather

The tanneries receive skins from the slaughter house in salted conditions which are then stored in cold storage. The process for changing the raw skin into finished leather is explained in detail below:

Manufacturing process &support functions

Top Player and Its Production Volume & other companies

• Muhammad Naseem Shafi, Shafi Group of Industries Headquarters: Karachi, Pakistan

Tanneries and locations: There are 5 tanneries in the group & 3 finished product sites:

113

1. Muhammad Shafi Tanneries, Karachi. Finished kid & goat for shoe upper and lining 2. M Muhammad Shafi & Co, Karachi. Finished leather from sheep & lambskins for clothing and gloving 3. Siddiq Leather Works, Lahore. Finished leather from cow & buffalo hides for footwear and clothing 4. Hafeez Shafi Tanneries, Lahore. Doubleface lambskins and kid/goat nappa for shoe uppers as well as lining 5. Sihui Shafi Leathers China, Sihui City, Guangdong. completed leather for kid/goatskins for shoe upper as well as lining

Table:6 List of Leather Companies in Pakistan

Company Name E-mail & Tele-phone no. Web-address

Blooming Leather PVT

1Ltd. - www.bloomingleather.com

[email protected]

2Nova Leather (PVT) Ltd. 092-21-506-1706/7 www.novaleather.com

[email protected] Bashir Tanneries (PVT) 092-42-760-2235/2289

3Ltd. -

[email protected]

4Dada Enterprises Ltd. 092-42-681-1229/5610 -

National Tanneries of

Pakistan PVT [email protected]

5Ltd. 092-42-585-8717/8 -

Zahur Sancho PVT [email protected]

6Ltd./Noor Leather 092-21-506-1786/1790 www.zahursancho.com

[email protected]

7Haji Abdul Latif & Co 092-21-294-24546/293841 -

114

[email protected]

8Hafiz Tannery 092-21-506-1761/3 -

[email protected]

9Multan Hide Company 092-61-510-361/583-191 -

[email protected]

10 Din Leather (PVT) Ltd. 092-21-561-0001/3 www.dingroup.com

[email protected]

11 Khas (PVT) Ltd. 092-21-505-4411-2 -

[email protected]

12 Aziz Tanneries PVT Ltd. 092-441-68341/68342 -

[email protected]

13 Firoz & company 092-21-506-220092-1-2 -

Universal Leather & [email protected]

14 Footwear 092-21-453-1525-32/506-2713 -

inducstrial Ltd. [email protected] Mohamed Ismail 092-21-506-0773-5/453-1525-

15 Mohamed Aslam 32 www.mimagrp.com

Ltd. [email protected]

16 Friend Traders 092-21-506-50370-39 -

Muhammad Shafi [email protected]

17 Tanneries (PVT) 092-21-561-0696-99 -

Ltd. [email protected] Leathertex Gloving (PVT) 092-42-527-2518~20/527- www.leathertex-

18 Ltd. 0842~3 gloving.com

[email protected]

19 Pak Leather Crafts Ltd. 092-21-506-410092-5 www.pakleather.com

[email protected], Eastern Leather Co.

20 (PVT) Ltd. eastern@easterngroup- www.easterngroup-pk.com

pk com 115

092-42-588-1138/1184 Siddiq Leather Woks [email protected]

21 (PVT) Ltd. 092-42-682-1257~60 -

[email protected]

22 Ideal (PVT) Ltd. 092-21-452-4123/453-2384 www.paks.net/ideal

H. Sadar Ali Akhtar Ali [email protected]

23 (PVT) Ltd. 092-42-682-2510/686-1452 -

Prime Tanning Industries [email protected]

24 (PVT) LTd. 092-42-291680/290360 www.prime.com.pk

Production: Capacity from the five tanneries is over 5 million square feet per month with tanneries typically operating at 90% capacity. Produce footwear, garment and lining leathers from ovine, caprine & bovine raw objects. Total group turnover is around $100 million per annum with 80% exported. All eight manufacturing sites are managed by three generations of the Shafi family under the overall supervision of a five member executive committee headed by Muhammad Shafi.

Sources of Raw Material

Pakistan is fortunate that the raw material required by the industry is available in the country in abundance. Local accessibility of raw materials & low wage cost gives the country a competitive edge in the world market. The following are the kinds of basic raw objects which are being used by this industry: - Cow hides - Buffalo hides - Goat skins - Sheep skins.

1. Buffalo 2. Cow 3. Goat 4. Sheep

116

SWOT Analysis of the Pakistan leather industry

Strengths ∑ High augmentation ∑ Ready accessibility of highly skilled and cheap manpower ∑ Huge raw material base ∑ Strategy initiatives taken by the Government ∑ Capability to assimilate new technologies & handle large projects ∑ Continuous emphasis on product development and design upgradation

Weaknesses ∑ Lack of warehousing maintain from the government ∑ International price variation ∑ Vast labour force resulting in high labour charges ∑ Lack of strong attendance in the global fashion market ∑ Unawareness of international standards by lots of players

Opportunities ∑ Rising possible in the domestic market ∑ Growing style consciousness globally ∑ Use of information technology & decision support software to help eliminate the length of the production cycle for different products ∑ Use of e-commerce in direct marketing

117

Threats ∑ Main part of the industry is unorganized ∑ Limited scope for mobilizing funds all the way through private placements and public issues (many businesses are family-owned) ∑ Difficulty in obtaining bank loans resulting in high cost of private borrowing ∑ Stricter international standards ∑ High competition from East European countries and other Asian countries ∑ Lack of communication facilities & skills

Analysis of leather industry

Textile is the largest export earning business of Pakistan. The second largest industry in regard to exports is the Leather Industry. Contributing more than $800 million in 2009 to the foreign exchange in Pakistan, this industry has the potential of carrying more and providing a large number of jobs by diversifying product range and improving quality.

The leather industry in Pakistan is as old as the history of the nation. During the regal era just a few number of tanneries were working in large cities such as Lahore, Karachi, and New Delhi etc. In the 1950s the number of well equipped tanneries augmented in Karachi, Lahore and other major manufacturing cities. This number continued to rise due to enhance in demand of finished products as well as raw material in the national and international market. Leather industry’s core products in Pakistan are leather garments, tanned leather gloves, and footwear. In the 50s & 60s most of the tanned leather was exported in raw form but soon after the local tanning industry making semi finished leather made rapid progress in making finished products due to availability of raw material, labor & growing demand in the foreign market.Leather is one of the most valuable and important international trading commodities. In 1999 the international leather trade value was above US$ 41 billion which can be divided into five major categories i.e. finished leather, leather garments, leather footwear, leather goods and leather gloves. Major exporters of leather include Italy, China and the Republic of Korea exporting up to 43% of the total international market of leather. The leather manufacturing has been on a turn down, for the last 5 years with an average growth

118

rate of –2%. On the international horizon 1999 was the worst year for leather products (7% decline in international exports) which could be attributed to a high slaughter of cows in Europe, which were contaminated from what is called the mad cow disease.

Pakistan’s share in the international market is hovering at about 1.5% from the last five years, earning an average foreign exchange of US$ 681 million per year. According to Federal Bureau of Statistics data, Pakistan exports for the year 2010 were about 763 million US$. Out of total leather exports, leather footwear accounts for 50.93%, which makes leather footwear extremely significant.

119

3. Comparative Position of selected Industry / Sector / Specific Company /Product with India and Gujarat.

Overview of leather industry

The EU is a major actor of the global leather market. To make sure the competitiveness of its leather trade, the EU works at lowering the impact of barriers to importation of raw materials and to access to foreign markets for finished leather products. Even if, generally, the share of the EU on world markets is tending to shrink with the development of the leather industry in other regions of the world such as Asia and the Americas, the EU tanning business is still the world's largest supplier of leather in the international market place. The leather tanning industry is a global trade, and EU tanners depend highly on access to raw materials and to export markets. This is, however, often hampered by tariff and non-tariff barriers. European tanners count two types of trade barriers: first, barriers hindering the export of completed leather and, second, barriers are restricting access to raw materials, which comprise a trade barrier typical to the leather tanning sector. These are considered to be very harmful trade barriers since they significantly impact the competitiveness of European tanners. Since access to European raw materials has become more difficult (slaughter rate and beef production have dropped in current years), access to raw materials outside Europe is vital. Many third countries, however, maintain export bans and limits for raw hides and skins. Market admission improvements are expected first and foremost in the context of the WTO where the European Commission supports the overall withdrawal of all export restrictions by different WTO members (China, Argentina, Brazil, Indonesia, Pakistan, India, etc.). To make sure that European industries have fair access to the raw materials they need, the European Commission has elaborated an integrated strategy as presented in its Communication on the 'Raw Materials Initiative' of November 2008. EU tanners are exposed to increasing competition from a large number of non-EU countries, remarkably low-labor cost ones. In this context, fair and mutual market access is essential in order to allow EU tanners to find markets in which to sell their

120

products. Presently, the European market is open to virtually unrestricted imports from all over the world. EU import duties are extremely low and non-tariff barriers do not exist. Simultaneously, European operators are still faced with numerous barriers to trade (such as high import duties and tariff and non-tariff measures such as excessive labeling or certification requirements). Leather tanning covers the treatment of raw materials, i.e. the exchange of raw hide or skin, a putrescible material, into leather, a steady material, and finishing it so that it can be used in the manufacture of a wide series of consumer products. The leather tanning industry uses hides and skins - by- products from the meat and dairy industry - which would otherwise have to be disposed of by other means, such as landfills and fire. Leather is the tanning sector's basic output. It is an intermediate industrial product, with applications in downstream divisions of the consumer goods trade. Footwear, garment, furniture, automotive and leather goods industries are the most significant outlets for EU tanners' production.

LEATHER INDUSTRY OF PAKISTAN

Pakistan's leather industry is one of the major foreign exchange earners for the country. About 90% of its products are exported in completed form. During 1996-97, the production of leather was about 14.3 million m2 and export income amounted to US$ 642 million. There are some 600 tanneries in the official sector and an equally large number of tanneries in the informal sector. These are concerted in a few clusters of which Kasur (180 tanneries), Karachi (170), and Sialkot (135) are the most important. Animal skins—which are the base of the leather industry—are obtained from the provinces of the Punjab and Sindh. Partial quantities of imported hides are also used. The season of peak action begins around Eid-ul-Azha and extends for between two to three months. During this period, manufacturing levels can reach twice the normal level. The chrome tanning technique is the most widely used process in Pakistan's leather sector. However, the vegetable tanning technique and a combination of chrome and vegetable tanning is also applied. The procedure includes a number of different steps during which large quantities of water and chemicals are applied to the skins. About 130 different chemicals are used in leather processing, depending on the kind of raw material used and complete product. These may be divided into four major classes: pretanning chemicals, tanning chemicals, wet final chemicals and final chemicals.

121

Groundwater is used as a main source of water in Pakistan's leather industry. Leather industry, including leather products, is the second biggest export earning sector after textiles. Currently, this division is contributing around $800 million a year but has the latent to multiply size of exports with the progression of quality and diversification indifferent range of products, specially garments and footwear. Essentially, it is a job- oriented sector providing employment to a very large section of the society besides earning foreign exchange for the country. The leather final and made ups industries represent an significant sector in Pakistan, contributing about more than half a billion US dollars in foreign exchange earnings to the national exchequer.PAKISTAN is considered to be the hub of producing high quality Leather and Leather Products, and there are about 800 Tanneries in the country actively engaged in producing best quality complete leather of Cow, Buffalo, and Sheep & Goat skins. Pakistan is rich in agricultural goods and has a large livestock population which plays an important role in the economy of Pakistan by manufacturing around 13.0 Million Hides and 47.4 Million Skins every year. The quality of goat skins, cow, buffalo hides in Pakistan is acceptable. The type of sheep skins we have in Pakistan is better in respect of grain, essence and solidity of fibers. Leather manufacturers & exporters are determined to increase export of quality finished leather and leather goods. And the industry is playing their positive role in invigorating WTO regime with quality consciousness and full sense of responsibilities to uphold the impeccable image of Leather manufacturing ofPakistan. As being the most significant contributor or the country’s GDP and foreign exchange earnings, The Leather manufacturing of Pakistan is employing more than 500,000 peoples directly and indirectly.Leather is a supple and tough material produced via the tanning of putrescible animal skin, primarily cattle hide. The leather made ups and finishing industries symbolize an important partition in Pakistan, earning approximately more than five million US dollars as a foreign exchange earnings to the country. The leather manufacturing contains of six sub-sectors such as, Leather Garments, Leather Goods, Footwear, Leather Shoe Uppers, Tanning and Leather Gloves. Pakbiz brings out the great opportunities to do the leather business in Pakistan with the best companies available.

122

The leather industry consists of six sub-sectors namely,

‹ Tanning ‹ Leather Footwear ‹ Leather Garments ‹ Leather Gloves ‹ Leather Shoe Uppers and ‹ Leather Goods

The Tanning industry plays a vital role in the improvement of these sub-sectors by providing the basic material like leather. At present Pakistan is among the leading countries in the production of Leather Garments and Gloves. The leather and leather made-ups industry is playing a significant role in the economy of Pakistan and its share in GDP is 4% now. Ten years ago, it was the fifth most important export industry in the manufacturing sector, and now it is the second. The Environmental Challenge:

Leather tanneries in Pakistan produce all three categories of waste: wastewater, solid waste and air radiations. However, wastewater is the most important ecological challenge being faced by Pakistan's tanneries. Wastewater: Although the particular quantity varies widely between tanneries, anordinary requirement of around 50-60 liters of water per kilogram of hide is recommended. ETPI's sample audits of tanneries in Pakistan show that in some cases the consumption of water is as high as three times the suggested requirement. The whole water release also demonstrates a high degree of seasonal and daily variation. For most part, the current practice is to discharge this water into the local environment without any treatment. Tannery wastewater is much polluted and the contamination observed is many times beyond the limits set by the National Environmental Quality Standards (NEQS) for all important wastewater parameters.

PAKISTAN LEATHER GARMENTS ASSOCIATION PLGMEA was formed in November 2001 for protecting, promoting and developing the Pakistan Leather Garment Industry. Through the last three years PLGMEA has been actively promoting the importance of its members regarding many trades, taxation and manpower related matters.

123

PLGMEA regularly gathers and disseminates statistics & other relevant information for the Leather Garment Industry. PLGMEA also carries out aggressive international marketing campaign for boosting the exports of Leather Garments mainly through involvement in international exhibitions. PLGMEA regularly organizes exhibition area for its members in following exhibitions. SOURCES OF RAW MATERIAL

Pakistan is lucky that the raw material required by the industry is available in the country in large quantity. Local availability of raw materials and low wage cost gives the country a competitive edge in the world market. The following are the types of basic raw materials which are being used by this industry, 1) Buffalo 2) Cow 3) Goat 4) Sheep 1. Buffalo: Buffalo is considered as the specialty of Pakistan in World, because of its sufficient availability in Pakistan

2. Cow:

The cow raw material is considered a superior raw material upon buffalo because of its fine, tight and moderately uniform structure.

3. Goat:

It is good for manufacturing shoe upper leathers, garment and goods leather and easily available in country.

4. Sheep:

Leather prepared from sheep raw materials has a very good and softer touch and measured best for leather garments.

124

STAGES OF LEATHER FORMATION:

1. Warehousing and sorting 2. Soaking. 3. De-Fleshing 4. Liming 5. Bating, pickling and tanning 6. Slamming 7. Splitting 8. Skiving 9. Sorting 10. Neutralizing, filling out, dyeing and greasing 11. Drying 12. Staking 13. Finishing 14. Quality Control 15. Dispatch. PROBLEMS FACED BY THE INDUSTRY

1. Quality 2. Cost of production 3. The issue of chrome 4. Energy issues 5. Environmental issues

PRICING STRATEGIES

The leather grading system employed by leather upholstery manufacturers and suppliers issued as a means of differentiating and marketing individual types of leather by price, based on quality or style.

‹ The grading system is the method manufacturers use to present their pricing structures to retail dealers. Leather suppliers also use a grading system to distinguish their leathers and prices to manufacturers. This categorization works efficiently and is simple to understand within the context of each individual leather line, but problems yield up if one 125

attempts to compare or contrast leathers from line to line or from manufacturer to manufacturer. With Air Emissions:There are two sources of air pollution from tanneries in Pakistan. The first relates to emissions from generators (diesel-based and operated only during power breakdowns) and from boilers. Emissions were found to be well below the NEQS level Ammonia emission during processing and washing of drums, though intermittent but important has adverse effects on workers health. Hydrogen supplied emission during mixing of acid and alkaline wastewater in drain is also a serious health hazardous. Segregated discharge of acidic and alkaline effluent can help to avoid the hydrogen sulphidegas emission.

‹ Solid Waste Two types of solid wastes are generated from leather production processes (i.e. tanned andun tanned). Solid waste includes dusted curing salts, raw trimmings, wet-blue trimmings, dry trimmings, wet-blue shavings, dry shavings, buffing, and packaging material etc. On an average a tannery processing 10,000 kilograms of raw material per day produces some 5,500kilograms of solid waste daily. The solid wastes do have secondary use in glue manufacturing and poultry feed making etc. However, the use of chrome-containing solid waste for poultry feed preparation can cause serious health problems for poultry consumers.

Prices of material (Approximately) • Cow hides ranges from Rs. 1,600 to Rs 1,900, • Goat Rs 240 to Rs 250 per skin and • The price stands for Sheep at Rs 370 to Rs 400 per skin. TRADE POLICY

The leather garment industry strongly recommended for imposition of 20 per cent export duty on export of semi-finished and finished leather in the approaching trade rule. This would help ease of use of good quality leather shaped nearby.’ Fox Furs' are a large amount in demand out of the country. This should be apart from unenthusiastic items list below import/export organize. Export of garments using permissible fox fur accompaniments for adornment should also be permitted for boosting sell abroad of value added leather wear. There is an instant need for business of a Leather plank in Pakistan which should operate as an self- governing dead body and funded by the government from export development

126

fund. The board should be headed by a person exporting value-added leather products. Value-added exports like leather garments where there cannot be any further value-addition should be excused from Export growth add-on. Re-export of temporarily imported goods supplied by buyers should be allowed without view letter of praise or advance payment if supplied as free of cost. The near policy does not give stipulation for export of such goods in unique and natural form due to deletion of sell abroad order or change in design/style of the order. The exporters may also be allowed to keep 5 per cent of their export salary for global advertisements and commission etc

Types of Export

Exports are divided into two main categories: direct and indirect exports.

Direct Exports: - This type of export in which firms enter into overseas markets straight and do their have possession of export promotion. The firm itself undertakes the complete export marketing job, which is wide. Direct exporting includes choosing appropriate foreign markets, choosing agents or distributors to stand for the firm in persons markets, inspiring and calculating those distributors choosing the product line for the goal markets, surroundings price and formative promotional strategy for persons market, conduct global delivery and money, and prepare export certification.

The compensation of direct export include more categorize over the sell overseas process, potentially higher profits, and a closer relationship to the abroad purchaser and market. However, these advantages do not come easily since the company needs to devote more time, personnel, and corporate resources than indirect exporting requires.

Indirect Exports: - Sales to export mediators who in turn sell to abroad patrons. The indirect exporter has no or limited direct contact with abroad customers. Sales are negotiated with a dealer in the exporter's country with sum made in local currency from the trader's office. For example, a Japanese trading house in Victoria arranges the contract for the supply of a particular product for the Japanese market. In such cases, payment will probably be made in Australian dollars. The principal advantage of indirect

127

marketing is that it provides a way to penetrate foreign markets without the complexities and risks of direct exporting.

‹ Limited scope for mobilize funds through confidential placements and public issues (many businesses are family-owned) ‹ complexity in obtain bank loans resultant in high cost of private borrowing ‹ Stricter global values ‹ High opposition from East European countries and other Asian countries ‹ Not have of communication facilities and skills Suggestion to Leather Industry in Pakistan

1. Introducing Brand Names Leather and Leather products from Pakistan have fixed a reputable place in the world market. Some of leather products from Pakistan especially leather jackets are much in demand but under the foreign well-known brand names. Made-in-Pakistan label and brands born in Pakistan have up till now to come. Steps need to be taken by the industry in this regard. Well-known Pakistani firm need to record trademark with respect to the leather products they manufacture. In light of the Agreement on trade related aspects of intellectual property rights (TRIPS) of WTO, Pakistan through Trade Marks regulation, 2001, provides effective protection and rights to the owner of trade marks.

2. Focusing on Footwear Sector Footwear, the largest segment of the leather industry around the world has been surprisingly abandoned in Pakistan. Foreign franchised companies have become household names in Pakistan. This is even though the fact that the entire stuff and skill they use belong to Pakistan. In addition, having a strong industrial stand, Pakistan's leather industry looks like tread without shoes. This emptiness in leather industry calls for the notice of the industry leaders to bridge the gap to give a inclusive look to the leather and leather products industry in Pakistan. One of the options to enter the field of footwear sector is to seek partnership with international brand producers by offering them attractive incentives.

128

3. Tackling Environmental and Labor Issues Regarding environmental concerns of WTO, the industry has made slight progress in this view. Combined overflow treatment plants need to be built so that dangerous chemicals from the tanneries do not affect the environment. Moreover, the industry needs to take on all the labor issues to which the consumers in the import countries are responsive to. It needs to be ensured that the leather industry in Pakistan adheres to the working condition requirements that have been developed by certain international bodies, mainly, the associations of leather industries in the importing countries of the west. Under the WTO rule, member countries can impose penalties or restrict imports from exporting countries whose industries do not observe environmental/labor concerns or social compliance.

4. Control on Smuggling & Diseases of Livestock Leather developed sector in Pakistan can also suffer because of massive smuggling of home animals to additional countries, shortage of raw material and nonattendance of the prepared dairy farming in the country. Steps should be taken to beat these problems. Moreover, diseases in the domestic animals in Pakistan can prove difficulty in the manufacturing and exports of completed goods of leather. Existing events need to be taken to defeat this risk to the domestic animals as a result the live animals are suffering from different diseases that damage the quality of the leather and smear the image of products at international level.

5. Reduction of Duties on Machinery

The duties on the import of tanneries related machinery need to be further reduced. The locally is technologically substandard which not only increases the cost of invention but restrains from developing at par with the international market . Indian leather industry

The Leather Industry holds a well-known place in the Indian economy. The leather industry occupies a place of importance in the Indian economy in view of its massive potential for employment, growth and exports. There has been an increasing

129

importance on its designed development, aimed at best use of on hand raw materials for increasing the returns, particularly from exports. The exports of leather and leather products gained momentum during the past two decades. There has been a unusual growth in exports from Rs.320 million in the year 1965-66 to Rs.69558 million in 1996- 97. Indian leather industry today has attained well merit gratitude in international markets besides occupy a famous place among the top seven foreign exchange earners of the country. The leather industry has undergone a dramatic transformation from a mere exporter of raw materials in the sixties to that of value added finished products in the nineties. Policy initiatives taken by the Government of India since 1973 have been instrumental to such a transformation . In the wake of globalization of Indian economy supported with liberalized economic and trade policies since 1991, the industry is poised for further growth to achieve greater share in the global trade.

Apart from a significant foreign switch over, leather industry has wonderful potential for employment cohort. Direct and indirect employment of the industry is approximately 2 million. The skilled and semi-skilled workers represent nearly 50% of the total work force. This sector is known for its consistency in high export earnings and it is among the top ten foreign exchange earners for the country. With an annual turnover of over US$ 7.5 billion, the export of leather and leather products increased various over the past decades and touched US$ 4.86 billion in 2011-12, recording a increasing annual growth rate of about 8.22% (5 years).The Leather industry is bestowed with an prosperity of raw materials as India is endowed with 21% of world cattle & buffalo and 11% of globe goat & sheep inhabitants. Added to this are the strengths of expert manpower, pioneering technology, increasing industry compliance to international environmental principles, and the fanatical support of the similar industries. The leather industry is an employment demanding sector, only if job to about 2.5 million people, mostly from the weaker sections of the world. Women employment is major in leather products sector with about 30% share. Though India isthe second largest producer of footwear and leather garments in the world, India accounts for a share of close to 3% in the global leather import trade of US$ 137.96 billion (2010) The major production centers for leather and leather products in India are located in Tamil Nadu (Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and Erod), WestBengal (Kolkata), Uttar Pradesh (Kanpur, Agra, Noida, Saharanpur)

130

Maharashtra (Mumbai), Punjab (Jallandhar), Karnataka, Bangalore, Andhra Pradesh (Hyderabad), Haryana (Ambala, Gurgaon, Panchkula, Karnal and Faridabad), Delhi, Madhya Pradesh ( Dewas), Kerala ( Calicut and Ernakulam / Cochin).Leather is along with the top ten foreign exchange earners for the Indian economy. India accounts for 21% of world cattle and 11% of world population of goat and sheep. Indian tanneries produce about 2 billion sq. ft. of leather per annum. According to an ITC data, India accounted for about 3% in the global leather import trade of $ 115.58 billion.The leather industry in India is based on the great quantity of locally available raw materials and skilled manpower. The industry employs 2.5 million people. Of them 30% are in the leather products sector. More than 50% of the total turnover of $7.5 billion is from exports. Exports in 2010-11 were worth $3.84 billion. The balance is from sales in the confined domestic market. India is the second largest producer of footwear and leather garments in the world. Leather Industry occupies a place of prominence in the Indian economy in view of its huge potential for employment, expansion and exports. There has been increasing stress on its planned development, aimed at optimum utilization of available raw materials for maximizing the returns, particularly from exports.

The leather industrial sector comprises of:

a) Tanneries (where raw hides and skins are transformed into leather)

b) Factories transforming leather into a variety of consumer products such as footwear, garments and outerwear, and assorted leather goods such as wallets, passport cases, key chains, handbags and brief cases. Apart from the quality of raw material, the process of its conversion into leather and, later, of the design, product development and process of manufacture, of products play a key role in adding value to it.

SWOT Analysis of Indian leather industry

Strengths:

• High Growth.

• Capability to assimilate new technologies and handle large projects.

• Continuous emphasis on product development and design upgradation

131

• Readily availability of highly skilled and cheap manpower.

• Bulky raw material base.

• Policy initiatives taken by the Government.

Weaknesses:

• Huge labor force resulting in high labor charges.

• Lack of warehousing support from the government.

• Unawareness of international standards by many players.

• Global price fluctuation.

• Lack of strong attendance in the global fashion market.

Opportunities:

• Use of e-commerce in direct marketing.

• Growing fashion awareness globally

• Use of information technology and decision support software to help remove the length of the production cycle for different products.

• growing potential in the domestic market

Threats:

• Complexity in obtaining bank loans resulting in high cost of private borrowing.

• Stricter international standards.

• Lack of communication facilities and skills.

• Limited scope for mobilizing funds through private placements and public issues.

• High competition from East European countries and other Asian countries.

COUNCIL FOR LEATHER EXPORTS (CLE)

The Industry provides employment to 2.5 million people, mostly from the weaker sections of the society. The Leather Industry holds a well-known place in the Indian economy. This sector is known for its constancy in high export earnings and it is among the top ten foreign exchange earners for the country. India’s leather exports touched US$ 3.40 billion in 2009-10, recording a increasing annual growth rate of about 5.43% in 5 years. Composition of India’s Leather & Leather Products Export Basket (2009-10) can be seen in the Chart. As per officially notified DGCI& S monthly export data, the export of leather and leather products for the first six 132

months of the current financial year 2010-11 i.e. April-September 2010 touched US$ 1864.27 million against the performance of US$ 1630.78 million in the corresponding period of last year, registering a positive growth of 14.32%. In rupee terms, the export touched Rs.85, 863.73 million in April-Sept 2010 against the previous year’s performance of Rs.79, 260.74 million registering a positive growth of 8.33%. A Statement which is showing the Product-wise Export performance during April- September 2010 in relation to April-September 2009 is given in Table below.

Government policies in support of the industry

• The whole leather sector is now de-licensed and de-reserved, concrete way for growth on current lines with state-of-the art equipment and tools • 100% Foreign Direct Investment and Joint Venture allowed through the routine way. • 100% repatriation of profit and dividends, if investments made in translatable foreign currency. Only announcement to this effect to the Reserve Bank is required. • Endorsement of industrial parks (one leather park in Andhra Pradesh, one leather goods park in West Bengal, one footwear park in Tamil Nadu and one footwear components park in Chennai). • Financial support for modernizing manufacturing amenities. • Financial support for establishing design studios. • Duty free import of raw materials (namely raw skins, hides, semi-finished leather and finished leather) and of accompaniments and mechanism under specific scheme. • Confessional duty on import of specific machinery for use in leather sector. • Duty neutralization / reduction scheme.

Strengths of Indian leather sector

• Hold raw material source – 2 billion sq ft of leather produced yearly. • Some variety of goat / calf / sheep skins control top position • Strong and eco-sustainable tanning base. • Modernized manufacturing units. • Skilled manpower at competitive wage level. • World-class institutional support for Design & Product Development, HRD and R&D.

• Presence of support industries like leather chemicals and final auxiliaries. • Presence in major markets – Long Europe experience. 133

• Strategic location in the Asian island

Emerging strengths

• Design development initiative by institutions and individuals. • Nonstop modernization and technology up gradation. • Economic size of manufacturing units. • Constant human resource development program to improve productivity. • Increasing use of quality component. • Shorter example development time. • Release compliance. • Growing domestic market for footwear and leather articles

Challenges in leather product sector

• Unreliable levels of technology in the factories depends on the size of the factories. • Low quality of shoes – threat of move in production to other areas or countries where wages levels are low if the quality is maintained at same level • The majority companies work on subcontract basis – design, component selection and methods of production are given by the buyers and do not provide their own fashion collections, however companies are able to make prototype based on ideas provided by the buyer • Strong requirement to increase quality as well as quantity • Availability of right raw material (finished leather) at right time • Under developed designs for footwear mechanism sector. • Lack of own collections and poor development of footwear components, particularly for women’s footwear – Market size of women’s footwear in the world is 63% of total footwear market, but the share of women’s footwear exports out of India’s total footwear is only 34% • Meeting manpower requirement under the state of affairs of speedy industrialization

134

Leather Industry in Gujarat

The State of Gujarat is having shoe artisans in the Saurashtra region (also known as Kathiawad region due to the presence of kathi people). No special product is being made in the whole Saurashtra except the traditional farmer’s shoe called BharwadiDeshiJoda, which is made only in vegetable leather. The districts are producing nothing special except local shoes like simple Derby, Oxford, Mozadi and casual designs. Chappals& sandals are being made for ladies and gents. Out of the total The Twelfth Five Year Plan (2012 to 2017) Shoes made in the region, 75% are open shoes. Apart from that, a number of Leather Processing Units are functioning there in the region, as cooperative societies, supported by (DIC) District Industry Centre. These Tanneries are mostly producing Vegetable Tanned Leather. Gujarat industries manufacturing and exporting dyes for leather products: Asiatic Colour Chem. Industries Limited, S.R. Trade Links, Vikram Trading co, Alpha Sterling Industries, Color Cascades Impex, Charm, Jeeka Industries, Associated Dyestuff Industries, Saumya Exports, Thomas Baker, Shree dye Chem., Desai Packwell etc.is the prominent Manufacturers & exporter of an extensive range of Industrial Dyes are Leather Dyes, Industrial Leather Dyes, Fashion fur Dye Stuffs, Leather Mix Colour, Leather Colour Dyes, Leather Black Dyes, Leather Brown Dyes, Fur Dyes, Acid Fur Colour Dyes, Reactive Dyes, Fabric Reactive Dyes, Acid Dyes, Wool Acid Dye, Textile Dye, Dye for Wool, Wool Dyes, Wool Dying, Coloring Wool Dyes, Dyes Wool, Nylon, Paper Dyes, Industrial Paper Dye, Ink Dyes . The wide range of our product includes Ink Dyes, Textile Dyes, Acid Dyes, Reactive Dyes and Paper Dyes. Products are known for various features like Water soluble, accurately formulated, and pure and Environment friendly.

Gujarat industries manufacturing and exporting for leather products: Yeti Leather Products, Jasneer Fashions , Indianmoda , A MARSHAL BAG PALACE , Patel Ishwarbhai And Company, S J Trading Company , Tushar Belting , New India Wood Works , studiothirtsycrow, Colourise Industries. These all industries manufacturing and exporting leather goods, luggage products, leather accessories such as belts and others and leather clothing’s printing.

135

Comparison between India and Pakistan

Some sectors of Pakistan economy have shown a good performance in terms of production and exports. Leather industry, including leather products, is the 2nd largest export earning sector subsequent to textiles. Currently, this sector is causal around $700 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products, particularly garments and footwear. Mostly, it is a job-oriented sector as long as employment to a very large segment of the society besides earning foreign exchange for the country. Currently, Pakistan's leather industry is contributing significantly to the national exports and a major foreign exchange earners. About 90% of its products are exported in finished form.

More than 5.7 million animals with an approximate value of Rs120 billion were sacrificed this EidulAzha in Pakistan, but Syed Saydin says these numbers have not affected the local market positively. Though Pakistani leather is considered to be the second best in the world, the chairman of Pakistan Tanners Association says the growth rate for the country continues to decline.

The growth rate is 22.68 %, 20.7 % and 17.51% in India, china, Bangladesh respectively. Unluckily, the growth rate in Pakistan is dilapidated by 3.94 percent.

The association says hides obtained from animals sacrificed this year have an estimated value of Rs7 billion. Leather from all over the country is brought to Lahore, the location for Pakistan’s one of the biggest market for the product. KhawajaSajjad, the market’s general secretary, says the population explosion has divided wealth between a greater numbers of people.

The material has not increased. Someone who would sacrifice a goat earlier, now only gets a share in the cow, so total resources remain the same.Due to least type of production amenities for value-added goods, leather is usually sold to other countries in raw form, where it is transformed into finished goods and sold at high prices. However, if investment is made in industrial infrastructure, a lot of this income can be held by

136

Pakistan. LAHORE - The leather industry has potential to grow up to $3 billion in next three years which is stagnant at $1 billion for last many years. This was stated by the newly-elected Chairman Pakistan Tanners Association (Central) AghaSaiddain. On the other hand, leather sector exports of India have grown up to $4.86 billion during the year 2011–12 from their previous exports of $1.96 billion during 1991. He further said that export of leather & leather products have grown up by 17 per cent in Bangladesh. Leather exports of Ethiopia doubled in last some years, while Pakistan’s exports have decreased by 3.94% during the year 2011-12. All countries as well as China have recorded positive growth in exports of leather and leather products but the only country lagging behind is Pakistan, he lamented. He suggested the government that leather sector may be treated as model sector in Strategic Trade Policy Frame Work 2012–15 with a view to enhance its growth. He said exports of Bangladesh increased four times from the year 2000 to 2010. Also global imports of leather & leather products improved from $80.2 Billion in 2001 to $137.96 Billion in 2010. South Asia with 26 %of global animal population of cattle, buffalo, sheep and goat enjoys 3.57 % of the global exports while Vietnam without help has reached to the level of 6.22 per cent of global leather exports with bare minimum animal population in comparison to India, Pakistan and Bangladesh. With limited animal population in Italy they enjoy 13 %market share at global level. One of the best illustrations is that of China have 37.5 % global market shares of leather do business. One reason for this brilliant performance of China is its value adding of 29 % as compared to 18 per cent in South Asia. Agha further added that India has successfully harvested the fruits of 10th & 11th Leather Development plan with an outlay of IRs 400 IRS 912.67 Crore in that order and have now announced 12th ILDP with an outlay of Indian Rupees 1251.29 Crore. Under 12th ILDP India has set up target of $14 billion with Annual Cumulative Growth of 24.03 per cent in next five years. He said that in Pakistan we have no leather development plan and for this reason we have lost our market share to other countries in South Asia. He articulated his dissatisfaction and said that Government especially Ministry of Commerce must sit with leather industry to draft a 137

plan to enhance exports. He said with little patronage we can cross $3.00 billion in next 3 years. Pakistan is still leading in leather technology and quality wise our leather is at second number behind Italy. The only missing thing is Government support. In India, Bangladesh, and China the responsibility disadvantage and incentives allowed to leather sector are much higher than Pakistan. All other Governments excluding our Government understand that leather sector is one of most important sector having wider benefits because of its role in job formation, connection to agro and countryside economy, poverty height and foreign exchange earner. He said MOC must make a study of Incentives permissible in India, Bangladesh, and China and leather area of Pakistan must be provided level playing field. He said there is a dreadful need to change our policies and tune these to the frequency of our competing countries. He urged Government to sit with stakeholders and exporters so that a viable plan could be chalked out to overcome this inertia. He finished his argument by saying that the government need to work out cost of borrowings from IMF and other international financial institutions with conditional ties they impose upon us and cost of incentives if allowed to the export industry with its benefits. He said Federal Minister of Finance to ponder upon this to control balance of trade and balance of payments which is only possible by increasing exports.

138

4. five forces analysis, Conclusions and Suggestions • In Pakistan textile industry is the 1 st largest industry and leather industry, including the leather products is the 2 nd largest export earning sector. Presently, this sphere is adding around $800 million per year but has the sufficiency to reproduce the book of exports with the progress of quality and variegation in different type of products, specially footwear and garments. • Basically, it is a job-oriented sector providing exercise to a very huge section of society too earning foreign exchange for the nation. • The leather ceasing and manufacture diligence represent a worthful section in Pakistan, it is adding almost more than half a billion US dollars in foreign exchange earnings to the national institute. The leather market of Pakistan consists of six sub-sectors namely, Tanning, Leather, Leather Garments, Footwear, Leather Goods, Leather Gloves, Leather Shoe Uppers. The Tanning sector performs a crucial part in the progress of these sub-sectors. This segment supplies the basic material i.e. leather. Pakistan is one of the leading countries in the production of Leather Garments and Gloves. The leather and leather made- ups industry’s role in GDP of Pakistan is 4%. 10 years ago, it was the fifth most substantial export industry in the manufacturing sector, and now it is the second position.

• Pakistan's leather exports detected a fall of 29% in the fiscal year 2008-09 after a tanner of fixed growth. The sharp fall in the exports of most value added and labor intensive leather segment, which is second top foreign exchange earner’s Pakistan and employs some 500,000 workers, is a matter of serious business concern. • Pakistan is wealthy that the raw material called for by the segment is uncommitted in the nation in profusion . Local accessibility of raw materials and low salary cost gives the nation a free-enterprise advantage in the global market. The main raw materials which are being utilized by this segment are as follow: - Buffalo hides - Cow hides - Goat skins - Sheep skins.

139

• Pakistan is wealthy that the raw material demanded by the nation is available in the nation in profusion . Local accessibility of raw materials and low salary cost gives the nation a free-enterprise advantage in the global market. • Production process includes Vegetable-tanned, leather Chrome-tanned, leather Synthetic-tanned leather, Alum-tanned leather, Rawhide. Stages of leather formation includes Warehousing & sorting, soaking, De-Fleshing, Liming, Bating, pickling, tanning, Summing, Splitting, Skiving, Sorting, Neutralizing, filling out, dyeing and greasing, Drying, Staking, Finishing, Quality Control, Dispatching. Problems faced by leather industry are quality, cost of production, energy issue and different environmental challenges. • Leather and Leather merchandise from Pakistan have cut up a pleasing place in the world market. Made-in-Pakistan label and brands born in Pakistan have yet to come. Development need to be taken by the segment in this regard. In light of the Agreement on trade related aspects of intellectual property rights (TRIPS) of WTO, Pakistan by Trade Marks Ordinance, 2001, gives effective protection and rights to the owner of trade marks. • The biggest sector of the leather industry all over the globe footwear has been unknowingly ignored in Pakistan. Foreign franchised companies have become household names in Pakistan. • Pakistan having a healthy industrial base, leather industry of Pakistan appears stepping without shoes. One of the options to come in the area of footwear sector is to seek partnership with global brand producers by offering them lucrative incentives. • Because of massive exporting and importing of livestock to other countries leather producing sector in Pakistan is also affected, deficiency of raw material and absence seizure of the coordinated dairy farming in the country. • Moreover, unwellness in the livestock can prove roadblock in the manufacturing and also exports of final products of leather. Substantial assesses need to be taken to overcome this menace, as a result of the unwellness of live animals nation suffers from diminish quality of the leather and impairment the image of products at international level. • The duties of tanneries on the import related machinery need to be reduced. The machinery made regionally is technologically inferior which increases the cost of 140

production and also holds from growing at par with the international market. More than 5.7 million animals with a near value of Rs120 billion were given to this Eidul Azha in Pakistan, but Syed Saydin says these digits have not struck the niche sector positively.

• Though Pakistani leather is regarded as to be the second most beneficial in the world, the chairman of Pakistan Tanners Association says the rate of growth for the nation goes forward to turn down.

• “The rate of growth in India is 22.68 percent. In China it is 20.7 percent and 17.51 percent in Bangladesh. Unluckily, the rate of growth in Pakistan is turning down by 3.94 percent,”

• The organization says hides received from animals given up this year have an figured value of Rs7 billion.

• Leather of all states over the country is contributed to Lahore, the area for Pakistan’s largest market place for merchandise.

• The relationship between the Pakistani leather trade and the environment is being filtered by a increasing need for the product in the globe and cognitive content of environmental troubles resulting from the tanning process. A one noted Pakistani news journalist commented, "The tanning industry is notorious for its heavy pollution through effluents containing organic and inorganic matter, dissolved and suspended solids, accompanied by requirements of high oxygenic demand and having toxic metal salt residues...these tanneries discharge effluents without any treatment into water reservoirs and the sea." Often, the workplaces are located in industrial fields within Pakistan that comprise a greater percentage of the population. With limited land resources, the pollution is causing damage to a large numbers of people. While the wastewater contaminates the water provided on the land, it also causes damage to the sea. This pollution in return regards the food service for the population. Moreover, much of the nation is subjected to the straight air pollution induced by burning the workplace residuals into the open environment. All of these forms of pollution are having prejudicious consequences upon the health of Pakistanis.

141

• The development of foreign brands and stores saw a discovering change in consumption pattern and environment for shoppers in Pakistan. The traditional Pakistani purchasing pattern was all about one thing, bargain. Upon the emergence of foreign brands and stores, contributed the more westernized business style of distinctive retail store, which is obviously what shoppers in Pakistan have to consent to. Although there is an increasing furious competition, with more brand names and labels approaching in the market place of Pakistan each and every day, consumers' power is still being countermined. A major agreement to this is the increasing potentiality of the Pakistani people to yield replacing currency for character, rather unreasoningly waiting to low price. • The Pakistani state, while at the same time needing to promote diligence in the nation, is the only business that can formulate the strict environment protection laws and ensure effective carrying out of these laws at the local level. Due to the leather industries high position in Pakistan's export industry, the national Government has instead extended incentives such as: • Discount on the export of leather and leather products. Duty-free import of raw bolts out and clambers for re-export after value- addition, and export repayment scheme on export of leather footwear- to bolster the leather industry with very little environmental guidance. These inducements are heightening the profit margin of the leather industry and advocating more operations to set up shop without the environmental controls. By wrongly inflating the profit margin for such leather workplace operations, however, the Pakistani Government has produced that much more of an unmanaged task in inevitably assigning the installation of waste-treatment equipment. The inviolable leather industry is presently still in a position to lobby strongly against such increased costs.

• Moneymaking markets that giving in elevated income will attract firms. The consequence is legion fresh newcomers, which will expeditiously bring down effectualness. Except the access of latest firms can be barren by officeholders, the revenue rate will go downwardly towards a private-enterprise stage (perfect rivalry). The survival of barriers to access (patents, rights, etc.), Economies of product difference, Brand equity, Switching costs or sunk expenses, Capital

142

necessities, Access to allotment, Absolute cost return, Learning curve return, Expected reprisal by incumbents, Management policies. • Rapid technical change, shrinking economically separated, new kinds of industrial businesses, tougher links stuck between national value chains and widespread policy liberalization, are all altering radically the surroundings facing developing nation’s organizations. Rivalry now comes up with bully vividness from practically any place in the world. It is based on a confusing array of new technologies. It calls for a variety of unique and highly technological skills and complicated supply-chain and distribution techniques. • It is organized in complex systems on both sides of many nations, tapping departures in expenses, ability, raw materials and tastes to optimize the efficiency of the entire structure. It is affirmed by global brands and Industrial competitiveness in Pakistan networks with the capacity to deliver enormous amounts of information at minimum expense. Manufacturing is getting more information-intensive: growing parts of value added consist of 'weightless' activities like exploring, designing, engineering, marketing and communicating. To compete, enterprises must use new technologies and organizational methods at best practice and link up to global value chains. The policy context for competing is also altering. Most nations are reducing difficulties to deal, capital, technology and data flows (and even some 'people flows', but on a much more prohibited measurement). • A Five Forces Analysis assumes that there are five vital forces that determine viable power in an organization term. • Rivalry among competitors : In the traditional economic model, the competition among the rival firms drives profits to zero value. But competition is not perfect and firms are sophisticated passive price takers. Rather than, firms strive for a competitive advantage over their rivals in market segment. The intensity of rivalry among firms varies industries, and strategic analysts are interested in these all differences. • If firms are in oligopolistic market than the industry is considered to be corrected. These conditions may consequence from the industry's history of competition about the leather market, the role of a leading firms, or informal compliance with a generally understood about the code of conduct. Express connivance broadly 143

is illegal and not an option; in low-rivalry industries done competitive moves must be tightened up conversationally. However, an irregular firm looking for a competitive advantage can displace the otherwise disciplined market. • When a rivals acts in a way of the counter-response by other firms, competition compounds. The vividness of rivalry normally is referred to as being bowelless, vivid, controlled, or watery, based on the firms' aggressiveness in attempting to gain an advantage. • In pursuing advantages over its rivals, a firm can choose several competitive moves: "Changing in prices are raising or lowering prices to gain an irregular reward. “Meliorate in the merchandise specialization, improving in products different kind of features, implementing in innovations of the manufacturing process and in the product itself.”Differently employs the dispersion channels – uses of vertical integration or uses of a distribution channel that is novel to the industriousness. For example, with higher jewelry shops reluctant to carry out its watches, Timex moved into drugstores and other non-traditional outlets and cornered the low to mid-price watch in the market place. "Exploited relationship with distributors - for example, from the 1950's to the 1970's Sears, Roebuck and Co. prevailed the recount household gradate market. Sears set high caliber standards and required suppliers to meet its demands for product specifications and price. • Capacity from the five tanneries is over 5 million square feet per month with tanneries typically operating at 90% capacity. Produce footwear, garment and lining leathers from ovine, bovine and caprine raw materials. Total group turnover is around $100 million per annum with 80% exported. All eight manufacturing sites are managed by three generations of the Shafi family under the overall supervision of a five member executive committee headed by Muhammad Shafi.

• Synthetic-tanned leather is tanned using aromatic polymers and such as the Novolac or Neradol types. This leather is white in a color and was invented when vegetables tannins were in a short distribution, i.e. at the time of the Second World War. Melamine and other amino-functional resins fall into this category as well and they provide the filling that modern leathers most of the time require.

144

Urea-formaldehyde resins were also used in this tanning method until dissatisfaction about the formation of free formaldehyde was realized.

• The tanning industry in Pakistan uses machinery which is out old-fashioned and believed to be imported from various countries in the 1970's to 1980's. Though, the country took advantage of these second hand machines by bringing in a large amount of foreign operating incomes, it conked out to make a friendly atmosphere in the procedure. A huge part of the nation is subjected to air pollution due to the burning of residual into the environment. This pollution has a dangerous effect on the health of the local universe, mostly in Karachi city, Kasur city and Sialkot. • The leather industry has implemented many progressive interventions and technologies in the past to deal with its frequent environmental and energy challenges. The ambassador association of leather industry i.e. Pakistan Tanners Association (PTA) has long been facilitating a number of initiatives to concentrate on the environmental issues of the industry. This has concluded into a more private-enterprise, stable and liberal leather industry of Pakistan. • Rapid technical change, shrinking economically separated, new kinds of industrial businesses, tougher links stuck between national value chains and widespread policy liberalization, are all altering radically the surroundings facing developing nation’s organizations. Rivalry now comes up with bully vividness from practically any place in the world. It is based on a confusing array of new technologies. It calls for a variety of unique and highly technological skills and complicated supply-chain and distribution techniques. It is organized in complex systems on both sides of many nations, tapping departures in expenses, ability, raw materials and tastes to optimize the efficiency of the entire structure. It is affirmed by global brands and Industrial competitiveness in Pakistan networks with the capacity to deliver enormous amounts of information at minimum expense. Manufacturing is getting more information-intensive: growing parts of value added consist of 'weightless' activities like exploring, designing, engineering, marketing and communicating. To compete, enterprises must use new technologies and organizational methods at best practice and link up to global value chains. The policy context for competing is also altering. Most

145

nations are reducing difficulties to deal, capital, technology and data flows (and even some 'people flows', but on a much more prohibited measurement). • Most are also giving the lead role in industrious activity to private enterprise, reserving the state for the provision of general public commodities. In fact, policy alters in the guidance of open trade and investment, level playing fields for all economic actors, transparentness and non-escarpment in legal systems governing firms, and substantial shelter of non-government holdings rights, are becoming the sine qua non of entering in the global economy. Many customary tools of industrial endorsement - infant industry protection, FDI restriction, local content and other performance demands, reverse engineering and imitating, and so on - are increasingly constricted or ruled out entirely. In this adjusting, no industrial initiative can grow even lasts, without being internationally militant.

• Leather garments constituting 52.9 % (US$306.6 million) of the total value of leather exportation, rank gamiest among exportation of leather manufacturer, followed by completed leather establishing 35.8% (US$207.8 million) of the total export earnings. Export of leather gloves, comprising mostly of industrial gloves, and rank third at 4.70 % (US$27.2 million). In recent years, Pakistan's exports of dress/fancy glove have been on the rise. Pakistan's export of footwear makes only about 4.80 % (US$28.2 million) of the total leather export. The above fashion in the export finished leather poses a danger to the Pakistan's industry yet it also provides Pakistan's Leather Industry an opportunity to enlarge and expand in value additional leather products. If Pakistan is to maintain its share in the world leather markets, it will have to upgrade its leather industry. This will absorb a shift from exporting finished leather to quality value-added products like gloves,

• The bargaining power of buyer : The growth of foreign brands and stores saw a striking switch in buying pattern and environment for shoppers in Pakistan. The traditional Pakistani buying habit was all about one word, bargain. Upon the emersion of foreign brands and stores, brought the extra westernized commerce style of specialty retail store, which is evidently what shoppers in Pakistan have to accept to. Although there is a rising furious rivalry, with more brand names and labels coming in the market of Pakistan every single day, consumers' ability is 146

still being undermined. A major understanding to this is the growing potentiality of the Pakistani individuals to yield substituting currency for character, rather unreasoningly waiting to low price. • As the fundamental factors, the power of suppliers and buyers alter with time, their biff develops or descents. In the global gadget industry, for instance, challengers including General Electric, Electrolux and Whirlpool have been crushed by the integration of retail channels (the reduction of gadget specialty stores. for instance, and the arise of big-box retailer merchant like Best Buy and Home Depot in the United States). Another container is travel agents, who count on airlines as a key provider. When the internet permitted airlines to deal with selling of tickets straight to customers, this importantly raised their ability to bring down agents’ commissions with bargaining power. • Pakistan’s exports of Leather Industry have declined by 3.94% during the year 2011-2012. All Countries including China have recorded positive enlargement in exports of Leather and Leather Products but the only country lagging behind is Pakistan. • Pakistan has no Leather development plan and for this reason we have lost our market share to other countries in South Asia. He uttered his dissatisfaction and believed that Government especially Ministry of Commerce must sit with Leather Industry to draft a strategy to boost our exports. He said with little patronage we can cross US$ 3.00billion in next three years. • Pakistan is still leading in Leather Technology and Quality wise our leather is at second number subsequent to Italy. The only mislaid thing is management Patronage. In India, China, and Bangladesh the responsibility drawback and incentives allowed to leather sector are much higher than Pakistan. All further management except our management understand that Leather Sector is one of most important Sector having wider benefits because of its role in Job formation, connection to Agro and Rural wealth, poverty height and foreign switch over earner.

• There is a dire need to change our policies and tune these to the frequency of our competing countries. He advised administration to be seated with Stakeholders and Exporters so that a viable plan is chalked out to overcome this

147

inertia. Government need to work out cost of borrowings from IMF and other International Financial Institutions with conditionality’s they impose upon us and cost of incentives if allowed to the export industry with its benefits. • Bargaining power of supplier: The leather industry in Pakistan is as old as the history of the nation. During the imposing period just a small number of tanneries were working in large cities such as Lahore, Karachi, and New Delhi etc. In the 1950s the number of well equipped tanneries increased in Lahore, Karachi and other major manufacturing cities. This figure continued to rise due to boost in demand of finished products as well as raw material in the national and international market. • The industry is meeting its 75% needs of raw hides from local resources while rest of the 20 to 30 percent is met from side to side imports. Pakistan imports leather from Australia, Saudi Arabia, Iran, China, Dubai, Kenya, Sudan, and Italy.

• Re-export of temporarily imported goods supplied by buyers should be allowed without sight letter of credit or advance payment if supplied as free of cost. The current policy does not provide provision for export of such goods in original and unprocessed form due to cancellation of export order or changes in design/style of the order. The exporters may also be permitted to hang on to 5% percent of their export earnings for international advertisements and commission etc.

• The industry has been facing some challenges which have been slowing down the manufacture procedure. The main issue is the energy crisis which is endured by all manufacturing in Pakistan. The nonattendance of energy well-organized technologies and be deficient in of proper machinery and maintenance is also causing an important amount of depletion of energy. Environmental confronts are faced by the leather industry all over the earth. Wastewater, solid waste and air emissions are the main wastes produced during the tanning procedure. Good class leather is exported and the majority of the time is not obtainable for high value finished merchandise. Lack of proper guidance for finished-goods producing labor is the main reason that good quality and high value raw material is exported. Providing a resolution for these troubles can also result in increasing in the production rate. The leather industry can easily be transformed into a major contributing sector for foreign exchange by focusing on the key production 148

lines like footwear business, beginning of technology and critical down production costs which can increase Pakistan’s share in the worldwide hides and skins production as the demand of leather products is increasing each year.

• The leather industry can easily be distorted into a major contributing sector for foreign exchange by focusing on the key production lines like footwear industry, beginning of technology and cutting down production costs which can increase Pakistan's share in the global hides and skins production as the demand of leather products is increasing each year.

• The leather garment industry strongly recommended for imposition of 20 percent export duty on export of semi-finished and finished leather in the forthcoming trade strategy. This would help out ease of use of good class leather produced locally. • 'Fox Furs' are much in requirement abroad. This should be detached from negative matter list under import/export order. Export of clothing using permissible fox fur trimmings for decoration should also be permitted for boosting export of value additional leather garments. • With an aim to ensure predictability of electricity supply, commerce minister announced, the ministry of water and power and electricity distribution companies shall be entering into an agreements with cluster of industries whereby electricity will be supplied at equally agreed times. The agreements would have punitive and compensation clauses and the compensation could be in the form of electricity charges credit. • Threats of Substitutes: The leather industry of Pakistan is confronted with stiff competition from the regional players who are supported by their governments in terms of rebates and different packages and needs support from the government to save the second largest export oriented sector, Pakistan Tanners Association (PTA) said. Chairman PTA, Agha Saiddain, while talking to told the government was informed in advance about this situation and requested to provide level playing field with neighboring nations.

• The governments of other competitor countries such as India, China, and Bangladesh have introduced new incentives to save their leather business.

149

Because of worldwide slowdown and pathetic demand, the Chinese government subjected circulars raising the export rebates from 11 percent to 14 percent on various leather items. India is already paying 11.50 percent and Bangladesh 15 percent rebate on leather, leather garments, gloves and shoes. India has recently announced 11th leather plan with spend of Rs 9.13 billion which is in addition to 10th plan with an expenditure of Rs 4 billion. In these circumstances Pakistan is on the verge of losing its market share and tanneries are running on 50 percent capacity, he lamented. He said on the one hand we are facing stiff competition from India, China and other countries and on the other hand administration has fixed the National Environmental Quality Standards (NEQS) much tougher than developing countries. The Federal Ministry of Environment is aware of this fact and the government has announced no relief. He said some of the major international chain stores have stopped buying leather products from Pakistan because of non-compliance with the very tough NEQS. The export of finished leather has shown a turn down of 17.67 percent in first six months of present financial year over the preceding year. The exports during July-December 2008 were recorded $163.935 million against $199.116 million for the same period of 2006-07. • Similarly, the export of leather garments got lowered by 16.49 percent and overall exports of leather industry have shown decline of 12.40 percent over the same era of previous year. He said the total exports of leather clothing, footwear, gloves and leather goods were evidenced $526.353 million for the period July- December 2008 against $600.830 for the same period of 2006-07. There is an import duty of 20 percent and 25 percent on chrome and formic acid. “Because of administration safeguard the manufacturer of these chemicals are mounting their earnings at the cost of leather manufacturing. The leather business is enabling service to more than 500,000 people in the nation and leather industry needs immediate attention of the government to save it from total collapse.

China is also affected as their whole economy depends on exports. In Pakistan, there has been an increase of 20% in chemical prices due to a downturn in the value of the local currency. In addition to the cost of chemicals, the price of electricity and gas has gone up but despite these problems the cost of Pakistani

150

leather is still more competitive for the European, Korean and Japanese markets. Pakistan's leather industry is second largest in exports after textiles with US$1,220.12 million in the previous year. The share of the value added exports of leather apparel and clothing is $528.15 million against exports of tanned leather to the tune of $425.26 million. Then comes the export of leather gloves at US$161.15 million and leather footwear $105.35 million.

• The newly elected chairman of the Pakistan Tanners Association, Agha Saiddain has said that if the leather industry gets the incentives to compete with China, India, and Bangladesh, leather business could double in three years and exports could fetch around $5 billion. He said that he has sent a letter to the Prime Minister Syed Yusuf Raza Gilani to push the volume substantially up. He said the country could lose the competitive edge over China, India and Bangladesh, if the industry did not receive proper incentives.

• Leather industry needs to gear up for several challenges including increasing costs and raw material shortage in the approaching year, according to Mr M. Rafeeque Ahmed, Chairman, and Council for Leather Exports. The industry can look forward to a positive year after two continuous years of slow down as demand in the international markets has picked up. But simultaneously, it has to address raw material shortage as hides and skins supply in international markets will be hit with floods affecting Brazil, Australia and Pakistan. Costs are also on the raise, and with exporters intense in South India, the area would be mainly strike as it faces more stringent environmental norms that add to the cost. The business in South India is meeting Zero Liquid Discharge norms but has to factor in the cost. • In Pakistan tanning materials like lime, fish and vegetable oil, Mangrove bark and babul bark are available in abundance. The wattle bark is imported from South Africa and East Africa. But the country is short of tan stuffs like myrabolams and avaram bark which at present is imported from India but it has been found by the tanning experts that babul, kikar and mangrove bark which are abundantly found in Pakistan are fairly good substitutes. For chemicals and dyes the country is dependent on foreign countries. Summing up the disagreement, Pakistan

151

possesses almost all the requirements that are necessary for the growth of the industry. • In current times the Pakistani Leather industry remains under a constant threat of foreign competition, in the field of both buying hides and skins and in selling tanned leather. Very often this competition leads to abnormally high price of hides and skins and the chances of profits for the producers decline. • Pakistan has entered the field of producing crust leather which formerly was a monopoly of South India. Our crust leather is superior to that of India and its popularity abroad is increasing. Moreover, there are certain difficulties in the development of chrome tanning such as higher technical processes requiring high chemical knowledge and costly mechanical equipment.

• The threat of the opening of new competitors: Lucrative markets that submit elevated income will draw firms. The consequence is numerous fresh entrants, which will efficiently reduce effectiveness. Except the access of latest firms can be barren by incumbents, the revenue rate will go down towards a competitive stage (perfect rivalry). • Yard goods are the leading export earning trade of Pakistan. The second biggest business in considering to exports is the Leather business. Contributing additional $800 million in 2009 to the overseas trade in Pakistan, this business has the latent of delivering more and providing a huge number of jobs by diversifying creation variety and improving excellence. • The leather manufacturing in Pakistan is as mature as the history of the nation. During the royal era just a small number of tanneries were operational in big cities such as Karachi, Lahore, and New Delhi etc. In the 1950s the figure of well operational tanneries enlarged in Karachi, Lahore and other chief industrial cities. This figure persistent to rise due to boost in demand of completed products as well as unprocessed material in the nationwide and in global market • Pakistan Leather manufacturing has the manufacturing capability of more than 100 million square meters and next to the manufacturing capability it is producing merely 60 million square meters. More than 450 units of leather item of clothing manufacturer in Pakistan are manufacturing about 5 million pieces next to the manufacturing capability of beyond 7.5 million pieces. In the same way a key 152

sector in leather business is the leather footwear manufacturing which is competent of manufacturing 200 million pairs per annum and its present manufacturing is presently 100 million pairs. Pakistan’s contribution in the global skin and hides manufacturing is about 7% yearly which can be twice with just the correct quantity of time and effort. One can review that these figures shows the business’s capability which are extremely under-utilized. • The manufacturing has been facing a number of challenges which have been slowing downward the manufacturing process. The main concern is the power crisis which is endured by all industries in Pakistan. The deficiency of power capable technologies and be deficient in of appropriate equipment and maintenance is also the reason a major quantity of depletion of energy. Ecological challenges are faced by the leather business all over the globe. Wastewater, hard waste and air emission are the major wastes formed during the tanning procedure. Good class leather is exported and most of the time is not accessible for elevated assessment completed commodities. Be short of proper guidance for finished-products manufacturing manual labor are the core reason that good quality and elevated value unprocessed matter is exported. Given that an explanation for these troubles can also effect in escalating in the manufacturing rate. • The leather business can effortlessly be altered into a foremost contributing division for overseas trade by looking on the key manufacturing lines like footwear business, beginning of technology and wounding down manufacturing costs which can enlarge Pakistan’s share in the worldwide hides and skins manufacturing as the requirement of leather products is increasing every year. • PTA is at present executing as a well-known trade organization suitably licensed by the Ministry of Commerce under Trade Organizations Ordinance/Rules 2007, registered with the safety measures & Exchange Commission of Pakistan and a genuine member of the Federation of Pakistan Chambers of Commerce & Industry. It is the 2nd major export earning division representing extremely active and worth added business in leather and leather goods in addition being job slanting segment. The business employs approximately 500,000 people straightforwardly, manufacturing fine excellence finished leather for export as

153

well as for habitat utilization. It contributes 5% of GDP and 5.4% to the whole export income of the nation and is measured to be a large amount important part which has a feasible role in revamping economic field of the nation.

• In Pakistan more than 5.7 million animals with an approximate value of Rs120 billion were sacrificed this Eidul Azha, but these numbers have not affected the local market positively

• However Pakistani leather is taken as the second best in the world, the chairman of Pakistan Tanners Association (PTA) says the growth rate for the country continues to decline. In India, the growth rate is 22.68 percent; China’s growth rate is 20.7 percent and 17.51 percent in Bangladesh. Miserably the growth rate of Pakistan is decreasing by 3.94 percent.

• The association says that estimated value of Rs7 billion sacrificed this year from hides obtained from all over the country leather is brought to Lahore, the location for Pakistan’s biggest market for the product. • Leather Sector may be treated as Model Sector in Strategic Trade Policy Frame Work 2012 – 15. This was stated by the newly elected Chairman Pakistan Tanners Association (Central) Mr. Agha Saiddain. Agha further added that the Leather Industry has potential to grow as 3.00 Billion dollar Industry in next 3 years which is stagnant at US$ 1.00 Billion for last five years. On the other hand Leather Sector exports of India have grown up to US$ 4.86 Billion during the year 2011 – 2012 from their previous exports of US$ 1.96 Billion during 1991. • Pakistan’s exports of Leather Industry have declined by 3.94% during the year 2011-2012. All Countries including China have recorded positive growth in exports of Leather and Leather Products but the only country lagging behind is Pakistan. • In Pakistan there was no Leather development plan and for this reason they lost their r market share to other countries in South Asia. Government especially Ministry of Commerce must sit with Leather Industry to draft a strategy to boost our exports. • Pakistan is still leading in Leather Technology and Quality wise our leather is at second number after Italy. The only missing thing is Government Patronage. In

154

India, Bangladesh, and China the duty drawback and incentives allowed to leather sector are much higher than Pakistan. • All other Governments except Pakistan Government understand that Leather Sector is one of most important Sector having wider benefits because of its role in Job Creation, Linkage to Agro and Rural economy, poverty elevation and foreign exchange earner. • Pakistan’s leather industry has also faced a lot of challenges in the recent past, particularly world’s concern over child labor, which suddenly affected its output in the early years of this century. Now with new labor laws and regulations, this industry may promise again. Exchange rate is another area which needs stability; exporters should be given due relief as and when exchange rate falls. • Despite world-wide recession Pakistan’s leather industry registered an increase of 21% during the financial year 2007-08. Exports valued at $1.25 billion were recorded, slightly improved than government projections for $1.13 billion. Pakistan is planning to capture 5% of the global market in the next 10 years. • The augment in exports can be attributed to factors as the advancement in technology, investment in Hi-Tech machinery and improved livestock in the country. • With the help out of universities and industry resources the cause of damage to raw hides and skins has been identified and the government is striving hard to eliminate these shortcomings at farm level. • Due to the demand of Halal Food they require for Pakistani Beef and Meat has increased in the Middle East resulting in the establishment of modern slaughter houses all over the country. • Under top level hygienic conditions the animals are slaughtered in these newly established abattoirs and large quantities are being exported to U.A.E, Bahrain, Saudi Arabia, Qatar & other nations. With recent findings in Europe that slaughtered animals with maximum blood drain are more hygienic than those carrying leftover blood in the veins of slaughtered animals the demand of Hilal meat has increased. • Leather Industry occupies a place of importance in the Indian economy in view of its immense likely for service, growth and exports. There has been increasing Emphasis on its planned increase, aimed at best operation of available raw 155

Materials for increasing the returns, particularly from exports. Leather industry has been one of the usual industries in use in India and is essentially located in certain states, but detached as cottage industries in rural areas. Indian leather industry is together in the organized and unorganized sectors. The main decentralized Nature and small size makes it hard to change this industry. Since small scale, small house and artisan sector account for over 75% of the total production it was technically very under developed in design, manufacturing, packing, and logistics. This makes it needed to be careful while scheming solutions for overcoming the weak scientific base. • The global competition has been the major driver that forced the leather industry to upgrade its technological base. While traditionally, the Indian leather industry has been an exporter of brown hides and skins, it has, in the early seventies, set its things to see on becoming a major player in the leather products segment. Over the period of the last twenty years and mainly in the last ten years, it has turn into the fourth major foreign exchange earner in the country. • The industry has become an area of export force with footwear having been known as an area of acute hub. Exports from the leather sector accounted for 4.4 % of India's total exports in 2000-01.The industry uses above all native natural resources with little reliance on imported resources. India is endowed with 10% of the world raw material and export constitutes about 2% of the world trade. It employs 2.5 million persons. As the technology increases the leather industry is flourishing and increasing at the greater pace. In comparing India Pakistan and Gujarat we saw that India’s exports is more than the Pakistan and Gujarat while the production is more in the Pakistan because their main source of income is from the leather industry. • A growing market and the potential for high profits induce new firms to enter a market and incumbent firms to gain production. A point is achieved where the industry becomes crowded together with rivals, and demand cannot support the new entrants and the resulting increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures.

156

• The leather industry has carried out many progressive treatments and technologies in the past to deal with its legion environmental and energy challenges. The spokesperson association of leather industry i.e. Pakistan Tanners Association (PTA) has long been helping a number of initiatives to address the environmental issues of the industry. This has ended into a more private-enterprise; supportable and progressive leather industry of Pakistan. • Leather garments forming 52.9% (US$306.6 million) of the total measure of leather export, rank most prominent among exports of leather market, succeeded by finished leather appointing 35.8% (US$207.8 million) of the total export earnings. Export of leather gloves, constituting mostly of progressive gloves, and rank third at 4.70% (US$27.2 million). In recent years, Pakistan's exports of dress glove have been on the rise. Pakistan's export of footwear makes only about 4.8% (US$28.2 million) of the total leather export. • Leather garments in Pakistan are made mostly from low grade & medium grade leather. Deficiency of proper aiming and deficiency of skills in slaughtering are among the most important factors leading raw hides and skins towards lower grades or even to refusal. Furthermore, inadequate information of preservation techniques and lack of sufficiently designed collection and storage facilities may cause problems that are associated with the lowering of the quality and quantity of raw material. Hence, the requirement for powerful training facilities for manpower at all levels through hiring of experts. • The quality of livestock affects the quality of raw hides and skins. The hides and skins removed out of young and healthy cattle may be taken as the best in its quality provided the conditions in which these are removed and also their collection, preservation and depository is satisfactory. • Leather tanneries in Pakistan produce all three categories of waste: solid waste, air emissions and wastewater. However, wastewater is by far the most important environmental challenge being faced by Pakistan's tanneries. • "Wastewater: Although the exact quantity varies widely between tanneries, a normal need of around 50-60 liters of water per kilogram of hide is recommended. ETPI's sample audits of tanneries in Pakistan show that in some cases the consumption of water is as high as three times the recommended need. The overall water discharge also demonstrates a high degree of seasonal 157

and daily change. For most part, the current practice is to discharge this water into the local environment without any treatment. • Leather industry, including leather products, is the second largest export earning sector after textiles. Currently, this sector is contributing around $700 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products, specially garments and footwear. Basically, it is a job-oriented sector providing employment to a very large segment of the society besides earning foreign exchange for the country. • The present policy does not provide provision for export of such goods in original and unprocessed form due to cancellation of export order or changes in design/style of the order. In order to give a boost to this major contribution of the national economy, imported tanning machinery and other complimentary goods be given some exemption Pakistan’s leather industry has also faced a lot of challenges in the recent past, particularly world’s concern over child labor, which suddenly affected its output in the early years of this century. • Export value of leather products in 2009 increased to US$132.183 million compared to US$194.193 million in 2002 i.e. an increase of 20%. For India the increase in value is 99% while china’s footwear export value grew by 162% in the same period • In the years 2006 and 2009, Pakistan’s leather products export value grew by 22.34% and 7.38% respectively. However, in the same years, china’s leather products exports growth rate increased by 10.95% and 13.27% whereas India witnessed a 8.13% and 12.44% growth rates respectively in 2006 and 2009 • Pakistan’s leather products exports showed negative and positive growth in value from 2002 to 2009 with similar trend in India and China. Pakistan’s leather products exports showed highest growth of 22.34% in 2007 (figure 1). While, India and China’s leather products exports showed highest growth of 15.50% and 16.16% in 2004 and 2006 respectively. • Any leather shipment having more than seven-eight tones should invariably be referred to PTA for checking and verification. Strategy Working Group under J E Austin had estimated leather sector exports to the tune of $3 billion by 2012 as such the sector lags behind by $1.911 billion. Pakistan Tanners Association with tuning policies and level playing field can compete with countries and restore 158

annual growth of 20-25 percent per annum. Pakistan Leather Development Programme (PLDP) like Indian Leather Development Programme may be announced with an outlay of handsome amount. India announced 10th LDP with an outlay of Rs 40 billion and Rs 91 billion is of 11 th LDP, for their industry with export volume of $3.844 billion. At least 1/3 of Indian outlay may be announced for development of leather sector of Pakistan. • Pakistan is still superior in quality of finished leather and some of the articles are even better than Italian products, having a number one position at global level. Most of the World Trade Organization (WTO). Signatory competing countries have either imposed very heavy duty on export of wet blue or some of these countries have imposed complete ban on export of wet blue. India has 60 percent export duty on wet blue. • There are all most 800 tanneries in the nation, 213 Members at present registered with Pakistan Tanners Association from all over the nation are vigorously occupied in building up and fully equipped towards promoting export of excellence completed leather and leather goods on recent pattern as per worldwide demand and are playing their optimistic role in earning much desirable overseas exchange by stimulating nation’s export quantity. They are bravely prepared to gather the challenges of WTO command and other worldwide pressures with excellence awareness and full intelligence of tasks to support the faultless representation of leather business within the ambit of nationwide policies, rules & system and global conditionality.

159

5. Policies and Norms of selected country for selected Industry/company for import / export including licensing /permission, taxation etc Leather industry is the second largest export earning sector after textiles. Currently, it is contributing around $800 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification indifferent range of products, specially garments and footwear. Actually, it is a job-oriented sector providing employment to a very large segment of the society .The leather finishing and made ups industries represent an important sector in Pakistan and it contributing almost more than half a billion US dollars in foreign exchange earnings to the national exchequer. The leather industry consist of six sub-sectors namely, Tanning, Leather. Footwear, Leather Garments, Leather Gloves, Leather Shoe Uppers, and Leather Goods. The Tanning industry plays a vital role in the progress of these sub-sectors by providing the basic material (leather). Today, Pakistanis are among the leading countries in the production of Leather Garments and Gloves. This leather and leather made-ups industry plays a significant role in the economy of Pakistan and its share in GDP is 4%. Ten years ago, it was the fifth most important export industry in the manufacturing sector, now it is at the second.

IMPORTS & EXPORTS: Exports from Pakistan:

Pakistan successfully dealt with export of the following items from Pakistan and the list is growing all the time:

• Textile Yarn & Fabrics

• Articles of Apparel and Cloth Accessories • Footwear

• Leather and Leather Products • Guwar Meal, Guar Gum and Guwar Protein Extracts • Surgical Instruments 160

• Fruit • Arts Resins and Plastic Material • Chemical Material

• Refractory Cements • Mortars

• Electric Machinery and Appliances • Refractory Blocks and Tiles • Viscose Fiber (Rayon Fiber) • Sports Goods

(1.1) EXPORT DATA

Table :7 Five Years Export Figures for Leather & Leather Products

(2003-04 TO 2006-07) Value in '000' US Dollar

July-June July-June July-June July-June July-June

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 Unit S/No. Commodities QTY Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value

1 '000' 16 252 18 304 17 292 19 357 24.26 415 Leather Tanned SQM

A.U.P per Sq.M 15,68 16,47 16,83 18,56 17,12

2 Apparel & '000' 8 324 9 329 13 502 10 388 13.45 528 Clothing of Leather Pcs.

A.U.P per Pcs. 38,10 37,23 39,90 38,14 39,26

3 '000' 16 71 34 164 27 151 24 133 25.55 161 Leather

161

Gloves Pairs

A.U.P per Pair 4,35 4,85 5,61 5,62 6,31

4 '000' 9 78 11 108 12 115 10 97 9.809 105 Leather Footwear Pairs

A.U.P per Pair 8,89 9,64 9,90 9,73 10,74

5 Leather '000' ## 20 2 33 3 69 1.4 33 521 10.2 Manufactures N.S. 'Kgs'

A.U.P per Kg 21,40 18,27 24,29 24,62 19,53

TOTAL : 744 938 1.129.638 1.008.154 1.220.121

(1.2) Prohibitions on Export

Certain items are not allowed and restricted for export from Pakistan by Customs. These things are in addition to items prohibited by the IATA. Senders are liable for making sure that the receiving country will accept the goods they are shipping.

‹ Items that are banned for Export from Pakistan

• Dangerous goods as defined by IATA • Live animals • Human body parts • Explosives

• Money

162

• Liquor • Passports • Antiques

• Gold • Counterfeit products • Used goods

(1.3) Pakistan Export Regulations

Take note of the following regulations when exporting from Pakistan :

• For size and weight maximums, an exporter must check with the destination country's limits • Dimensional weight or actual weight, whichever is , determines the shipment tariff

• Foreign exchange rules and procedures apply to exports as determined by the State Bank of Pakistan. (1.4) Reasons to Set Up a Unit in EPZS of Pakistan

1. 100% ownership rights 2. 100% repatriation of capital & profits 3. No minimum or maximum limit for investment 4. Duty free imports of machinery, equipment & material 5. No sales tax on input goods including electricity & gas bills 6. Obsolete/old machinery can be sold in domestic market of Pakistan after payment of applicable duties & taxes 7. No excise duty, no Custom duty on cement, steel & any other material used in construction of buildings 8. Freedom from National import restrictions 9. Foreign Exchange control regulations of Pakistan are not applicable 10. Defective goods/waste can be sold in domestic market after payment of applicable duties, maximum up to 3% of the total value of export

163

11. Duty free vehicles allowed under certain conditions. After 5 years of use, vehicles can be disposed off in domestic market on payment of duty 12. Domestic market of Pakistan available on same conditions as for imports from other countries 13. Units operating in EPZ's can undertake sub-contracting for units of tariff area subject to payment of duty and taxes on value addition only 14. Only EPZA is authorized to collect Presumptive Tax at the time of export of goods which would be final tax liability 15. EPZ units allowed to supply goods to Custom manufacturing bonds 16. Production oriented labour laws to be solely regulated by the Authority 17. EPZ manufacturers be treated at par with bonded manufacturers in tariff area for any future incentives to be announced for exporters 18. Relief from double taxation subject to bilateral agreement

(1.5) Current scenario of leather and its industry

(1.6.1) Leather and its products: Decrease of (-22.65%) exports of leather and leather products which came down to US$ 943.79 million from US$ 1220.12 million. Leather tanned contributed 2.18%, Leather garments/manufactured 2.77% and leather footwear 0.65% in the group of leather & leather products

(1.6.2) Leather: showed a decrease of (-27.88%). The export of Leather fetched US$ 299 million as against US$ 415 million in previous year. Quantity also decreased by (- 21.57%) from 24,258 thousand (‘000) SQM to 19, 026 thousand (‘000) SQM.

Major buyers of the product were Indonesia, Bangladesh, Thailand, and UAE.

(1.6.3) Leather garments (Excluding gloves): registered decrease of (-25.68%) to US$ 392.537 million from US$ 528.15 million. The major buyers of this product were Germany, USA, Spain, France, Turkey and Brazil.

(1.6.4) Leather gloves: a downward trend of (-5.53%) from US$161.168 million to US$ 152.26 million. The major buyers of the product were Belgium, Saudi Arabia, UAE, Norway and Poland. The product market of USA, Germany and Sweden and France registered decrease during 2008-09.

164

(1.6.5) Leather Manufacture: registered increase of 17.66% from US$ 10.177 million 2007-2008 to US$ 11.97 million 2008-2009. The major buyers of the product were Germany, Netherlands, USA, UK, France and South Africa.

(1.6.6) Leather footwear: obtained increase by 3.54% from US$ 124.135 million of the previous year to US$ 128.53 million.

The major markets of the product were Germany, Italy, Afghanistan, UAE, Oman and South Africa .

(1.6) IMPORT DATA:

Pakistan Import Regulations: According to the customs authorities below are the import regulations for Pakistan.

(1.7.1) Free Import:

• 200 cigarettes or 50 cigars or 1/2 kilogram of tobacco; • 1/4 litre of eau de toilette and perfume, of which not more than 1/8th litre may be perfume; • Gift articles and/or souvenirs in a reasonable number and quantity: • First visit in one calendar year: value not more than PKR 2,000. • Second visit in one calendar year: value not more than PKR 1,000. • Third or subsequent visits: not duty free.

(1.7.2) Prohibited:

• Import of alcoholic beverages is strictly prohibited for both residents and non- residents regardless of their nationality. • Matches, fruits, plants and plant material (incl. cut flowers) whether live or dead unless accompanied with Phytosanitary (Health) certificate from the country of origin and import permit from the Pakistan Ministry of Agriculture (Department of Plant Protection). • Banknotes in denominations of 50 and 100 rupees or more.

165

(1.7.3) Restricted:

• Import permit and Arms Licence required. • Animals and pets must be accompanied by a veterinarian certificate.Pets may enter as passenger's checked baggage, in the cabin or as cargo.

Currency Import regulations: Local currency (Pakistan Rupee-PKR): PKR 100.in denominations of 10 rupees or less, also in combinations of personal quota.

Table:8 Import data of Pakistan:

Value in Commodities Growth Share thousand $

G R A N D T O T A L 39,968,496 30.87 100

A FOOD GROUP 4,209,742 53.51 10.53

B MACHINERY GROUP 7,376,383 10.32 18.46

C TRANSPORT GROUP 2,251,116 -6.04 5.63

D PETROLEUM GROUP 11,380,048 55.14 28.47

E TEXTILE GROUP 2,348,808 49.96 5.88

AGRICULTURAL AND OTHER F 5,828,912 31.59 14.58 CHEMICALS GROUP

G METAL GROUP 2,542,409 8.37 6.36

H MISCELLANEOUS GROUP 738,115 11.62 1.85

I ALL OTHERS ITEMS 3,292,963 38.55 8.24

Source: Lahore chambers of commerce and industry

166

Table:9 Country wise import duty:

MF N RATE MFN RATE MFN RATE MFN RATE

S.No. Country Name Chapter 41 Chapter 42 Chapter 43 Chapter 64

1 Albania 2 - 10% 15% 2 - 15% 10 - 15%

2 Algeria 5 - 15% 30% 30% 15 - 30%

3 Argentina 2 - 10% 20% 10 - 20% 18 - 35%

4 Armenia Free 10% Free - 10% Free - 10%

5 Australia Free - 5% Free - 17.5% Free - 7.5% Free - 10%

6 Austria Free - 6.5% 2 - 9.7% Free - 3.7% 3 - 17%

7 Azerbaijan 15% 0.5 - 15% 15% 3 - 15%

8 Bahrain 5% 5% 5% 5%

9 Bangladesh 5% 3 - 25% 12 - 25% 25%

10 Belgium Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

11 Bolivia 5 - 20% 10 - 20% 5 - 20% 5 - 20%

12 Brazil Free - 10% 20% 10 - 20% 18 - 35%

13 Brunei Free Free - 10% Free - 10% Free - 5%

14 Bulgaria Free - 6.5% 2 - 9.7% Free - 3.7% 3 - 17%

15 Cambodia 7% 7 - 35% 15 - 35% 7 - 35%

16 Free - 5% Free - 15.5% Free - 15.5% Free - 20%

17 China 5 - 14% 8 - 20% 10 - 23% 10 - 24%

18 Colombia 5 - 15% 5 - 20% 5 - 20% 15 - 20%

19 Costa Rica Free - 9% Free - 14% 14% Free - 14%

20 Cyprus Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

21 Czech Republic Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

22 Denmark Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

23 Egypt 2 - 10% 2 - 30% 2 - 30% 10 - 30%

24 Estonia Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

167

25 Finland Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

26 France Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

27 Georgia Free Free Free Free

28 Germany Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

29 Ghana 10% 10 - 20% 20% 20%

30 Greece Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

31 Hong Kong Free Free Free Free

32 Hungary Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

33 Indonesia Free - 5% 5 - 15% 5 - 15% 5 - 25%

34 Ireland Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

35 Israel Free Free - 12% Free - 12% Free - 12%

36 Italy Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

37 Japan Free - 30% 2.7 - 18% Free - 20% 3.4 - 30%

38 Jordon Free - 30% Free - 30% 10 - 30% Free - 30%

39 Kazakhstan 5% 5% 5 - 10% 5 - 10%

40 Kenya 10% 25% Free - 25% 10 - 25%

41 Kuwait 5% 5% 5% 5%

42 Free Free - 10% Free - 10% Free - 10%

43 Latvia Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

44 Lebanon Free - 10% Free - 25% 5 - 25% Free - 10%

45 Libya Free Free Free Free

46 Lithuania Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

47 Luxembourg Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

48 Malaysia Free - 10% Free - 25% Free Free - 30%

49 Mauritius Free Free - 30% Free Free - 15%

50 Mexico Free - 5% 5 - 30% 5 - 30% Free - 30%

51 Morocco 2.5 - 7.5% 2.5 - 35% 2.5 - 35% 7.5 - 35%

52 Netherlands Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

53 New Zealand Free - 5% Free - 12.5% Free - 5% Free - 12.5%

168

54 Nigeria 5 - 10% 10 - 35% 5 - 10% 5 - 20%

55 Norway Free Free Free Free

56 Oman 5% 5% 5% 5%

57 Pakistan Free - 25% 5 - 25% Free - 25% 20 - 25%

58 Panama Free - 15% 2.5 - 15% 10 - 15% Free - 15%

59 Paraguay 2 - 10% 17 - 20% 10 - 20% 17 - 25%

60 Peru Free - 9% Free - 9% 9% 17%

61 Philippines 1 - 7% 3 - 15% 3% 1 - 15%

62 Poland Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

63 Portugal Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

64 Qatar 5% 5% 5% 5%

65 Romania Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

66 Russian Fed Free - 5% 5 - 20% 5 - 20% 5 - 15%

67 Saudi Arabia 5 - 12% 5 - 15% 5% 5 - 12%

68 Senegal 5 - 10% 10 - 20% 5 - 20% 10 - 20%

69 Free Free Free Free

70 Slovak Republic Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

71 Slovenia Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

72 South Africa Free - 10% 10 - 30% Free - 30% Free - 30%

73 South Korea 1 - 8% 8 - 13% 3 - 16% 8 - 13%

74 Spain Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

75 Sri Lanka 2.5 - 15% 15 - 28% 28% 15 - 28%

76 Sweden Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

77 Switzerland Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

78 Taiwan Free - 2.5% 5 - 10% Free - 10% Free - 7.5%

79 Tajikistan 5% 5 - 15% 10% 10 - 15%

80 Tanzania 10% 25% Free - 25% 10 - 25%

81 Thailand Free - 5% 10 - 40% 1 - 30% 10 - 30%

82 Trinidad & Tobago Free Free - 20% Free - 20% Free - 20%

169

83 Tunisia 10 - 36% 10 - 36% 36% 36%

84 Turkey Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

85 Turkmenistan 2% 2% 2% 2 - 5%

86 Ukraine Free - 10% 5 - 25% Free - 10% 10%

87 United Arab Emirates 5% 5% 5% 5%

88 United Kingdom Free - 6.5% 1.7 - 9.7% Free - 3.7% 3 - 17%

89 USA Free - 5% Free - 20% Free - 6.5% Free - 48%

90 Uruguay 2 - 10% 20% 10 - 20% 18 - 35%

91 Uzbekistan 5% 30% 30% 5 - 30%

92 Venezuela 5 - 15% 15 - 35% 5 - 35% 15 - 20%

93 Vietnam Free - 10% Free - 34% Free - 34% 5 - 36%

(2) Taxation policies :

(2.1) Import and Export conditions for leather :

Import duty and taxes are due when importing goods into Pakistan whether by a private individual or a commercial entity. The valuation method is CIF (Cost, Insurance and Freight), which means that the import duty and taxes payable are calculated on the complete shipping value, which includes the cost of the imported goods, the cost of freight, and the cost of insurance. However, import duty can also be charged per unit of measure. In addition to duty, imports are subject to sales tax (VAT), excise on some products, and import regulatory duty.

Import of accessories for textile/leather garments, and leather goods, imports of accessories, allowed free of Customs duty and Sales Tax, for export of garments including leather garments, flat goods, ladies hand bags and soft luggage items, subject to the following conditions:

• Customs duty/Sales Tax exemption is available only to the extent of 5% of the FOB value of exports, to be declared by the exporter on every Shipping Bill, giving information of import papers and the total FOB value of re-exported goods so far. 170

• Application for exemption is prepared to the Customs providing full particulars of the goods and the reason of import. Only one point of entry for such imports is accessible as per the affirmation of the importer.

• An Indemnity Bond alongside with post dated cheque, equivalent to the amount of Customs duty and Sales Tax is provide to the Customs, binding the importer to re-export the finished goods within a period of one and a half year. Failure to export within the stipulated period attracts enforcement of the Indemnity Bond / post-dated cheque. • On importation, the importer has to speak out on the Bill of Entry that the goods are imported. At the time of re-export, the exporter has to declare on the Bill of Export that the materials were imported for the purpose of SRO-954/98 and gives particulars of import documents. • After re-export, essential data of re-export within the predetermined period has to be given to the Customs upon which the Indemnity Bond is set free. • Transfer of ownership of short term imported goods may be allowed by Customs, at their discretion, subject to reassign of Indemnity Bond. • for the short term imported goods are used in adding together to duty-paid materials, and duty drawback is admissible on the export of finished products, the FOB value of export is lesser by the value of the duty-free imported goods, for the aim of calculation of duty drawback amount.

(2.2) Duty reduction on imports of materials for export of leather made-ups number of raw materials, accessories and components are importable without any duties, with the aim of export production, For certain items needed in export production of leather made-ups and footwear that are not cover up under this, and to make easy, those manufacturer-cum-exporters permit import of accessories and parts of footwear, at a reduced Customs duty of 10%. The items covered up can be imported subject to the following conditions:

• The manufacturer-cum-exporter need to say publicly on the Bill of Entry that he is an exporter of leather made-ups and to give full authority of the imported goods and their use. 171

• The advantage of declining in duty is also available for goods consigned by a foreign country person without cover of Letter of Credit. • An Indemnity Bond is to be providing by the manufacturer-cum-exporter, to the effect that if he be unsuccessful to re-export the goods within an year, or an extra period not greater than six months as may be permitted by the Customs, the Indemnity Bond will be imposed. As a substitute to Indemnity Bond, a Bank Guarantee for the duties involved can also make available. • The manufacturer-cum-exporter has to maintain an account of the goods imported, received, consumed and exported. • The Custom-Station, the place from where the goods are imported, needs to be well-informed about the export of finished products within the stipulated time span. • At the time of export, on each Bill of Export, the quantity of goods imported and used in the leather made-ups being exported, has to be confirmed. • Waste of imported goods is allowed up to 3% of the imported quantity.

(2.3) Duty-free Raw Materials for Leather Goods:

It let duty-free clearance of the following raw materials, into manufacturing bonds, for production of leather goods wholly for export:

• Raw and pickled hides and skins(ii)Wet blue hides and skins • Finished leather; and • Accessories, components and trimmings for leather manufacturers.

(2.4) Sales tax : The Federal Board of Revenue (FBR) has imposed 2 percent sales tax on five export-oriented sectors - textile, leather, surgical, carpets and sports from March 1, 2013. The FBR has amended to bring supplies of five-leading sectors into the formal value added tax (VAT) regime. The rate of sales tax for outside the five sectors has been kept intact at 5 percent .

172

(1) LICENSING:

Restricted goods can be imported or exported through a license or as per procedure in a public notice for this. Pakistan’s import trade in the private sector is regulated by an elaborate licensing system, which is administered by the chief controller of imports and exports ( CCI&E )in the ministry of commerce, who is the principal licensing authority in the country.Restricted item license / certificate / permission may be settled by the Director General of Foreign Trade or any other licensing authority which is authorized by him in this behalf. The DGFT / Licensing authority may take the assistance and advice of a facilitation committee. The Facilitation Committee consists of representatives of technical authorities and Departments / Ministries concernedIndustrial licensing is more complicated than commercial licencing. It creates a major process to complete it. But scenario is changing and nowadays no more licensing is required to import into Pakistan. If we look towards stats in imports : Imports during the first ten months (July-April) of the fiscal year 2011-12 increased by 14.5% compared with the same period of last year, reaching to $33.15 billion.

(3.1) Which goods require Export Licenses?

• Those goods that do require export licenses include the following: • Orderly marketing of primary products and commitments under advertising agreements, e.g., meat, wheat and wine • International agreements, eg. atomic materials and drugs of dependence • Control of quality • Conservation of Australian fauna and items of historical or cultural significance such as Aboriginal artifacts • Utilization of Australian resources such as stone ores and merino sheep • Listed in the ‘Australian Customs Service Manual - Export Control’ are details of goods which are conditionally prohibited from export and/or which require export permits (or similar export authorizations), and the government departments and agencies issuing the permits.

173

(3.2 ) Documents required to import into Pakistan: As stated earlier, import license is no more required to import into Pakistan. Only the following initial documents are needed to import into Pakistan: -- 1. National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC. 2. Current bank account is required for import proceedings and documents 3. Sales Tax Registration is required to import into Pakistan. For registration, Form ST-1 is required to send to the local sales tax registration office via post with acknowledgment due (courier is preferable). (4) The challenges faced by Leather business:

The industry has been facing some challenges which have been slowing down the making process. The main issue is the energy crisis which is endured by all industries in Pakistan. The absence of energy competent technologies and lack of proper machinery and maintenance is also causing a significant amount of wastage of power. Environmental challenges are faced by the leather industry all over the world. Wastewater, solid waste & air emissions are the main wastes produced during the tanning process. Good excellence leather is exported and most of the time is not available for high value done goods. Lack of proper training for finished-goods producing labor is the main reason that good quality and high value raw material is exported. Providing a solution for these troubles can also result in increasing in the production rate.The leather industry can easily be changed into a major contributing sector for foreign exchange by focusing on the key production lines like footwear industry, introduction of technology and cutting down production costs which can increase Pakistan’s share in the global hides and skins production as the demand of leather products is increasing each year.

(5) Global scenario

(5.1) World Market Orientation :

The manufacturing of leather products takes place in the East with the major market being in the West. The main consuming markets in the world for leather products are

174

Europe; the biggest and North America. These areas are the target markets for many leather products manufacturers who aspire to be exporters. The difficulties in Europe and to a certain extent the difficulties in China, (5.1.1) Leather Industry in Europe:

The leather tanning industry is a global industry, and EU tanners depend highly on access to raw materials and to export markets. Even if, in general, the share of the EU in the world markets is tending to shrink with the development of the leather industry in other regions of the world such as Asia and the Americas, the EU tanning industry is still the world's largest supplier of leather in the international market place. The EU is a major player in the international leather market. To ensure the competitiveness of the leather industry, the EU is working to reduce barriers to imports of raw materials and finished products to access foreign markets. Europe is an important player in the international trade of leather as it represents 25% of the world production of leather and it is also the largest and most dynamic consumer market of leather goods. (5.1.2) The Australian Industry:

The Australian leather industry consists of bovine (cattle), kangaroo and sheepskin tanning industries (either part or fully processed). The overall leather industry employs around 2700 people in Australia and has close to $1 billion in revenue. The vast majority of this is from the export of pre-tanned or raw hides which in 2010 was close to $700 million.

Australia produces approximately 8 million cattle, 24 million sheep and 1.5 million kangaroo hides per annum based on available slaughter numbers.

In terms of finished leather, the Australian industry has been at the forefront of developing performance leather for automotive and footwear use.

(5.1.3) Indian Leather Industry:

The exports of leather and leather products gained momentum during the past two decades. There has been a phenomenal growth in exports from Rs.320 million in the year 1965-66 to Rs.69558 million in 1996-97. Indian leather industry today has attained

175

well merited recognition in international markets besides occupying a prominent place among the top seven foreign exchange earners of the country .

(5.2) Comparison of leather industry

Export value of leather products in 2009 increased to US$132.183 million compared to US$194.193 million in 2002 i.e. an increase of 20%. For India the increase in value is 99% while china’s footwear export value grew by 162% in the same period (Table 1). In the years 2006 and 2009, Pakistan’s leather products export value grew by 22.34% and 7.38% respectively. However, in the same years, china’s leather products exports growth rate increased by 10.95% and 13.27% whereas India witnessed a 8.13% and 12.44% growth rates respectively in 2006 and 2009 (table 2)

Table 10 . Exports Performance of Selected Asian Economies in leather Products Exports of Leather Products (U SD thousand s) Years Pakistan Chin India 2002 194,393 17,987,315 2,018,714 2003 151,,005 19,883,291 1,941,820 2004 188,836 23,615,063 2,297,914 2005 154,719 26,862,523 2,546,196 2006 161,322 32,038,616 2,881,437 2007 207,719 35,976,581 3,136,263 2007 122,424 40,855,493 3,545,205 2009 132,183 47,108,796 4,048,891 Source: ITC, COMTRADE data

176

Table 11. Growth in the Value of leather products Exports Growth of exports in value (%) Years Pakistan Chin India 2003 - 9.5 -3.96 2004 20 .0 15 .8 15 .5 2005 - 12 .0 9.75 2006 4.0 16 .1 11 .6 2007 22 .3 10 .9 8.13 2008 - 11 .9 11 .5 2009 7.3 13 .2 12 .4 Source: ITC, COMTRADE data

Figure 4. Growth of Leather Exports: Comparison of Pakistan, India and China

Pakistan’s leather products exports showed negative and positive growth in value from 2002 to 2009 with similar trend in India and China. Pakistan’s leather products exports showed highest growth of 22.34% in 2007 (figure 1). While, India and China’s leather products exports showed highest growth of 15.50% and 16.16% in 2004 and 2006 respectively.

177

Figure 5. Leather Exports as % of Total Exports

The share of Pakistan’s leather exports in the world’s total leather exports is about 0.75% while it is 2.38% for India and 27.76% for China in the year 2009. Leather exports share in Pakistan’s total exports fell to 0.07% in 2008 from 0.21% in 2002. India’s leather exports account for about 0.22% of total exports

178

6. Policies and Norms of India for Import or export to the selected country including licensing / permission, taxation etc

Leather Industry in India

Leather Industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, development as well as exports. There has been increasing emphasis on its planned growth, aimed at optimum utilization of obtainable raw materials for maximizing the returns, mainly from sell abroad. The leather industrial segment comprises of: a) Tanneries (where raw hides & skins are converted into leather) b) Factories transforming leather into a variety of consumer products such as footwear, garments & outerwear, & assorted leather high-quality & brief cases.

Apart from the quality of raw material, the procedure of its conversion into leather &, later, of the design, product expansion & process of produce, of products play a key role in adding worth to it. The leather industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, growth & exports and there has been an increasing emphasis on its planned development aimed at optimal utilization of available raw materials for maximizing the returns particularly from exports and the exports of leather and leather products gained momentum during the past 2 decades and also there has been a phenomenal growth in exports from Rs.320 million in the year 1965-1966 to Rs.69558 million in 1996-1997.Today Indian leather industry has attained well merited recognition in international markets besides occupying a prominent place among the top seven foreign exchange earners of the country. The leather industry has undergone a dramatic transformation from a mere exporter of raw materials in the sixties to that of value added finished products in the nineties and policy initiatives taken by the Government of India since 1973 have been instrumental to such a transformation and in the wake of globalization of Indian economy supported with

179

liberalized economic and trade policies since 1991 the industry is balanced for further growth to achieve greater share in the global trade. Apart from a significant foreign exchange earner and leather industry has tremendous potential for employment generation. Direct & indirect employment of the industry is around 2 million and the skilled and semi-skilled workers constitute nearly 50% of the total work force and the estimated employment in different sectors of leather industry is as follows: Table12: Sector wise employment profile

Sector Total Employment Flaying, Carcass Recovery & curing 8,00,000 Tanning & Finishing 1,25,000 Full Shoe 1,75,000 Shoe Uppers 75,000 Chappals & Sandals 4,50,000 Leather Goods & Garments 1,50,000

Brief history of Indian leather industry

Leather, the oldest manufacturing industry in India, catered to the international market from the 19 th century. Leather is a traditional Indian craft and the primitive method of leather-making is still alive in many villages in Uttar Pradesh, , Madhya Pradesh, Punjab, Gujarat, West Bengal and Orissa. Modern methods of leather tanning were introduced by the British in 1857. The first leather factory in India was set up in Kanpur to make saddlery and harness. The following are some of the notable years in the development of Indian leather industry:-

1880: A boot factory was established by the British India Corporation in Kanpur

1890: More tanneries were set up in UP, Bengal, Bombay, Orissa and Central India

1895: Chrome tanning was introduced at Pallavaram, Chennai, and then Madras. It was also introduced in Bangalore, Cuttack, Kolkatta and then Calcutta.

1903: Commercial chrome tanning started at Pallavaram, in Chennai (Madras).

180

1913: By 1913, 22 chrome tanneries were established in several parts of India. Seventeen of them were at Pallavaram.

The two world Wars lead to the establishment of more tanneries and product manufacturing factories in Kanpur, Agra, Chennai and other places.

I948: The establishment of the Central Leather Research Institute in Chennai (Madras) as a constituent laboratory under the Council of Scientific and Industrial Research (CSIR)

1951: Independent India banned the export of raw hides and skins and reserved the production of leather and leather goods to the small sector.

1972: Dr A Seetharamiah Committee Report suggested export of finished leather and value-added products only

1991: Economic liberalization and globalization helped leather industry also to flourish

2005: Cabinet Committee on Economic Affairs announced an Rs 2.9 billion- scheme for the integrated development of Indian leather industry – modernization of tanneries and setting up of modern footwear units were the focus areas.

Some attributes of Indian leather industry • The Government policies on leather & leather product export started changing from 1974. Priorities were given for sell abroad of value added high-quality. From the year 1991 onwards only finished leather were exported & export of raw or semi finished leather was banned. • Many tanners started setting up factories for manufacturing leather products after 1991-92 like shoe uppers, shoes, garments & leather goods. Similarly many shoe & garment manufacturers began to seek toward the back linkage, by taking on lease or setting up tanneries. This is a single expansion in India, a tanner becoming product maker & the product sector setting up tanneries or leasing out tanneries. • At the same, as incentive to the exporters, the import duties on investment goods have been reduced.

181

• Until 2002, the leather sector was reserved for small scale sector & this may have prevented Foreign Direct Investment (FDI) in this segment. The FDI in this sector from August 1991 to December 2005 is US$ 51.84 million. This is only

0.15% of total FDI inflows & ranked at 30. • Today the industry ranks 8th in the sell abroad trade in terms of foreign exchange earnings of the country. • India is largest livestock holding country; The Indian leather sector meets 10% of global finished leather requirement. • The main production centers’ for leather & leather products are the following: Tamil Nadu – Chennai, Ambur, Trichy, Dindigul, Ranipet, Vaniyambadi, & Pondicherry − West Bengal – Kolkata − Uttar Pradesh – Kanpur, Unnao, Banther, Agra & Noida − Punjab – Jall&har • Tamil Nadu accounts for about 40% of India’s exports & has about 60% of tanning capacity. • The Indian leather industry employs about 2.5 million workforces & 30% of the workforce is women. • The industry has a very strong institutional set up. The following are the most important institutions cater to the industry: o CLE Council for Leather Exports (Under Ministry of Industries & Commerce); o CLRI Central Leather Research Institute (Under Department of Scientific & Industrial Research and Ministry of Science & Technology) o AISHTMA, All India Skin Hide Tanners Merchants Association o ISF, Indian Shoe Federation o IFLMEA, Indian Finished Leather Manufacturers & Exporters Association o CFTI Central Footwear Training Institute o ILIFO, Indian Leather Industry Foundation Government policies in support of the industry

• The entire leather sector is now de-reserved & de-licensed, paving way for development on modern lines with state-of-the art machinery & equipment.

182

• 100% Foreign Direct Investment & Joint Ventures permitted through the automatic route.

• 100% repatriation of profit & dividends, if ventures made in convertible foreign currency. Only statement to this effect to the Reserve Bank is required. • Promotion of industrial parks (one footwear components park in Chennai , one leather park in Andhra Pradesh, one footwear park in Tamil Nadu & one leather goods park inWest Bengal).

Import Policy The economic needs of the country effective use of foreign exchange & industrial as well as consumer requirements are the basic factors which influence India's import policy and on the import side the policy has three objectives: to make necessary imported goods more easily available including essential capital goods for modernizing and upgrading technology; to simplify and streamline procedures for import licensing; to promote efficient import substitution and self-reliance. There are only 4 prohibited goods: animal rennet, wild animals, tallow fat, and unprocessed ivory and there is a restricted list but most of the restrictions are on grounds of security, health & environmental protection or because the goods are reserved for production by small and tiny enterprises which are home-based or village-based & which require low skills and employ a large number of people but the policy of restricting import of consumer goods is changing. The Indian government's clearly laid down policy is to achieve and through a series of progressive steps and the average tariff levels prevalent in the ASEAN region and the basic customs tariff rate now ranges from 0 to 40% plus additional duty of 2%; the average rate is about 30%. Imports are allowed free of duty for export production under a duty exemption scheme and input-output norms have been specified for more than 4200 items and also these norms specify the amount of duty-free import of inputs allowed for specified products to be exported. There are no quantitative restrictions on imports of capital goods and intermediates and import of second-hand capital goods is permitted provided they have a minimum residual life of 5 years and there is an Export Promotion Capital Goods (EPCG) Scheme under which exporters are allowed to import capital goods (including computer systems) at concessionary customs duty subject to fulfillment of specified export obligations and service industries enjoy the facility of zero import duty under the EPCG Scheme. 183

Likewise, air cargo, hospitals, hotels & other tourism-related industries and software units can use data communication network to export their products.

Export Policy Exports are the major focus of India's trade policy and a thrust area is exports involving higher value additions and most items can be freely exported from India and a few items are subject to export control in order to avoid shortages in the domestic market to conserve national resources & to protect the environment. Export profits are exempt from income tax. Higher royalty payments of 8% (net of taxes) are permitted on export sales as compared to 5% on domestic sales. Export commissions up to 10% are also permissible. Inputs required to be imported for export production are exempted from the basic customs duty. Export Oriented Units (EOUs) and Export Processing Zones (EPZs) enjoy special incentives such as duty free import of capital goods and raw materials for the purpose of export production. A Brand Equity Fund has been set up to popularize high quality India brands in the world market. The corpus of the fund of Rs 5 billion (US $156 million) will receive equal contributions from the government and industry. Licensing system in Pakistan:

The system of licensing in the country is closely linked with the exchange control system which regulates both the inflow and outflow of foreign exchange. Apart from this, exports have to submit their entire earnings to the state bank of Pakistan. Expenditure of foreign exchange on imports is regulated by the annual foreign exchange budget.The foreign exchange budget is approved by the cabinet after which the budgeted foreign exchange expenditure cannot be exceeded without its prior approval. It is a very long and complicated process to get licensing to import in Pakistan.

Documents which required to import into Pakistan

Now a day’s import license is no MORE required to import into Pakistan and only the following initial documents are required to import into Pakistan: --1. National Tax Number Certificate (NTNC), which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC.2. Current bank account is required for import proceedings and documents

184

3. Sales Tax Registration is required to import into Pakistan.

For registrationForm ST-1 is required to send to the local sales tax registration office via post with acknowledgment due (courier is preferable). The local registration office shall transmit filled up applications to the Central Registration Office based in CBR Islamabad and the previous requirements of furnishing supporting documents have been done away now there is no need to attach any document with the application. The Central Registration having on line access to database of NTN as well as of NADRA shall verify the particulars declared in the application with database and on verification, it shall generate & issue registration certificate to the applicant directly on his given address Membership certificate of Chamber of Commerce and Industries or any relevant trade association of Pakistan

India Import Trade Data and Statistics Report - 2011

These findings are based on Info drive India export import trade data through Jan - 2011 and will be updated till Dec -2011. Info drive India Trade data is the most up-to- date information on India’s foreign trade , It covers 94 major ports in India like, Bombay Air and Sea , Chennai Air & Sea , Delhi IGI Air, Delhi Tughlakhabad ICD, Delhi Patparganj, Kolkata Air and Sea, Bangalore Air and many more. Info drive India.com trade data is available for online analysis within 3 weeks from date of export import at InfodriveIndia.com compared to Govrnment sources which are around 3 months old.

Export License:

Majority of goods are allowed to be exported without obtaining a license. Export licenses are simply required for matter listed in the Schedule 2 of ITC (HS) Classifications of Export and Import items . A claim for grant of Export License for such items must be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for topic of export licenses.Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) items are also permitted under a license or prohibited overall.

185

Export of Samples: Export of samples up to specific limits is allowed free. The exporter is necessary to be registered with the appropriate Export Promotion Council to avail of this benefit. Samples with lasting marking as "sample not for sale" are allowed freely for export without any border.

Processing of Shipping Bill:

In case of export by sea or air, the exporter must submit the 'Shipping Bill', and in case of export by road he must propose 'Bill of Export' in the prescribed form containing the prescribed details such as the name of the exporter, consignee, invoice numeral, details of packing, account of goods, amount, FOB value, etc. Along with the Shipping Bill, extra documents such as copy of packing record, invoices, export contract, letter of credit, etc. are as well to be submitted.

Types of Shipping Bills

V Shipping Bill for export of duty free goods . This shipping bill is white highlighted.

V Shipping bill for export of goods under claim for duty drawback . This transport bill is green colored.

V Shipping bill for export of duty free goods ex-bond i.e. from bonded warehouse. This delivery bill is pink colored. V Shipping Bill for export of dutiable goods . This delivery bill is yellow colored.

V Shipping bill for export under DEPB scheme. This shipping bill is blue in color.

186

TRADE BETWEEN INDIA AND PAKISTAN

Table 13 The figures of bilateral trade between India and Pakistan during the year 2005-2006 onwards are given below

Exports to Imports from YEAR Total Trade Pakistan Pakistan

2005-06 689 180 869

2006-07 1349 323 1672

2007-08 1944 288 2232

2008-09 614 124 738 (Apr-July) Source DGCI&S Kolkata through NIC DOC

Table 14 Top ten items of import from Pakistan into India during April-July 2008 (2008-2009)

Value in US $ Sl.No. Commodity million million

1. Petroleum, crude & products 48.87

2. Cement 30.66

3. Cotton yarn & fabrics 13.95

4. Leather 5.40

5. fruits & nuts excl cashew nuts 5.17

6. Leather commodities 4.25

7. Lon-ferrous metals 2.33

8. Eool, raw 2.13

9. Organic chemicals 2.07

10. Metalifers ores & metal scrap 1.97 Source DGCI&S Kolkata through NIC DOC

187

How to get an Export License in India…..

To export in India, you must first obtain an send abroad license. Before submitting your application, you should consult the latest trade in and export procedures and policies, which list all the rules for obtaining an export license in India. Before you receive a license, a alert review will be conducted of the factors surrounding the your intended export contact. Licensing is determined by the goods to be exported and the port of export.

India Pakistan Leather Import Export: An Overview

Despite tensions, India's exports to Pakistan increased by almost 15 per cent in 2012-13 even as exports to the rest of the world fell by 4 per cent. Imports as of Pakistan too showed a rise, with 30 per cent. While India's exports to Pakistan added up to nearly $1.6 billion between April 2012-February 2013, up from $1.4 billion in the corresponding period last year, imports rose to $488 million from $375 million. A government official said these were the highest-ever figures for India-Pakistan trade. In the SAARC region, the growth rate as well as the absolute numbers is reaching the level of trade India has with Bangladesh and Sri Lanka. While India's exports to Bangladesh rose 35 per cent during the period, Sri Lanka saw a 21 per cent amplify and Iran a 27 per cent increase. India exported raw cotton worth $270 million to Pakistan in the period, up by 313 per cent from last year. The export of man-made yarn improved by 110 per cent, plastic by 32 per cent, cotton yarns & fabrics by 222 per cent, gasoline by 608 per cent and pulses by 30 per cent. Similarly, import of gypsum from Pakistan increased by 957 per cent, raw cotton by 148 per cent & raw wool by 99 per cent. "The business delegations of the two countries have been talking to each other. The data shows that order for intermediate goods has gone up. A lot of trade has also regularized after the dismantling of the positive list," said the official. "The growing trade shows two things — the optimism between the two nations, & that trade is happening directly and not via other jurisdictions like the center East. Pakistan's promise to grant MFN status to India has propelled the enlargement further," said Abhijit Das, head of the centre for WTO studies, Indian Institute of Foreign Trade. Pains to push trade between India and Pakistan began in 2004 but were put on 188

hold after the 26/11 attack in 2008. The year 2011 saw the 1 st visit by a Pakistani commerce minister to India in 35 years.

Source: indianexpress.com

Interim Guidance on Indian and Pakistan Export Control Licensing Policy

The President has determined and reported to Congress, under the authority of Section 102 of the Arms Export Control Act (the Glenn amendment), that India and Pakistan, non-nuclear weapons states, have detonated nuclear explosive devices. In light of these developments, the Bureau of Export Administration (BXA) is taking the following interim steps under its export control authority. Consistent with the licensing policies in Sections 742.3 or 744.2 of the EAR, we are suspending all existing licenses authorizing the export to Indian and Pakistani government entities, including parastatals involved in proliferation activities, for items controlled for nuclear (NP) or missile (MT) reasons. No further exports may occur under the authority of these existing licenses.

How to get an Import License in Pakistan ….

1. Get the national tax number certificate from the income tax department. Application for obtaining national tax number requires filling the application form and attaching an attested copy of a National Identity Card (NIC). 2. Register with sales tax department for refund purposes if you are paying sales tax on the purchased goods. However, if you register with the sales tax department, you will have to file monthly sales tax returns even if you are not involved in any sales tax-related activity. 3. Open a bank account for export proceedings and related documents. 4. Obtain a membership certificate for a Chamber of Commerce or relevant trade association 5. To clear the consignment at the port, provide the following documents to the clearing agent: a. Packing list b. Commercial invoice c. Letter of Credit (LC) 189

d. Certificate of origin which is issued by the chamber of commerce e. National Tax Number Certificate f. Form "E" (State bank form) 6. Submit the duplicate and triplicate copies of form 'E,' along with the shipping documents, invoices etc., to the bank who had certified the form 'E'. Attach an extra copy of the shipper's invoice to the triplicate copy of the form 'E'.

TAX SOPS FOR LEATHER, PRECIOUS STONES EXPORTS

→ Finance Minister P Chidambaram planned tax incentives to increase shipments of labour-intensive sectors such as leather sector, much to the cheer of exporters. → For leather sector, the minister projected to reduce the duty on specified machinery for manufacture of leather and leather goods, including footwear, from 7.5 per cent to 5 per cent. → "To encourage exports, he recommends reducing the duty on pre-forms of precious and semi-precious leather products from 10 per cent to 2 per cent.

→ The tax sops will help in increasing the competitiveness of apparel, leather products like footwear, purse, gloves etc. It will also help in creating more jobs in Indian leather industry. → India is part of the global economy. India exports and imports amount to 43 per cent of GDP and two-way external sector transactions have risen to 108 per cent of GDP.

IMPORT LICENSE INDIA Requirements: For New Proprietorship Firms 1. PAN CARD (of Proprietor) 2. ELECTRICITY BILL (of Residence Address and Registered Office Address, should not be added than 2 months old) 3. APPLICATION LETTER (Format will be given by us) 4. AUTHORITY LETTER (Format will be given by us) 1. 7 PHOTOS 2. BANK ACCOUNT STATEMENT CURRENT ACCOUNT

190

3. OPTIONAL SERVICE TAX OR GUMASTA LICENSE/ SHOP ACT LICENSE 4. BANKERS CERTIFICATE (FORMAT WILL BE GIVEN BY US) 5. OPTIONAL DOCUMENTS 6. PASSPORT WITH MATCHING ADDRESS 7. ELECTION ID WITH MATCHING ADDRESS 8. DRIVING LICENSE WITH MATCHING ADDRESS 9. RATION CARD WITH MATCHING ADDRESS 10. For Registered Office/ Proposed Registered Office

If Registered Office is possessed by you or your relative Society Maintenance Bill If Registered Office is Rented Property Lease Agreement Owner N.O.C. (Format will be given by us) BANK ACCOUNT MIRC NUMBER BANK ACCOUNT NUMBER BANK NAME AND ADDRESS WHETHER CURRENT ACCOUNT OR SAVING ACCOUNT Sample of License:

191

7. Present Trade barriers for import / Export of selected goods(if any)

The Global Country Project Report Entitle “ Present Barriers of Import/Export Trade in Pakistan”

Executive Summary and Description of the Business and Trade Policy in Pakistan:In the preparation of this Global Country Project Report, we have tried to cover the principal aspects that regulate businesses in Pakistan, using, for this purpose, a language accessible to potential investors and business managers.The Present Trade barriers of import and exports in Pakistan with respect to leather industry, various imports, exports, policies, trade barriers list, pakistan’s overall government policies are given in the perfect manner in a ways that will help you to understand the various trade barriers in leather industry.How the leather is produced, what are the various materials that are used in the production of leather, various legal aspects of the leather and various other products that are imported or exported from and into Pakistan.We had also gathered the information about Setting up the Business in Pakistan, what are the license agreements that are needed to set up the business in Pakistan.The Global Country Project Report is designed to give some general information to those contemplating doing business in Pakistan, and is not intended to be a comprehensive document. Furthermore, its updating process is annual. Therefore, the users should consult us before taking any decision on the basis of information contains in this Project Report. Urdu) ( ِن : Pakistan ( i/ˈpækɨstæn/ or i/pɑː kiˈstɑː n/; Urdu pronunciation: [pa ːkɪˈst ̪aːn] ( listen )), officially the Islamic Republic of is a sovereign country in South Asia . With a ,( ِن ور یام : Pakistan (Urdu population exceeding 180 million people , it is the sixth most populous country in the world. Located at the crossroads of the strategically important regions of South Asia, Central Asia and Western Asia, Pakistan has a 1,046-kilometre (650 mi) coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by India to the east, Afghanistan to the west and north, Iran to the southwest and China in the far

192

northeast. It is separated from Tajikistan by Afghanistan's narrow Wakhan Corridor in the north, and also shares marine with Oman .

We plan to provide complete and full information about the trade which means the import and export policy, how any company whether it is private sector or public sector company should follow the procedures and documentation before starting a firm in Pakistan.We also emphasis on the list of the countries involved in the trade with Pakistan, five of the main reasons to invest in Pakistan, Investment Opportunities, Employment Regulations in Pakistan, Labor Laws, Work Visa Procedures.Later, We had given the information about how to set up the business in Pakistan, License Agreements, Types of Business Organizations, Listing of Companies and Securities.The Flow Diagram of the How the formation of any Companies takes Place in Pakistan, what are the major export opportunities, Overview of Economy and Trade Policy.

Table 14: The following is a list of Pakistan's main trading partners as of 2011.

Sources:- http://en.wikipedia.org/wiki/Foreign_trade_of_Pakistan

HISTORY OF FOREIGN TRADE AND WHY IMPORTS AND EXPORTS ARE NEEDED.

Why Exports?

Pakistan’s economic structure today presents a distinctly different picture from what it was in 1991 when economic reforms started. In 1991 our foreign exchange reserves had depleted substantially. We then had just enough reserves to tide over the import requirements of three 193

weeks. It was in this context that Pakistan gradually started dismantling its quantitative restrictions, partially liberalized its exchange rate and reduced the peak rate of customs duties. The average duty on all products stands reduced from over 70% in 1991-92 to 12% in 2008-09.

Why Imports?

Because of tough competition, you can sell only if the quality of your product is better than that of your competitors, the price most competitive and the buyers get delivery on time. In order to achieve all this, one needs to have access to international standard quality materials and capital goods. We also need to have better technology at our command as there is a sea change in the markets worldwide.The Imports & Exports (Control) Act, 1947 was enacted “to continue for a limited period, the powers to prohibit and/or control imports and exports”. The initial life of the Act was three years but it was extended from time to time till 1971. Thereafter, the Act ceased to be a temporary measure and became a permanent statute.In the early fifties, the Pakistan Govt. took several measures to build an industrial base in the country. It allocated substantial resources for infrastructure building such as steel plants and developing the core sector. The private sector was also encouraged to set up industries in the non-core sector. These infant industries needed protection from influx of imported goods. So, the Govt. issued the Imports (Control) Order 1955 allowing most of the imports only against an import license. In 1976, far-reaching changes were made to the Imports & Exports (Control) Act, 1947. The amended Act gave the Central Government wider powers to prohibit, restrict and control the Imports and Exports Trade. The Act covered practically all articles of trade and manufacture except those permitted to be imported under a license or customs clearance permit or an Open General License. The Exports (Control) Order 1988 held sway before liberalization process was launched in 1991.

194

TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES.

1.Since Pakistan's previous TPR, constitutional changes have validated legislation made since 1999. Fiscal and administrative decentralization has lagged political devolution to local governments. General trade policy objectives have focused on reduced protection, achieving a more outward- oriented trade regime, increased market access for exports, and greater global integration, aimed at increasing economic efficiency, competitiveness, and export-led growth. The main institutional changes in the area of trade policy have been the replacement of the Export Promotion Bureau by the Trade Development Authority, and the restructuring of the National Tariff Commission to become an effective trade defence body focused on contingency protection.

2. Pakistan continues to attach high importance to an effective rules-based trading system and has participated actively in the Doha Round negotiations. Nevertheless, it has felt compelled to respond defensively to the proliferation of preferential agreements, while acknowledging the threat posed to multilateralism. Its trade policy has been focused on regional trade liberalization by deepening and expanding existing plurilateral commitments (e.g., SAFTA, OIC, D-8, and ECO) as well as ambitiously expanding its network of bilateral free-trade agreements (e.g. in place with China, Iran, Malaysia, Sri Lanka, and Mauritius, and negotiations well advanced with other partners, e.g., Singapore and the GCC states). Pakistan is concerned by the restricted access under GSP treatment, especially provided by the EC and the United States, on key exports, such as textiles, clothing, and leather products, as well as preferential access to these markets given to LDC competitors. Pakistan has benefited from trade-related technical assistance.

3. Pakistan’s investment framework has changed little during the review period. Only a few activities are closed to foreign investors (e.g., arms and ammunition, high explosives, and radioactive substances) or restricted (e.g., corporate agricultural farming, media, tourism, and air transport). Generous investment

195

incentives are based on national treatment. While FDI performance has increased recently, foreign investment would be facilitated by further improving the business climate, including ensuring political stability.

The leather industry consists of six sub-sectors namely, ‹ Tanning ‹ Leather Footwear ‹ Leather Garments ‹ Leather Gloves ‹ Leather Shoe Uppers and ‹ Leather Goods

The Tanning industry plays a vital role in the improvement of these sub-sectors by providing the basic material like leather. At present Pakistan is among the leading countries in the production of Leather Garments and Gloves. The leather and leather made-ups industry is playing a significant role in the economy of Pakistan and its share in GDP is 4% now. Ten years ago, it was the fifth most important export industry in the manufacturing sector, and now it is the second.

HISTORY OF LEATHER INDUSTRY IN PAKISTAN.

The history of leather industry in Pakistan is as old as the country itself. At the time of independence there were merely a few tanneries producing sole leather and that also at a very insignificant scale. However, since then this industry has been prosperous and has not ever looked back. During 1950s, some well-furnished tanneries were set up at various places like Karachi and Lahore, while during 60s and 70s more components were established at Hyderabad Kasur, Sialkot, Multan, Sahiwal and Gujranwala. Starting with the manufacturing of picked and vegetable tanned hides and skins, the tanneries, today, are manufacturing not only crust and wet blue, but also fully finished leather. In the beginning days of independence some tanneries were established in Karachi. In 1950ssome were established in Lahore and bordering areas. The entire production of hides and skins were being exported in a raw appearance. Afterward the local tanning industry making at first semi-finished leather made quick progress due to encouraging raw material situation, cheap labor and the existence of rising demand and foreign market.

196

The Environmental Challenge:

Leather tanneries in Pakistan produce all three categories of waste: wastewater, solid waste and air radiations. However, wastewater is the most important ecological challenge being faced by Pakistan's tanneries. Wastewater: Although the particular quantity varies widely between tanneries, an ordinary requirement of around 50-60 liters of water per kilogram of hide is recommended. ETPI's sample audits of tanneries in Pakistan show that in some cases the consumption of water is as high as three times the suggested requirement. The whole water release also demonstrates a high degree of seasonal and daily variation. For most part, the current practice is to discharge this water into the local environment without any treatment. Tannery wastewater is much polluted and the contamination observed is many times beyond the limits set by the National Environmental Quality Standards (NEQS) for all important wastewater parameters.

Pakistan leather garments association PLGMEA was formed in November 2001 for protecting, promoting and developing the Pakistan Leather Garment Industry. Through the last three years PLGMEA has been actively promoting the importance of its members regarding many trades, taxation and manpower related matters. PLGMEA regularly gathers and disseminates statistics & other relevant information for the Leather Garment Industry. PLGMEA also carries out aggressive international marketing campaign for boosting the exports of Leather Garments mainly through involvement in international exhibitions. PLGMEA regularly organizes exhibition area for its members in following exhibitions.

Future goals for leather industry in Pakistan In one statement Pakistan Tanners Association (PTA) Chairman Agha Saiddain said that if leather sector of the country is treated as a model sector in the Strategic Trade Policy Framework (STPF) 2012-15 leather exports can be increased. The Ministry of Commerce (MOC) sits with the leather industry stakeholders to draft a strategy to boost exports. With little support the leather sector can cross $3 billion exports in the next three years and he also urged the federal minister of finance to consider upon this to control balance of trade and payments, which is merely possible by increasing exports.

197

Pakistan is still leading in leather technology and quality-wise their leather is at second number after Italy. Pakistan Leather industry has potential to grow, as it is sluggish at $1 billion for previous five years. On the other hand leather sector exports of India have grown up to $4.86 billion during the fiscal year 2011-2012 from their previous exports of $1.96 billion during 1991. Export of leather and leather products have grown-up by 17 percent in Bangladesh and leather exports of Ethiopia doubled in the last three years.

SOURCES OF RAW MATERIALS FOR LEATHER. Pakistan is lucky that the raw material required by the industry is available in the country in large quantity. Local availability of raw materials and low wage cost gives the country a competitive edge in the world market. The following are the types of basic raw materials which are being used by this industry,

1) Buffalo

2) Cow

3) Goat

4) Sheep

1. Buffalo:

Buffalo is considered as the specialty of Pakistan in World, because of its sufficient availability in Pakistan

2. Cow:

The cow raw material is considered a superior raw material upon buffalo because of its fine, tight and moderately uniform structure.

3. Goat:

It is good for manufacturing shoe upper leathers, garment and goods leather and easily available in country.

4. Sheep:

198

Leather prepared from sheep raw materials has a very good and softer touch and measured best for leather garments.

The industry is meeting approx. Its 75% of needs of raw material hides from local resources while rest of the 25-30 per cent is met through imports. Pakistan imports leather from Saudi Arabia, Iran, and China, Dubai, Sudan, Kenya, Australia and Italy. In the leather industry the raw materials are by-products of the meat industry, with the meat having high value than the skin. Taxidermy also makes usage of the skin of animals, but mostly the head and part of the back are used. Hides and skins are also used in the production of glue and gelatin.

The main sources of raw material for the tanning industry are hides and skins from animals that have been accepted as fit for processing for human consumption at accepted slaughterhouses, where the handling and treatment of domestic animals fully meets the appropriate animal welfare and hygiene requirements.

STAGES OF LEATHER FORMATION:

16. Warehousing and sorting in the raw material area the skins are sealed in salt, stored in forbidden cool rooms and before processing, presorted for quality and weight. 17. Soaking the skin is drenched to remove dirt and salt. 18. De-Fleshing During this process hankie, flesh and fat bits and pieces are removed by a roller mounted knife. 19. Liming By adding lime and sculpture complex hair is removed from the skin. 20. Bating, pickling and tanning during bating and pickling the skins are treated with acid and salt in preparation for tanning. During tanning the skin fibers soak up the tanning agents. That is when the skin becomes leather. 21. Slamming During this process water is removed.

199

22. Splitting In order to achieve an even specified thickness the leather is reduced in material. The resulting split-leather can then be processed further as suede. 23. Skiving the grain leather is brought to an even thickness. Irregularities are detached from the reverse side and the leather is separated into color-batches. 24. Sorting the leather is sorted into numerous quality grades. 25. Neutralizing, filling out, dyeing and greasing the acid resulting from the tanning process are neutralized. Then the dyeing takes place, where proper with aniline-dye-stuffs. The greasing system will finally achieve the correct softness. 26. Drying Two methods are used to dry leather. The vacuum process during which wetness is removed by suction and the hanging process, when leather is swung and taken through ovens. 27. Staking following drying the leather is mechanically staked in order to soften it. Further processes take place in research for finishing. 28. Finishing here the leather is given its final surface action and look. Through processes of base coat, coloring, embossing, steaming the leather becomes, depending on the demands of style, matt or shiny, two-tone or uni-coloured, smooth or grained. The art of concluding lies in working in wafer-thin layers without disturbing the natural look of the leather and its characteristics such as flexibility and breath ability. 29. Quality Control In between every process quality is controlled. Final control checks to ensure each individual production is to specification and sortation into various trades. 30. Dispatch The leather is measured electronically, wrapped and dispatch.

200

NON-TARIFF BARRIERS TO TRADE IN PAKISTAN

Definition of Non Tariff Trade

Non-Tariff Barriers include all measures, other than tariffs, that are used to protect domestic industry and discourage imports.

Invisible Barriers to Trade

¢ Non Transparent and cumbersome Administrative Procedures and Government Policies and Regulations

¢ Market Structure

¢ Institutional Factors

¢ Max. duty is generally 25% but with many exceptions (e.g. Agri. Products)

Non Tariff Barriers in Pakistan

¢ Lack of information: Entry of new firms into trading with Pakistan indicates anonymous entry into trading which is facilitated by modern modes such as the internet.

¢ Lack of Adequate Banking Relations: Some Indian banks do not recognize L/Cs from all Pakistani banks. Moreover payments through Asian currency union are delayed.

¢ Application of standards: Barriers are often encountered in the application of measures related to standards necessary to protect human, animal or plant life or health, to protect environment and to ensure quality of goods

¢ Visa Restrictions: Visas can be obtained only for specific cities prior to entry into Pakistan

¢ Communication Problems: Whenever there are disturbances at the Indo-Pak border, the mobile connections are not operational. 201

¢ Trade Logistics : Goods move by air, sea, and rail between India and Pakistan . While road routes for trade are non-existent, rail and air connectivity between the two countries has been erratic.

The statistics shows that there is a large untapped trade potential between the two countries. Using the potential trade approach, it is estimated that the trade potential between these two countries is US $6 billion. Items having export potential from Pakistan are largely in the Textile sector while items having export potential from India are predominantly in non-textile sectors. Very few items having export potential from India are on the positive list adopted by Pakistan. At the same time there are several items that India is importing from other countries but not from Pakistan. This indicates that there is a huge information gap on both sides on items that can be imported by India from Pakistan.

A working definition of non-tariff barriers included six major categories, namely, quantitative restrictions, trade facilitation and customs procedures, technical barriers to trade and sanitary and phytosanitary measures, financial measures, Para-tariff measures and visas.

The approach followed

The Positive List Approach

The most apparent barrier o having a positive list approach is that it limits Potential trade. Over the years, the positive list approach has expanded gradually but there are several problems that traders face in the application of this policy measure.

The most well documented problem being that several goods not on the positive list are exported to Pakistan through Dubai. This has been a traditional practice and is admitted by traders in both countries.

Trade Facilitation and Customs Procedures

Trade between India and Pakistan takes place by sea, rail, air and road. Several Factors such as inadequate land routes, weak transport infrastructure and bilateral Transport protocols raise the transaction cost of trading between the two countries. Barriers related to customs procedures, customs clearance, and rules of origin Certification has also been of great Importance. 202

Infrastructure Constraints and Related Bilateral Protocols

This section outlines infrastructure constraints related to rail, road and sea

Routes. There are several bottlenecks for transportation by the rail route. Currently Goods move by rail by the goods wagon or by parcel wagons that are attached to the Samjhauta Express, the passenger train. In addition, rake is allowed to ply from some cities in Madhya Pradesh. Goods that are transported by Samjhauta Express by parcel wagons move at fixed timings on a biweekly basis.

Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT)

The Agreement on Technical barriers to trade and the Agreement on Sanitary and Phytosanitary measures allows all WTO Members to maintain standards to ensure safety and to protect plant human and animal life. India and Pakistan have taken the initiative to implement all the WTO-compatible procedures related to standards, testing, and labeling and certification requirements. The basic obligation of the TBT agreement is that measures should be applied in a non-discriminatory manner with respect to like products of national origin and to like products originating in any other country. The Agreements also require Members to apply these measures in a manner that they do not have the effect of creating unnecessary obstacles to international trade.

Enforcement of standards in India

This creates confusion among exporters from Pakistan as to which the actual national standards are, who the certifying agencies are and what is the relevant law/regulation applicable when there are multiple laws for the same purpose.

Exports from India to Pakistan

In the survey conducted in India and Pakistan there was no evidence on nontariff Barriers related to the application of SPS and TBT measures in Pakistan on imports from India.

In fact traders in India and Pakistan felt that the implementation of standards to

203

imports was not a rigorous process in Pakistan.

Some exporters of live animals in India and importers in Pakistan pointed out that the Pakistani Government had relaxed the quarantine and other import Requirements for imports of live animals through the Wagah border. Some of these Measures included reduction in quarantine requirement from 21 days to 5 days, Waiver of quarantine and testing fees, and allowing additional quarantine stations in the private sector to operate at the Wagah border. However, Indian exporters have to obtain an animal quarantine certificate before they can export live animals. The closest animal quarantine centre to Amritsar is in Delhi. Blood samples collected at Delhi are sent for testing to Bareilly. On the whole the process takes about seven to eight days for which not only does the exporter incurs additional cost but animals lose weight by about 5 kgs

It was pointed out by Indian exporters that if the importing country has lower standards, India should allow exporters to follow those standards.

BILATERAL TRADE STATISTICS SUMMARIZED

Pakistan export to India

274,983, 000 USD

PERCENTAGE OF TOTAL PAKISTAN EXPORTS TO INDIAN IMPORTS.

0.1%

INDIA TOTAL IMPORTS FROM THE WORLD

220, 290, 676,000 USD

Potential between India and Pakistan

Irrespective of the fact that both the countries are sharing culture, history, language and religion, only 0.1 % of the total Indian Imports Consist of Products from Pakistan. The item which is being imported to India makes meager share of the total imports of India in that particular product category

204

whereas, Pakistan do have the potential to increase the exports of commodities in such h categories. For example, referring to the above table, Pakistan exports in sugar and confectionary item is 87,956,000 USD where as The Indian imports of this category from Pakistan is nearly 1000 USD, this items carrying a lot of potential for exports to India on the basis of the fact that it’s a neighboring country, where less trade restriction and lesser rules will lead to improved exports figures as far as this product is concerned. Same is the case with

Cosmetics, essential oils, wood.

GENERAL IMPORT REGULATIONS :

Pakistan Import Regulations: According to the customs authorities below are the import regulations for Pakistan.

Free Import

• 200 cigarettes or 50 cigars or 1/2 kilogram of tobacco; • 1/4 litre of eau de toilette and perfume, of which not more than 1/8th litre may be perfume; • Gift articles and/or souvenirs in a reasonable number and quantity: • First visit in one calendar year: value not more than PKR 2,000. • Second visit in one calendar year: value not more than PKR 1,000. • Third or subsequent visits: not duty free.

Prohibited

• Import of alcoholic beverages is strictly prohibited for both residents and non- residents regardless of their nationality. • Matches, fruits, plants and plant material (incl. cut flowers) whether live or dead unless accompanied with Phytosanitary (Health) certificate from the country of origin and import permit from the Pakistan Ministry of Agriculture (Department of Plant Protection). • Banknotes in denominations of 50 and 100 rupees or more.

Restricted 205

• Import permit and Arms Licence required. • Animals and pets must be accompanied by a veterinarian certificate.Pets may enter as passenger's checked baggage, in the cabin or as cargo.

Currency Import regulations: Local currency (Pakistan Rupee-PKR): PKR 100.in denominations of 10 rupees or less, also in combinations of personal quota.

PAKISAN IMPORT DOCUMENTATION:

(Documents required to import into Pakistan )

As stated earlier, import license is no more required to import into Pakistan. Only the following initial documents are needed to import into Pakistan: --

1. National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC.

2. Current bank account is required for import proceedings and documents

3. Sales Tax Registration is required to import into Pakistan.

For registration, Form ST-1 is required to send to the local sales tax registration office via post with acknowledgment due (courier is preferable).

The local registration office shall transmit filled up applications to the Central Registration Office based in CBR Islamabad. The previous requirements of furnishing supporting documents have been done away now there is no need to attach any document with the application.

The Central Registration having on line access to database of NTN as well as of NADRA shall verify the particulars declared in the application with database. On verification, it shall generate and issue registration certificate to the applicant directly on his given address Membership certificate of Chamber of Commerce and Industries or any relevant trade association of Pakistan.

Pakistan’s Leather Industry: Some Recent Facts and Problems

Export value of leather products in 2009 increased to US$132.183 million compared to US$194.193 million in 2002 i.e. an increase of 20%. For India the 206

increase in value is 99% while china’s footwear export value grew by 162% in the same period (Table 1).

In the years 2006 and 2009, Pakistan’s leather products export value grew by 22.34% and 7.38% respectively. However, in the same years, china’s leather products exports growth rate increased by 10.95% and 13.27% whereas India witnessed a 8.13% and 12.44% growth rates respectively in 2006 and 2009.

CRITICAL PATH OF PAKISTAN’S LEATHER INDUSTRY:

Although the leather and leather products have ample scope for exports in the international market yet the industry was suffering from irritants which are hampering its actual growth. Leather and Leather garment industry of Pakistan is confronted with various challenges to survive in international market. On top of these issues is the use of modern technology for quality products and availability of skilled manpower to cater to the needs of the world market.

Leather garments in Pakistan are made mostly from low grade & medium grade leather. These garments face stiff competition from Chinese & Indian products. Cost of production is also very high in Pakistan as compared to our competitors like China and India particularly wage differentials and higher energy and inputs price.

Table :15 Global Trade in Leather Sector

Global Trade in Leather Sector Global Trade 77.33 137.11 77.31% 245.54* China’s export & Share 13.74 32.86* 139.16% 130.00* 17.77% 23.96% 52.94% Value in Billion USD 79.08% Vietnam’s export & Share 1.67 4.30* 157.48% 14.00* 295.62%

2.16% 3.14% 5.70% 225.58% Pakistan’s export & Share 1.96 3.4 73.46% 9.80* 188.23% 2.54% 2.48% 4%

* - Projections

Global Trade Value for 2020 projected on basis of same CAGR level @ 6% experienced during 2000-2010

207

India’s export to grow at a higher rate @ 20% per annum during 2011-2020 as the basic infrastructure is in place.

SWOT Analysis of Pakistan leather industry.

Strengths

‹ High Growth ‹ Ready ease of use of highly skilled and cheap manpower ‹ Large raw material base ‹ Framing of policy taken by the Government earlier. ‹ Ability to incorporate new technology and grip large project ‹ constant stress on product growth and plan up stage Weaknesses

‹ Lack of warehousing hold from the government ‹ International price variation ‹ Huge labor force ensuing in high labor charge ‹ Lack of physically powerful presence in the global market ‹ Unawareness of international standards by many players Opportunities

‹ Rising possible in the home market ‹ Rising fashion awareness globally ‹ Use of in order technology and decision support software to help do away with the length of the manufacture cycle for unlike goods ‹ Use of e-commerce in direct advertising Threats

‹ Major part of the industry is unorganized ‹ Limited scope for mobilize funds through confidential placements and public issues (many businesses are family-owned) ‹ complexity in obtain bank loans resultant in high cost of private borrowing ‹ Stricter global values ‹ High opposition from East European countries and other Asian countries ‹ Not have of communication facilities and skills 208

Recommendation & Suggestion to Leather Industry in Pakistan

Introducing Brand Names Leather and Leather products from Pakistan have fixed a reputable place in the world market. Some of leather products from Pakistan especially leather jackets are much in demand but under the foreign well-known brand names. Made-in-Pakistan label and brands born in Pakistan have up till now to come. Steps need to be taken by the industry in this regard. Well-known Pakistani firm need to record trademark with respect to the leather products they manufacture. In light of the Agreement on trade related aspects of intellectual property rights (TRIPS) of WTO, Pakistan through Trade Marks regulation, 2001, provides effective protection and rights to the owner of trade marks.

Focusing on Footwear Sector Footwear, the largest segment of the leather industry around the world has been surprisingly abandoned in Pakistan. Foreign franchised companies have become household names in Pakistan. This is even though the fact that the entire stuff and skill they use belong to Pakistan. In addition, having a strong industrial stand, Pakistan's leather industry looks like tread without shoes. This emptiness in leather industry calls for the notice of the industry leaders to bridge the gap to give a inclusive look to the leather and leather products industry in Pakistan. One of the options to enter the field of footwear sector is to seek partnership with international brand producers by offering them attractive incentives.

Tackling Environmental and Labor Issues Regarding environmental concerns of WTO, the industry has made slight progress in this view. Combined overflow treatment plants need to be built so that dangerous chemicals from the tanneries do not affect the environment. Moreover, the industry needs to take on all the labor issues to which the consumers in the import countries are responsive to. It needs to be ensured that the leather industry in Pakistan adheres to the working condition requirements that have been developed by certain international bodies, mainly, the associations of leather industries in the importing countries of the west. Under the WTO rule, 209

8. Potential for import / export in India / Gujarat Market Introduction to Leather Industry

Leather is a by-product - the main sources of raw material for the leather industry world- wide are cattle, sheep and goats which are reared specifically for the production of meat, wool and dairy products. Typically the value of cattle hides sheep and goat skins represents in the region of 5-15% of the market value of an animal.

Leather Industry Pakistan

Leather goods are the best source of trade locally and internationally and second major export items of Pakistan after textile products Leather Industry Pakistan exports variety of leather products like motorbike leather jackets, gloves and shoes, safety gloves, leather works gloves, industrial gloves, leather garments for men, women, motor bike leather suits, man leather wallet, ladies leather bags and wallet fashion garments, leather card holder and many other items produced on demand It is the largest industry earning and boosting foreign exchange of the country and creating thousands of employment in the industry employed about five hundred thousand peoples producing fine quality finished leather for export as well as for consumption.Italy is a major importer of our leather jackets, gloves and handbags. There are about 800 tanners are manufacturing and promoting export quality finished leather and leather products as per international demand and are playing their positive role in earning valuable foreign exchange, they are well prepared to meet the challenges of world trading and upholding the image of leather industry. Leather Making Business

While hide tanning or curing may have been born out of necessity for early man and taken a rather rudimentary form by modern standards, the state of the industry today is due in large part to the technology and automation of the Industrial Revolution. The glitz, glamour, excitement, and insatiable appetite for extravagance that marked the age also fuelled the development of newer, faster, more scientific methods for mass- producing leather products. Chromium tanning, fat liquoring, and hide splitting were just a few of the advanced techniques developed heading into the 20th Century.

210

And as the demand for beef grew and cattle feeding and slaughter houses expanded westward to more open tracts of land, so went the tanning industry in an effort to stay in close geographic proximity to its best source of raw materials. The obvious and inescapable fact that dying flesh is extremely consumable led the industry to identify specifically that animal flesh needs to be processed (tanned) within 4 hours of "take-off" for optimum quality, so the marriage actually made pretty good sense for both parties.

Source of Raw Material Pakistan is fortunate that the raw material required by the industry is available in the country in abundance Local availability of raw materials and low wage cost gives the country a competitive edge in the world market. The following are the types of basic raw materials which are being used by this industry- Cow hides - Buffalo hides - Goat skins - Sheep skins.

The Pakistan leather industry

The uncontrolled discharge of untreated effluents tanneries is a growing problem in Pakistan’s leather industry. Pakistani exports of tanned leather are on the increase following a decline of leather production in the developed world due to more stringent environmental controls. The increase of tanneries in Pakistan is causing severe environmental humiliation as the untreated effluent used in the tanning process is released into nearby water reservoirs and the sea; in addition, air pollution is on the rise with the tanneries burning residuals (i.e. hair) from the tanning process into the atmosphere. Due to a need for foreign exchange, the national government is cheering the growth of tanneries by offering these industries export rebates while at the same time\lagging on implementing the sparse existing governmental environment regulations in leather tanning. The combination of an increasing demand for the product and a lack of government regulation are exacerbating whatever fragile balance existed between The Pakistani leather trade and the environment.The leather industry in Pakistan is continuing to grow. In fact, the overall bulk of industrialization still lies ahead and it is expected that industry will double in 10 years and then double again. The leather tanneries will no doubt be a part of this burgeoning trend. As long as there is a profit to be made in the arena new factories--small or large--will continue to start up.

In 1990 the leather sector jumped to become the second largest foreign exchange earner for the country by contributing 10.41 percent toward the total export revenue. 211

The increase in tanned Leather exports (not even including leather garments) from 1990-1995 alone is astounding. The leather products industry increased its amount of exports from $271 million USD in the 1990-1991 fiscal years to $349 million USD in 1994-95. The Environmental Challenge Leather tanneries in Pakistan produce all three categories of waste: wastewater, solid waste and air emissions. However, wastewater is by far the most important environmental challenge being faced by Pakistan's tanneries.

Wastewater: Although the exact quantity varies widely between tanneries, a normal requirement of around 50-60 liters of water per kilogram of hide is suggested. ETPI's sample audits of tanneries in Pakistan show that in some cases the consumption of water is as high as three times the suggested requirement. The overall water discharge also demonstrates a high degree of seasonal and daily fluctuation. For most part, the current practice is to discharge this water into the local environment without any treatment.Tannery wastewater is highly polluted and the contamination observed is many times beyond the limits set by the National Environmental Quality Standards (NEQS) for all important wastewater Technologies of Change Various measures can be taken to address the environmental challenges faced by the leather sector in Pakistan. The most immediate of these are in-house measures related to waste reduction at source and adopting more environment friendly processes

Towards Environment Friendly Tanneries :Tanneries in Pakistan can take a number of steps to move towards more environment friendly production. A number of technological approaches exist which could also be a source of net economic saving for tanners. However, the applicability of these solutions varies from one tannery to the next depending on the nature of raw material, processing conditions, and type of finished product. Water Conservation: Converting from continuous to sequential washing can lead to significant water saving and to a much reduced hydraulic load for the effluent treatment plant.

212

Use of Environment Friendly Chemicals: Enzymatic products can replace sulfides; surfactants, if used, should be biodegradable; use of Penta Chloro Phenol (PCP) should be avoided; weak organic acids can replace ammonium sulfate in deliming process; trivalent chromium should be used for tanning instead of hexavalent chromium which is toxic; metal complex dyes should be replaced; halogen containing hydrocarbons should be replaced by water finishers. Green Fleshing of Hides: Green fleshing, just after deep soaking, results in pH close to neutral. This will result in savings on liming and un haring chemicals and improve the penetration of chemicals into skins. Hair Savings Methods: These require smaller quantities of sulfide and allow an easy separation of the protein constituted by the un dissolved hair. This results in significant reductions in the COD, BOD5, Nitrogen, Sulfide, and Total Suspended Solids, thereby reducing the organic load for the treatment plant. Recycling Liming and Un haring Liquors: Improved liming and unchairing techniques permit a direct reuse of the spent liquors. This leads to savings in water, sulfide, and lime. Lime Splitting and Trimming: Splitting and trimming is usually carried out after tanning by which time chromium has been introduced into the by-products. Savings in the amount of chemicals used for deliming, pickling, tanning, and consequently reduction in the pollutant load can be achieved if these procedures are carried out with the pelt. The non-tanned by-product will be good raw material for the manufacture of gelatine or animal feedstock. Oxidation of Sulfide: Oxidizing the sulfide in the liquor through the use of hydrogen peroxide or sodium hydrogen sulfite will avoid the formation of hydrogen sulfide during the acidification of the deliming float. Finishing Process: Conventional spray equipment wastes between 30-50% of the finish whereas a roll coating machine reduces the loss to about 5%. The conventional spray equipment should be equipped with proper scrubbing systems to reduce emissions.

Treatment of wastewater from wet finishing processes Design and cost estimates were undertaken for tanneries of two different sizes. The large tannery processing between 8,000-10,000 kg of wet blue skins per day It was assumed that a medium sized tannery daily processed between 600-1,500 kg. This 213

translates to water requirements of 80-120 m 3/day (averaged for the whole year) for the large tannery and 30-40 m 3/day for the medium sized tannery. Based on the estimated daily pollution load a treatment Export Promotion In order to enhance exports of leather and its products, the following issues must be resolved at the earliest. - New markets must be explored and Steps for promotional activities be taken. - Measures must be taken for increasing the unit value of the leather products by concentrating on improving the quality. - Line of production must be diversified . - Encouraging BMR of the existing units by which production of leather is increased and timely supply to the leather goods producers is ensured. - Supportive policy measures should be adopted for the entrepreneurs.

Overall trade in leather products

Textile is the largest export earning industry of Pakistan. The second largest industry in regard to exports is the Leather Industry. Contributing more than $800 million in 2009 to the foreign exchange in Pakistan, this industry has the potential of delivering more and providing a large number of jobs by diversifying product range and improving quality.

Leather industry’s core products in Pakistan are leather garments, gloves, tanned leather and footwear. In the 50s and 60s most of the tanned leather was exported in raw form but soon after the local tanning industry making semi finished leather made rapid progress in making finished products due to availability of raw material, labor and growing demand in the foreign market. During the 1960's Pakistan's exports were restricted to wet blues. In the 1970's finished leather processing was started on a large scale. Major centers for selling of our leather products were Western Europe particularly France and Italy. In mid 1970's Spain was included in this list for goat skins whereas, buffalo and cow hides were bought by France and Italy. Eastern Europe with the exception of Romania is a small market for Pakistan. Japan is the sole purchaser in East Asia . China bought a large quantity of finished sheep leather which proved to be a turning point for our leather exports. In 1980's South Korea also attached this list and from here the exporters obtained useful experience of mass scale production and quality control. During the 1980's Italy and Spain remained in our buyers list for goat skins, and cow and buffalo hides. France

214

gradually dropped out from the scene. At present the list of importing countries of our leather and its products is quite large. However our efforts for exploring the market in USA, Canada and Scandinavian countries have not yielded the preferred results so far. The Tanning Industry

According to the Tanners Council of America's "The Romance of Leather" published in 1937 "today more than ever before fine quality leather begins to take shape from the moment the animal is born." Evidently everything right up to the slaughter is carefully calculated, from physical environment to quality of diet. Even after the slaughter an unsteady hand or dull blade can decide whether leather becomes a fine couch or a cheap belt.Further, according to the Leather Research Institute on-line, there are approximately 20 established steps in creating leather for profitable consumption, which include, "soaking, pickling, unhearing, buffing, conditioning, and (the rather ominous- sounding) fleshing. Leather and Leather garment industry of Pakistan is confronted with various challenges to survive in international market. On top of them is the use of Hi-tech for value products and availability of skilled manpower to cater to the needs of the world market. This is a serious issue and need to be addressed as early as possible. There is a growing need to prepare labor force having capacity to produce leather garments on scientific lines and comply with the demands of international market to compete. There is an immediate need to training our labor force on modern pattern to upgrade our end product to enhance reliability of leather garment industry in Pakistan.

Market share and capitalization

Leather industry including leather products, is the second largest export earning sector after textiles currently this sector is contributing around 700 million dollar a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products specially garments and footwear.Basically it is a job-oriented sector providing employment to a very large segment of the society besides earning foreign exchange for the country.Currently, leather sector is contributing significantly to the national exports. For the current financial year ending June 2003 the total export earnings from Leather and Leather products are estimated to earn $670 million this estimate is 5 percent less than the actual target of $704 million set for 2002-2003

215

Size of the industry: Industry Output: $628 million USD (fiscal year 1993-1994) 5 % of GNP with an annual growth rate of about 4.7% in its exports $621 million USD (fiscal year 1992-1993 9% of Pakistan's total exports Employment 200,000 persons. According to the Leather Industry Development Organization, there are 526 tanneries in Karachi Lahore, Multan, Kasur, Faisalabad Peshawar, Gujranwala, and Sialkot, with the majority of leather production taking place in medium-size tanneries. The leather industry as a whole--including both tanned leather and leather garments--is an important foreign exchange earner As mentioned previously the industry was the second largest foreign exchange earner in 1990 The leather tanning industry produces about 6 million hides and 36 million skins annually

Domestic and Exports Share

Pakistan enjoyed solid economic growth over the period 2001-2006. Pakistan's GDP growth rate averaged 6% plus during the period; the incidence of poverty declined from 34 percent to 25 percent; and the unemployment rate decreased to 6.2% However more recently there are reasons for serious concern on the growing constraints to trade - Pakistan's export growth rates dropped from 18% in 2006 to 3.5% in 2007

Industry Output: $628 million USD (fiscal year 1993-1994), 5 % of GNP with an annual growth rate of about 4.7% in its exports $621 million USD (fiscal year 1992-1993) 9% of Pakistan's total exports Employment: 200000 persons. According to the Leather Industry Development Organization, there are 526 tanneries in Karachi, Lahore Multan Kasur,

Incentives Provided

The government has extended certain incentives to uplift this industry in the shape of rebates on exports, exemption on import duty on the import of machinery for the manufacturing of leather products and certain another tax exemptions. Moreover, the government has recognized the Importance of personal selling. Hence assistance to the exporters for extensive travelling to any part of the world for exploring the markets of leather and leather products has been extended by the government. NCBs and DFIs are also extending their full co-operation in the shape of providing the

216

required financial assistance for the purchase/import of machinery and to meet their requirements of working capital.

Joint Ventures

Foreign investors, especially from Netherlands have shown interest in joining hands with Pakistan in this industry. By entering into joint ventures with those experienced tanners and traders, we can improve the quality of our products by using Dutch Chemicals, machines and expertise, which will ultimately lead to fetching more shares in world market. Moreover from Yiwu city in Chinese province of Zhejiang containers of cheap footwear are dumped daily into Pakistani market and that too hurts our footwear industry This has compelled manufacturers of joggers and at least one producer of a leading brand of sleepers to outsource production to Yiwu and take advantage of the low cost of doing business there.Businessmen say Pakistan needs to set up leather engineering institutes to overcome the shortage of skilled workforce for making high value-added high-priced commercial and industrial leather products Turkey has moved into this area allowing countries like China, India, Pakistan and Bangladesh to export their low value-added low priced leather products to its domestic market said an exporter of leather garments who has trading links with Turkey. Turkey is no more our competitor; it is now our customer. Despite having a strong industrial base, Pakistan's leather industry looks treading without shoes. This vacuum in leather industry calls for the attention of the industry leaders to bridge the gap to give a comprehensive look to the leather and leather products industry in Pakistan. One of the options to enter the field of footwear sector is to seek partnership with international brand producers by offering them attractive incentives.

Locations in Pakistan

In Pakistan there are more than 2500 tanneries (registered& Un registered) and footwear manufacturing units running in Pakistan Over the years, the number of registered tanneries in the country has increased from 529 in 1999 to 600 in 2003 and to 725 at present Located in Karachi Hyderabad, Lahore, Multan, Kasur, Faisalabad, Gujranwala, Sialkot, Sahiwal Sheikhupura and Peshawar the increase in the number of tanneries can be attributed to increase in demand of tanned leather in the world markets till the fiscal year 2007-08.

Technology level:

The tanning industry in Pakistan uses machinery which are out dated and believed to be imported from various countries in the 1970’s and 1980’s Though the country took advantage of these second hand machines by bringing in a large amount of foreign

217

earnings it failed to create a friendly environmental atmosphere in the process, A large part of the country is subjected to air pollution due to the burning of residual into the atmosphere, This pollution has a dangerous effect on the health of the local population, mainly in the cities of Karachi, Kasur and Sialkot.

Pricing Strategies:

The leather grading system employed by leather upholstery manufacturers and suppliers is used as a means of differentiating and marketing individual types of leather by price based on quality or style. The grading system is the method manufacturers use to present their pricing structures to retail dealers Leather suppliers also use a grading system to distinguish their leathers and prices to manufacturers.This classification works efficiently and is simple to understand within the context of each individual leather line but problems crop up if one attempts to compare or contrast leathers from line to line or from manufacturer to manufacturer.

Demand and supply

Eleven months of the fiscal year 2009 exports of tanned leather fell to $270 million from $377 million in year-ago period Exports of leather products including leather garments also dropped to $499 million from $641 million the overall exports of leather and leather products declined to $769 million from $1 billion.Industry leaders say that leather sector`s exports have suffered partly due to a lower demand amid global recession and partly because leather industries in China India and Bangladesh have become more competitive on the back of incentives. Leather garments exporters in China for example receive 13-15 per cent duty drawback while their Pakistani counterparts get 2.4 per cent. Hope for a revival of demand for leather and leather products from September director at Shafi Tanneries. Many in the industry share this optimism and it is based on some signs of economic recovery in the US.

Quality:

Good quality leather is mostly exported and is not available for high value-added Leather Garments & Leather Products.

218

Leather garments in Pakistan are made mostly from low grade & medium grade leather. Lack of proper training and inadequacy of skills in slaughtering are among the most important factors leading raw hides and skins towards lower grades or even to rejection. Furthermore inadequate knowledge of preservation techniques and lack of sufficiently designed collection and storage facilities may cause problems that are associated with the lowering of the quality and quantity of raw material Hence the need for strengthening training facilities for manpower at all levels through hiring of experts.

Trade Policy

The leather garment industry strongly recommended for imposition of 20 per cent export duty on export of semi-finished and finished leather in the forthcoming trade policy This would help availability of good quality leather produced locally'Fox Furs' are much in demand abroad This should be removed from negative items list under import export order Export of garments using allowable fox fur trimmings for decoration should also be permitted for boosting export of value added leather garments.Re-export of temporarily imported goods supplied by buyers should be allowed without sight letter of credit or advance payment if supplied as free of cost. The present policy does not provide provision for export of such goods in original and unprocessed form due to cancellation of export order or changes in design/style of the order.The exporters may also be allowed to retain 5 per cent of their export earnings for international advertisements and commission etc

Future Perspectives

As far as the implications of WTO on the leather industry are concerned the Agreement on Technical Barriers to Trade (TBT) and the Agreement on the application of Sanitary and Phyto sanitary Measures (SPS) can have significant impact on Pakistan’s ability to increase the exports in this sector However the environmental issues related with the leather industry in Pakistan could have significant negative effects on its exports Another problem could be related to the quality of Pakistan's leather exports If the Pakistani exporter does not improve the quality of the product the current competitive advantage that Pakistan has in this field could quickly fade away.

219

Leather products like jackets shoes and gloves account for more than two-thirds of leather exports while tanned unfinished leather accounts for a third but the industry is struggling to compete in an increasingly tough market China and India are fighting for market share by beating Pakistan with cheaper input costs Meanwhile in Pakistan the debate in the leather sector rages about whether unfinished leather should be exported The exporters of leather garments want exports of raw leather to be restricted to give them a competitive advantage of cheaper raw material But the tanners claim every right to fetch the best price for their products. the largest export earning industry of Pakistan. The second largest industry in regard to exports is the Leather Industry. Contributing more than $800 million in 2009 to the foreign exchange in Pakistan, this industry has the potential of delivering more and providing a large number of jobs by diversifying product range and improving quality.Pakistan Leather Industry has the production capacity of more than 100 million square meters and against the production capacity it is producing only 60 million square meters. More than 450 units of leather garment manufacturers in Pakistan are producing approximately 5 million pieces against the production capacity of exceeding 7.5 million pieces. Similarly a key sector in leather industry is the leather footwear industry which is capable of producing 200 million pairs annually and its current production is just 100 million pairs. Pakistan’s share in the global skin and hides production is around 7% annually which can be doubled with just the right amount of time and effort. One can assess that these statistics show the industry’s capabilities which are highly under-utilized. The industry has been facing some challenges which have been slowing down the production process. The main issue is the energy crisis which is endured by all industries in Pakistan. The absence of energy efficient technologies and lack of proper machinery and maintenance is also causing a significant amount of wastage of energy. Environmental challenges are faced by the leather industry all over the world. Wastewater, solid waste and air emissions are the main wastes produced during the tanning process. Good quality leather is exported and most of the time is not available for high value finished goods. Lack of proper training for finished-goods producing labor is the main reason that good quality and high value raw material is exported. Providing a solution for these problems can also result in increasing in the production rate. The leather industry can easily be transformed into a major contributing sector for foreign exchange by focusing on the key production lines like footwear industry, introduction of technology and cutting down production costs 220

which can increase Pakistan’s share in the global hides and skins production as the demand of leather products is increasing each year.

Government Policies

To stem decline in leather exports the government has announced a number of steps for giving a boost to leather apparel industry in its 3-year strategic trade policy framework 2009-12 These steps as announced by federal minister for commerce, on July 26 2009 include facilities from Export Investment Support (EIS) Fund for procurement of expert advisory services, matching grant to establish design studios centers and establishment of research and development centers in Karachi and Sialkot In addition, this sector would be able to avail EIS Fund facilities that include sharing 25 per cent financial cost of setting up laboratories and matching grant for setting up of effluent treatment plants. The commerce minister announced that a scheme is also likely to be launched to compensate inland freight cost to exporters of leather garments and some other items like cement light engineering goods, furniture, soda ash, hydrogen peroxide and sanitary ware. To ensure predictability of electricity supply commerce minister said, the ministry of water and power and electricity distribution companies will enter into agreements with cluster of industries whereby electricity will be supplied at mutually agreed times The agreements would have punitive and compensation clauses and the compensation could be in the form of electricity charges credit. .

Trade Policy

The leather garment industry strongly recommended for imposition of 20 per cent export duty on export of semi-finished and finished leather in the forthcoming trade policy This would help availability of good quality leather produced locally 'Fox Furs' are much in demand abroad This should be removed from negative items list under import export order Export of garments using allowable fox fur trimmings for decoration should also be permitted for boosting export of value added leather garments. There is an immediate need for establishment of a Leather Board in Pakistan which should operate as an independent body and funded by the government from export development fund The board should be headed by a person exporting value-added leather products. Value- added exports like leather garments where there cannot be any further value-addition 221

should be exempt from Export Development Surcharge. Re-export of temporarily imported goods supplied by buyers should be allowed without sight letter of credit or advance payment if supplied as free of cost. The present policy does not provide provision for export of such goods in original and unprocessed form due to cancellation of export order or changes in design/style of the order. The exporters may also be allowed to retain 5 per cent of their export earnings for international advertisements and commission etc.

IMPORT POLICIES In fiscal year 2008-2009 the government of Pakistan increased ad valorem tariff rates on 397 non-essential and luxury items from the 15 percent to 25 percent range to the 30 percent to 35 percent range these items include cosmetics, domestic appliances luxury food items and cigarettes The tariff on automobiles with 1800cc to 2500cc engine capacity was increased from 90 percent to 100 percent and from 100 percent to 150 percent on cars with engine capacity from 2500cc to 3000cc A 50 percent tariff was imposed on imported vehicles with engine capacity less than 850ccs In Pakistan’s Budget 2011-2012, 338 regulatory duties on 388 out of the 397 items were abolished limiting duties to luxury vehicles cigarettes, arms and ammunitions, betel nuts, sanitary ware, and tiles. In an effort to protect its domestic automotive parts manufacturers Pakistan imposes higher tariff rates (50 %) on imports of automobile part types that compete with domestically manufactured products than on imports of automotive parts that have no domestic competition (35 %) The government of Pakistan grants sector- specific duty exemptions concessions and other protections through promulgation of Statutory Regulatory Orders (SROs) For example in 2008certain substances identified as drugs by Pakistan’s 1976 Drug Act was granted tax exemptions while certain other pharmaceutical products not covered under the SRO remained subject to a 15 percent duty. Pakistan also provides concessionary tariffs for the import of raw materials used as active ingredients in pharmaceutical production. A list of SROs and other trade policy and regulatory documents can be found on the Federal Board of Revenue’s

222

9. Present Position and Trend of Business (import / export) with India / Gujarat during last 3 to 5 years.

Import

The term import is derived from the conceptual meaning as the goods and services into the port of a country. The buyer of such services and goods and is referred to an "importer" who is based in the country of import where the overseas based seller is referred to as an "exporter". An import of any goods or service brought in from one country to another country for use in trade .The good are imported and the are sale in that country. Imported goods or services are provided to domestic consumers by foreign producers.

Definition

"Imports" includes the transactions in goods and services (sales, barter, gifts or grants) from non-resident residents to residents. The unique definition of imports in national accounts includes and excludes specific "borderline" cases. A general disadvantage of imports in national accounts is given below:• An import of a good occurs when there is a change of ownership from a non-resident to a resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in unique cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e.g. cross border financial granting, cross border deliveries among the affiliates of the same enterprise, goods crossing the border for valid processing to order or repair). Also smuggled goods cannot be excluded out of the import measurement. • Imports of services consist of all services varies from the non- residents to residents. In national accounts the purchases by residents outside the economic territory of a country are considered as imports of services; therefore the entire expenditure by tourists in the economic territory of different country are considered as part of the imports of services. Also international flows of illegal services must be considered.Basic trade statistics often varies in terms of definition and coverage from the requirements in the national accounts:• Data on international trade in

223

goods are result through the declarations to custom services. If a country implements the general trade system, all goods registering the country are recorded as imports. If the special trade system (e.g. extra-EU trade statistics) is applied goods which are received into customs warehouses are not recorded in external trade statistics unless they subsequently go into free circulation of the importing country.• A special case is the intra-EU trade statistics. Since goods are exchanged freely between the member states of the EU without customs controls, strict rules and regulation must be followed by the members of EU. To reduce the statistical workload on the respondents small scale traders are neglected from the reporting obligation. Statistical recording of trade in services is based by surveys of the main operators. In a globalized economy it is very difficult to identify the international flows as it is done through electronic components. Basic statistics on international trade neglect the illegal services of smuggled goods in international markets . A small quantity of the smuggled goods and illegal services may be included in official statistics through dummy shipments or dummy declarations to hide the illegal nature of the activities.

1.2 Types of import

There are two basic types of import:

1. Industrial and consumer goods 2. Intermediate goods and services

Companies import goods and services to supply to the domestic market at a cheaper price and better quality than competing goods produced in the domestic market. Companies supply products that are not available in the local market.

There broad types of importers are subdivided into three sections:

1. Looking for any product around the world to import and sell. 2. Looking for foreign sourcing to get their products at the cheapest price. 3. Using foreign sourcing as part of their global supply chain.

Direct-import refers to a type of business importation involving a major retailer (e.g. Wal-Mart) and an overseas manufacturer. A retailer typically 224

purchases products designed by surronding companies that can be manufactured overseas. In a direct-import program, the retailer neglects the local supplier (colloquial middle-man ) and buys the final product directly from the manufacturer, to save the additional costs. This type of business is fairly happening and follows the trends of the global economy. These findings are based on Info drive India export import trade data through Jan - 2011 and will be updated till Dec -2011. Info drive India Trade data is the most up-to-date information on India’s foreign trade , It covers 94 major ports in India like JNPT, Bombay Air and Sea , Chennai Air & Sea , Delhi Patparganj, Kolkata Air and Sea, Bangalore Air and many more. InfodriveIndia.com trade data is available for online analysis within 3 weeks from date of export import at InfodriveIndia.com comparatively more used to Govt sources which are around 3 months old. InfodriveIndia.com is the market leader and primary source of India Export Import Trade information. Launched by Rakesh Saraf 15 years ago, a exporter from Kolkata, InfodriveIndia.com quickly became very famous for the standard reference on India export import trade data and Foreign Trade rule and regulations. The India Export Import databank, is a unique process of informational services. It is formed by the Bills of Entry and Shipping Bills filed at various ports, Info drive India reporters collect this data from every Indian port, and Info drive India database shows the most timely, effiency, comprehensive information available on trade through India Ports.More specialized Info drive India databases are US Import Data, UK Import Data, China Export Import Data, Russia Export Import Data, Sri Lanka Export Import Data, Latin American trade data, Chile Export Import Data, Peru Export Import Data, Argentina Export Import Data, and Uruguay Export Import Data .

2 What is Exporting?

2.1 INTRODUCTION:-

Exporting can be a profitable way of spreading your business, spreading your risks and deducing your dependence on the local market. Austrade research indicates that, on average, exporting companies are more profitable compare to their non-exporting counterparts.Exporting increases your ability to face to new ideas, management practices, marketing skills, and ways of competing that you wouldn’t have experienced

225

by staying at home. All this technique your ability to compete in the domestic market as well.By going overseas, you can become more efficient and increase your productivity. Companies which deals with export have more growth prospects, highly educated, highly productive staff and tend to adapt technology and best practice techniques faster.Even if you have a restricted domestic market, you should consider exporting.Products able to be exported include goods, services and intellectual property (IP). A product does not need to physically leave the country in order to be considered an export, provided that it earns foreign currency. For example, in-bound tourism is an export, as is education. In recent years, rapid technological advances have also meant that intellectual capital can be transferred internationally, even without the originator leaving Australia.Export success relys on having permission to practical, customer preferences, distribution and marketing practices, political issues, cultural requirements, legal problems, government assistance programs, etc

2.1Types of Export

Exports are divided into two main categories: direct and indirect exports.

Direct Exports

The type of exporting in which firms enter foreign markets directly and do their own export marketing. The firm undertakes the complete export marketing process, which is extensive. Direct exporting consists of different prospects of choosing appropriate foreign markets, distributors to show the firm in those markets, motivating and controlling those distributors selecting the product line for the target markets, deciding prices and obtaining promotional strategies for those markets,controlling international shipping and finance, and preparing export documentation.The benefit of direct exporting includes more control over the export process, potentially more profits, and a closer relationship to the overseas buyer and marketplace. However, these advantages has to earned by devoting more time, personnel, and corporate resources than indirect exporting requires.

226

Indirect Exports

Sales to export intermediaries who in turn sell to overseas customers. The indirect exporter has less direct contact’s with overseas customers. Sales are related with a trader in the exporter's country with payment done in local currency from the trader's office.For example, a Japanese trading house in Victoria arranges the contract for the supply of a particular product for the Japanese market. In such cases, payment will probably be made in Australian dollars. The principal advantage of indirect marketing is that it provides a way to penetrate foreign markets without the complexities and risks of direct exporting.Other examples of indirect exports are listed below.

Manufacture Under Licence

The Australian company sells technical know-how to an established manufacturer overseas who is licensed to produce the product or service in that country. The overseas licensee may also be appointed to distribute the product or service or arrange distribution through a separate organisation.For example, a local chemical company grants a licence to a Korean company to reproduce their product in that market. This may or may not include distribution.

Licensing and Franchising

The Australian company (the licensor) grants an overseas company (the licensee) a licence to use its intellectual property, (e.g. technology, patents etc.)A variation of this type of licensing is franchisingFor example, the Australian franchisor grants the Canadian franchisee a licence to operate its business using the franchisor's business systems.

Project Management

The Australian company provides a fully integrated management service to the overseas client. Usually, a contract of this type does not involve equity in the overseas client company.

227

For example, an Australian company sells its skills and expertise to a Canadian resort to run the resort for a set period of time.

Joint Venture

The Australian company enters into an arrangement with a company overseas to set up a third business entity, the joint venture company, which will be responsible for production and/or distribution of the product or service in the overseas market place.For example, a local Australian manufacturing company, in collaboration with a Indian distributor, may establish a new company (joint venture) to produce a product and/or distribute it in India.

Wholly-owned company in export market

The Australian company establishes a branch or subsidiary in the overseas territory. For example, an Australian company opens an office in Tokyo, Japan.Note: When entering into distribution, agency, licensing or joint venture arrangements, it is advisable to seek advice from a lawyer specialising in the drafting of these types of agreemen

2.2 Benefits of Exporting

Our economic prosperity as a nation depends upon our success in the international marketplace. We live in a global economy and it's no longer possible to do business in isolation. Exports bring Australia much-needed foreign exchange and also create jobs for Australians.

Exporting can also deliver considerable benefit to your business.

Advantages of Taking Your Business Overseas

The decision to export can have direct economic benefits including the opportunity to:

• expand your business • increase profitability • spread your risks • Decrease your dependency on the local market 228

• use surplus production capacity; and • seasonal demand is opposed by buffer.

2.3 Risks of Exporting

While exporting offers great benefits, there are also new risks you may not previously have encountered, that need to be considered. Risks include:

Political Risk

The political stability of your destination country should be monitored both from a business and personal security perspective. Instability may result in default or blockage of payment or confiscation of property. The Department of Foreign Affairs and Trade’s Smart Traveler website should be consulted in the planning stages and prior to and during any market visits. Likewise Austrade continually monitors the effects of political changes. Their information can be sourced via the Austrade website or by contacting them directly.

Legal Risk

Every country has its own legal systems. Their legislation will affect all your business transactions like import procedures, taxation, employment, intellectual property, currency, contracts and agency/distributorship arrangements. It is essential to obtain advice from respected legal practitioners in the countries you are looking at exporting to, or legal practitioners in Australia familiar with the legal system and laws of your target country.You should know that while graft and corruption may exist in some countries, under Australian law it is an offence to give illegal payments and legal steps can be taken against you on your return to Australia. For additional information you may wish to obtain the relevant law - the Federal Government’s Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999.

Financing Risk

Sources of financial risk should be fully investigated before embarking along the export route.Types of financial isk include:

229

• credit risk - whether the buyer will be able to pay you; • transfer risk - any economic, political or government restrictions that might impact on you; • exchange risk - fluctuations in exchange rates.

Transport Risks

Unless you are providing a service, you are likely to be exposed to some risks associated with the transport of your goods to their destination. Risks include damage, loss, theft and, for some products, exposure to the elements. Correct packaging, storage, distribution channels and insurance can assist you to minimize your transport risks.Regulations and Quarantine Requirements vary between countries. You need to find out about these requirements upfront. The onus is on you to be aware of all of the requirements to be met at your destination. The consequences of a shipment that is refused entry and needs to be shipped back could be dire.To clarify the overseas buyer's and your outgoing export quarantine requirements, check with the Australian Quarantine Inspection Service (AQIS).

Inadequate Resources

A business seeking to enter the international marketplace must ensure that it has adequate resources, including raw materials, components and human and financial resources to meet the export requirement. If these resources aren't available and part of the export work needs to be subcontracted, the business runs the risk of losing control of quality or of spending time and money on constant supervision

Indian leather industry

• The Leather Industry holds a prominent place in the Indian economy. This sector is known for its consistency in high export earnings and it is among the top ten foreign exchange earners for the country. • With an annual turnover of over US$ 7.5 billion, the export of leather and leather products increased manifold over the past decades and touched US$ 4.86 billion in 2011-12, recording a cumulative annual growth rate of about 8.22% (5 years).

230

• The Leather industry is bestowed with an affluence of raw materials as India is endowed with 21% of world cattle & buffalo and 11% of world goat & sheep population. Added to this are the strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and the dedicated support of the allied industries.

• The leather industry is an employment intensive sector, providing job to about 2.5 million people, mostly from the weaker sections of the society. Women employment is predominant in leather products sector with about 30% share.

Though India is the second largest producer of footwear and leather garments in the world, India accounts for a share of close to 3% in the global leather import trade of US$ 137.96 billion (2010)

• The major production centers for leather and leather products in India are located in Tamil Nadu - Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and Erode ; West Bengal – Kolkata ; Uttar Pradesh – Kanpur, Agra, Noida, Saharanpur; Maharashtra – Mumbai ; Punjab – Jallandhar ; Karnataka – Bangalore ; Andhra Pradesh - Hyderabad ; Haryana - Ambala, Gurgaon, Panchkula, Karnal and Faridabad; Delhi; Madhya Pradesh – Dewas ; Kerala – Calicut and Ernakulam / Cochin

Strengths of Indian leather sector

• Own raw material source – 2 billion sq ft of leather produced annually • Some varieties of goat / calf / sheep skins command premium position • Strong and eco-sustainable tanning base • Modernized manufacturing units • Trained / skilled manpower at competitive wage levels • World-class institutional support for Design & Product Development, HRD and R & D. • Presence of support industries like leather chemicals and finishing auxiliaries • Presence in major markets – Long Europe experience • Strategic location in the Asian landmass

Emerging strengths

• Design development initiatives by institutions and individuals • Continuous modernization and technology upgradation • Economic size of manufacturing units • Constant human resource development programme to enhance productivity • Increasing use of quality components • Shorter prototype development time • Delivery compliance

231

• Growing domestic market for footwear and leather articles

Highlights of Leather Product Segments:

• Tanning Sector – Annual production 2 billion Sq.ft. Accounts for 10% of world leather requirement. Indian colors continuously being selected at the MODEUROPE Congress • Footwear Sector - Second largest footwear producer after China. Annual Production 2065 million pairs. Huge domestic retail market 1950 million pairs (95%) are sold in domestic market. Footwear export accounts for 45.05% share in India’s total leather & leather products export. The Footwear product mix Gents 52%, Ladies 39% and Children 9% • Leather Garments Sector – Second largest producer with annual production capacity of 16 million pieces. Third largest global exporter. Accounts for 10.43% share of India’s total leather export • Leather Goods & Accessories Sector including Saddlery & Harness - Fifth largest global exporter. Annual production capacity - 63 million pieces of leather articles, 52 million pairs of Industrial gloves & 12.50 million pieces of Harness & Saddlery items. Accounts for 23.44% share of India’s total export.

future Outlook:

The Government of India had identified the Leather Sector as a Focus Sector in its Foreign Trade Policy 2004-09 in view of its immense potential for export growth prospects and employment generation. Accordingly, the Government is also implementing various Special Focus Initiatives under the Foreign Trade Policy for the growth of leather sector. With the implementation of various industrial developmental programmes as well as export promotional activities; and keeping in view the past performance, and industry’s inherent strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and dedicated support of the allied industries, the Indian leather industry aims to augment the production, thereby enhance export, and resultantly create additional employment opportunities for overall one million people.

232

Pakistan Leather Industry

The leather industry in Pakistan is as old as the history of the country. During the colonial era just a few number of tanneries were working in large cities such as Karachi, Lahore, New Delhi etc. In the 1950s the number of well equipped tanneries increased in Karachi, Lahore and other major industrial cities. This number continued to rise due to increase in demand of finished products as well as raw material in the national and international market.leather industry’s core products in Pakistan are leather garments, gloves, tanned leather and footwear. In the 50s and 60s most of the tanned leather was exported in raw form but soon after the local tanning industry making semi finished leather made rapid progress in making finished products due to availability of raw material, labor and growing demand in the foreign market.Pakistan Leather Industry has the production capacity of more than 100 million square meters and against the production capacity it is producing only 60 million square meters. More than 450 units of leather garment manufacturers in Pakistan are producing approximately 5 million pieces against the production capacity of exceeding 7.5 million pieces. Similarly a key sector in leather industry is the leather footwear industry which is capable of producing 200 million pairs annually and its current production is just 100 million pairs. Pakistan’s share in the global skin and hides production is around 7% annually which can be doubled with just the right amount of time and effort. One can assess that these statistics show the industry’s capabilities which are highly under-utilized.

The industry has been facing some challenges which have been slowing down the production process. The main issue is the energy crisis which is endured by all industries in Pakistan. The absence of energy efficient technologies and lack of proper machinery and maintenance is also causing a significant amount of wastage of energy. Environmental challenges are faced by the leather industry all over the world. Wastewater, solid waste and air emissions are the main wastes produced during the tanning process. Good quality leather is exported and most of the time is not available for high value finished goods. Lack of proper training for finished-goods producing labor is the main reason that good quality and high value raw material is exported. Providing a solution for these problems can also result in increasing in the production rate. 233

Gujarat Leather Industry the state of gujarat is having shoe artisans in the saurashtra region (also known as kathiawar region due to the presence of kathi people). no special product is being made in the whole saurashtra except the traditional farmer’s shoe called bharwadi deshi joda, which is made only in vegetable leather. the districts are producing nothing special except local shoes like simple derby, oxford, mozadi and casual designs. chappals & sandals are being made for ladies and gents. out of the total the twelfth five year plan (2012 to 2017). shoes made in the region, 75% are open shoes. apart from that, a number of leather processing units are functioning there in the region, as cooperative societies, supported by (dic) district industry centre. these tanneries are mostly producing vegetable tanned leather. Asiatic colour chem. Industries limited, s.r. Trade links, vikram trading co, alpha sterling industries, color cascades impex, charm, jeeka industries, associated dyestuff industries, saumya exports, thomas baker, shree dye chem., desai packwell etc. Is the prominent manufacturers & exporter of an extensive range of industrial dyes are leather dyes, industrial leather dyes, fashion fur dye stuffs, leather mix colour, leather colour dyes, leather black dyes, leather brown dyes, fur dyes, acid fur colour dyes, reactive dyes, fabric reactive dyes, acid dyes, wool acid dye, textile dye, dye for wool, wool dyes, wool dying, coloring wool dyes, dyes wool, nylon, paper dyes, industrial paper dye, ink dyes . The wide range of our product includes ink dyes, textile dyes, acid dyes, reactive dyes and paper dyes. Products are known for various features like water soluble, accurately formulated, and pure and environment friendly .

234

Comparison between India and Pakistan

Some sectors of Pakistan economy have shown a good performance in terms of production and exports. Leather industry, including leather products, is the second largest export earning sector after textiles. Currently, this sector is contributing around $700 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products, specially garments and footwear. Basically, it is a job-oriented sector providing employment to a very large segment of the society besides earning foreign exchange for the country. Currently, Pakistan's leather industry is contributing significantly to the national exports and a major foreign exchange earners. About 90 % of its products are exported in finished form.

New trends in Pakistan leather Export

The export of leather constituted 78 per cent of the total exports of leather sector during 1979-80 whereas the export of other value added goods was 22 per cent. However, during 1989-90 the exports in leather contributed 52 per cent of the total exports of leather sector and the export of leather products including footwear and leather garments contributed 48 percent.Showed decrease of (-22.65%) exports of leather and leather products which came down to US$ 943.788 million from US$ 1220.119 million. Leather tanned contributed 2.18%; Leather garments/manufactured 2.77% and leather footwear 0.65% in the group of leather & leather products.

Leather showed a decrease of (-27.88%). The export of Leather fetched US$ 299 million as against US$ 415 million in previous year. Quantity also decreased by (- 21.57%) from 24,258 thousand SQM to 19, 026 thousand SQM.

Recent trends in Indian leather industry

The Leather industry is enjoying the status of a major foreign exchange earner in India nearly

235

over last thirty years. Source of this comparative advantage lies in large raw material base, cheap labor and rich craftsmanship. The leather industry is enjoying the status of a priority sector in india since the early seventies. Following the oil crisis it was realized that industry like leather deserved special attention because of its strong potential of foreign exchange earning without making any compromise with the employment generation objective. Over the years this industry has evolved from being exporter of raw materials in the sixties to that of high value added finished products by the turn of the century. It has passed through different policy regime both at the national and international levels and is claimed to maintain its relatively strong position in the international market all throughout (Sinha & Sinha 1991, Kumar 1997, Kadekodi et. al. 2002, Sankar 2007). However, Indian leather is yet to establish a brand reputation in the international market and the relative share of India in the World leather trade is gradually declining.

236

Findings & Suggestions

• Indian and Pakistan leather industries are at the level of where both can achieve the tremendous level by proper execution of planning and developing of export of their business.

• Facilitating export-import trade through redressed of various procedural hurdles by representing to authorities concerned.

• Participating in major international leather trade fairs & specialized trade shows across the globe.

• Organizing Buyer-Seller Meets and Mega Leather Shows, B2B meetings in potential markets etc.,

• Promoting, facilitating & attracting joint ventures, technical collaborations & strategic alliances, Fids etc into the Indian leather sector.

• Develop & strengthen the leather industry both industrial development as well as export growth.

• Undertake concerted and aggressive export promotion and market development activities to extend global reach of Indian leather & leather products.

• Assist importers anywhere in the world towards their sourcing needs of Indian leather & leather products.

237

10. Business Opportunities and threats analysis for conducting business in future

With about 160 million inhabitants, Pakistan is the second largest Islamic nation after Indonesia. The country has considerable potential to develop into a stable, moderate and democratic state, but has not yet fully realised this potential. Although some progress on democratisation has been made by installing an elected parliament in October 2002, army influence is still strong and strengthening democratic institutions and processes remains an important task. Other political challenges include eliminating religious extremism and sectarian violence, addressing regional imbalances and improving the human rights situation. Continuation of the positive trend in relations with India and Afghanistan would greatly contribute to enhanced regional stability. Since 1999 Pakistan has been successfully implementing a macroeconomic reform programme, resulting in some of the best economic indicators in its history. GDP growth registered 8.4% in 2004-05. This was facilitated by good export performance, high remittances and external financial support. However, the reforms have not yet had a major impact on reducing poverty , with one third of Pakistan’s population still classified as poor. In spite of large contributions of official development aid, Pakistan’s human development indicators worsened during the 1990s and social inequalities deepened. The 2004 UNDP Human Development Index ranks Pakistan last in South Asia. If the Millenium Development Goals are to be met a drastic change of approach towards social development will be required. The October 2005 earthquake caused widespread destruction but, according to the IMF, should have no major impact on Pakistan’s economic prospects. Pakistan is facing major Risk problems , including growing water shortages due to emographic pressure, deforestation and degradation of rangelands. There are fears that Pakistan could enter a downward spiral of environmental degradation and poverty. Poor governance emains a key issue and has had a negative impact on social service delivery. While the devolution process has strengthened local political institutions, more needs to be done to address management and capacity issues at local level.

238

In Pakistan the Leather Industry is the 3 rd largest export-earning sector with an export income of over US$ 700 million and contributes about Rs. 35 million to the national economy. This is the achieved from the production of more than 750 tanneries, located in clusters of (160 tanneries), Kasur (238), Sialkot (235), Gujrawanwala- Wazirabad (40), Lahore (26), Sahiwal (6) and Multan (45). For the availability of raw material Pakistan being an agricultural country possesses a well established system of cattle breeding, have large livestock population and produces about 6.1 million hides (2.1 million cow hides and 4.0 million buffalo hides) and 36.5 million skins (22.7 million goat skins and 13.8 million sheep skins) per year. The terms of trade for the oil- exporting developing countries deteriorated sharply from a very high level after 1980 throughout till 2001 when it started experiencing improvement. Some metal-exporting economies, such as Chile and Zambia, have also experienced favourable terms of trade, thanks to recent increase in copper prices. For other developing countries, the terms of trade remained slightly above 100 during the 80s but from 1990 onwards became almost flat at 100. Taken together, these eight highly developed conomies represent about 14 percent of the world population, but they account for about 65 percent of the World GDP. High income countries in general experienced worsening of terms of trade during 1980-1985, though afterwards it became static at a level slightly above 100. Compared to the level of exports in Pakistan, the value of imports is much higher which poses a problem of import financing. For example, for 2007-08, against the export level of $ 20.2 billion, the import value amounted to $ 35.1 billion. Both in Pakistan and around the globe, the demand for footwear is increasing. Pakistan is one of the most populous countries in the World and according to an estimate with an average population growth of 2.25 %, about 3 million children have been born during the year 2005-06, signaling the growing demand for footwear in Pakistan. It is also estimated that about 60 percent of the World’s total consumption consists of simple footwear made entirely of non-leather materials and that for the remaining 40 percent only the upper part of the shoe is made of leather. In the manufacturing of footwear, most frequently used material consists upon leather, manmade materials, rubber / canvas / synthetic and textile along accessories. Different type of shoes are being produced by the local industry e.g. sportsmen, army, disabled persons and safety shoes for the industrial workers etc. The population of Pakistan is expected to be about 172 239

million in the year 2010. Keeping in view the growth in population, the growth in the demand of footwear industry is also anticipated.

Trade information of leather

The aim of the Trade Information Brief (TIB) is to highlight potential export markets to SADC producers who may not have the financial resources to engage in preliminary market research activities. T he T IB is not a detailed market intelligence report but rather highlights potential lucrative business opportunities in a market. A T IB should not be used to determine whether one enters a particular market but rather to ask questions about a market and stimulate further research. A series of T IBs has been produced that covers a range of product clusters.In 1999, Leather goods accounted for $9 million in foreign exchange earnings, which is nearly 2% of total leather exports of Pakistan. The leather goods market as a whole has shown a negative trend, in Pakistan, the leather goods market has decreased by an annual average of 3% in last five years. In the year 2000-2001, the exports of Pakistan have increased from $9 million to nearly $15 million, which is an increase by more then 66%. Based on the following reasons, which will be explained in greater detail in this T IB, leather and leather products were selected as a potential tradable product for the SADC region: Opportunity to move into the production of value-added processed goods as developed countries are outsourcing labor intensive production processes to improve their price competitiveness to compete against Asian imports; Opportunity to capitalize on SADC’s competitive advantage to produce cheaper products than developed countries due to lower labor costs and less stringent environmental regulations; Opportunity to build on SADC’s current strengths, such as established institutions that have the capacity to reinforce quality standards, developed databases, parties’ recognition that in the medium term environmentally friendly production techniques will become an important source of competitive advantage and the development of trade promotion strategies ( FAO , 2002b: 8); Opportunity to participate in a growing market: Value of export earnings from raw hides and skins, processed leather and leather products dramatically increased during the 1980s and mid 1990s, and as a result the market for leather manufactured products is considered to be one of the fastest growing export markets, in terms of value, in the world (FAO , 2002a:33); Opportunity for developing countries to participate in world markets: Over the past two decades developing countries have doubled their share of global export 240

earnings in a rapidly expanding market; Opportunity to participate in a substantial market: Leather and leather products are the most widely traded and universally used commodities in the world; during 1994-1996 the value of trade was close to three times that of meat and three times more than sugar The value chain for leather products comprises four broad stages (refer to Figure 3). The first three stages cover core industrial processing functions and the last stage concerns product placement activities.

Consumption

. Improvements in infrastructure have facilitated the creation of distribution networks that make it simpler to place products within consumers’ reach in remote areas, in turn opening up new markets for traditional products. Given consumers’ motivation for purchasing leather goods; a relationship exists between per capita income levels and consumers’ demand for leather products. As a consequence the demand for leather and leather products is elastic as it moves in line with the performance of the global economy. Therefore circumstances that depress economic growth such as a hike in oil prices, raising interest rates, inflation and growing unemployment will negatively affect consumers’ demand for leather and related-product markets. T he industry is aware that demand for traditional based leather products is influenced by a countries’ macroeconomic performance. T o reduce its exposure to economic downturns, the industry is developing new products to create organic growth.

Global trade patterns

Greater competition for shares of end-product markets in developed countries has intensified rivalry between retailers causing them to exert downward cost pressure throughout the value chain. In a competitive market a seller’s ability to reduce costs is important, provided it does not negatively affect quality. Sellers in developed countries have outsourced production activities such as tanning leather and manufacturing leather products to developing countries to take advantage of less severe environmental regulations and cheaper labor, respectively, which reduces production costs. A caveat in the above statement needs to be stated to avoid confusion. Although developed countries have relocated tanning activities to developed countries, they have strategically outsourced the type of goods that they have outsourced produced in developing countries. Manufacturers in developed countriesrealize that they cannot 241

compete in the mass produced market segments as their cost base is too high. Instead they have focused their attention on producing and marketing high value, quality leather goods that require large investments in technology, design capabilities, excellent quality control procedures and the ability to shape and anticipate fashion trends (CBI: 2005).

Since the 1980s growth in developing countries’ production of hides and skins has outpaced developed countries growth in production and this trend should continue. T his trend is linked to higher precipitate income levels in developing countries that have stimulated the demand and consumption of meat, which has increased beef prices.Domestic demand has been a key factors driving growth in the following countries slaughter industries: China, Indonesia, Philippines and Vietnam. South America’s industry has also enjoyed rapid growth which was driven by exports. Developing countries on average have managed to make significant inroads into international markets; however this does not imply that all developing countries have been equally successful. Developing countries in the F arEast are the largest exports of leather products because of the cost competitiveness of their processing and manufacturing functions. Most notably high-value components of the value chain have remained in developed regions; the styling of goods, creating fashion trends, designing capabilities, branding and marketing activities. T he slicing up of activities in the value chain and the geographical placement of high value compared to low value activities has EU 25’s export performance is primarily driven by Italy and France that are the world’s second and third largest exporters of leather articles. Other countries that have a significant impact on the region’s performance and fall into the world’s top ten exporters include Germany, Belgium, United Kingdom, Spain and T he Netherlands. T his region’s trade is value driven The majority of the EU 25’s imports were destined for Germany, France, United Kingdom, Italy, Spain and Belgium. In 2005 the above countries were amongst the top ten largest importers of leather articles in the world. Within the EU 25 member states consumers’ preferences are remarkably different and thus certain member states are more receptive to products from developing countries. Generally T he Netherlands, Belgium, United Kingdom and Germany offer lucrative trade prospects for producers from developing countries, while opportunities in Italy, France and Spain are limited (CBI, 2005:6). T his is due the divergent nature of consumers’ preferences and the relative productive capacity of these countries.

242

Germany, the United Kingdom and Belgium are amongst the world’s largest top ten importers and exporters of leather products but their domestic production of leather products is limited. Germany and the United Kingdom were net importers of leather products in 2005 while Belgium was a net exporter. As consequence when a producer from a developing country exports his/her product to one of these markets, his/her product indirectly has access to a third market. Therefore one of the benefits of exporting to these markets is that a producer’s global reach is extended, providing exposure to other markets, which is vital to improve the perception of the quality of goods originating from developing countries. Therefore one of the advantageous for a developing producer to export to these countries is the ability is to improve his/her market access.

Environmental Pollution

All the above mentioned operations in the leather lead to the formation of liquid and solid wastes. All the wastes are to be disposed of under environmental protection requirements. Efforts have been made to reduce the pollutants in the tannery wastes at Kasur, where more than 230 tanneries exists, by constructing Common Effluent Pre- Treatment Plant (CEPTP) under Kasur Tannery Pollution Control Project (KTPCP) at a cost of Rs. 425 million with an annual running cost of Rs. 20 million. In the effluent Cr 3+ is said to be reduced by 96–98%, BOD 5 by 60–75%, COD by 50–65%, sulphides by 65– 75%, TDS by 20–30% and sulphate by 25–35%. Permanent sludge lagoons have been constructed to collect the sludge so that the sludge stays permanently in the sludge lagoons. The CEPTP is functioning since Oct 2001. It is worth mentioning that only very few tanneries have their primary treatment plant to separate sludge from the effluent. These wastes are thrown without any treatment into the environment. It is also to be noted that more than 235 tanneries exist in Sialkot cluster and none of these have any type of treatment plant, thus all these industries throw their wastes without any treatment in to the environment.

Collaboration with PTA in research

EM Pakistan is collaborating with Pakistan Tanners Association (PTA) for carrying out research in the leather industry. During February 2002 EMRO & PTA initiated research on “Tannery Sludge Bioremediation using EM Technology” in the premises of Eastern 243

Leather Company (ELC), Muridkey. ELC was not equipped with Cr removal plant and the sludge was containing 5% Cr. The sludge was just like flacks of 1.0 to 1.5 cm thickness, very hard to break with hands, can be broken with hammer into small pieces of various dimensions..

Major Problems Facing Footwear Industry

One of the most important problems hindering the growth of footwear industry is higher energy prices. Increasing energy and inputs prices leads to an increase in the cost of production that influences the expected production of the industries and thereby exports. Industries do not have footwear training institutes of quality and repute and in result there is a lack of skilled labor force. Thus there exists a problem of absorption capacity in advanced machinery. Outdated production methods are still prevailing in the shoe factories. Improper availability of raw material. There is no mechanism of collaboration between Industry units and other related research organization and academic institution to improve their productivity. Transport and utility infrastructure facilities are not adequate. Industry is facing high competition from China providing cheaper footwear product in markets.

Imports

In 2005 the largest global importers of leather products in descending order were The United States (25%), Japan (12%) and Hong Kong, China (11%). These three countries comprised 48% of global imports amounts to US$9,559 million (refer to Table 10). Six of the remaining seven top ten importers were former EU 25 countries. European markets are diverse and thus should be examined individually due to this TIB’s format this is not possible and therefore readers should refer to http://www.cbi.nl for more information about these countries’ respective markets. Potential exporters are attracted to this market because of its value, but accessing this value is difficult because the market is fragmented (CBI, 2005).In 2005 Japan was the second largest importer of leather products with a 12% share of global imports (refer to Table 10), and is its primary trading partner was China (refer to T able 11). Japan’s import basket is predominately 244

for up market, branded exotic products. Japanese buyers are conservative and thus prefer to import trusted brands and thus are loyal to their suppliers. Furthermore buyers’ decisions are not easily swayed by price differentials between competing goods as decisions are primarily governed by the quality aspects of a good. T he implication is that there is a shortage of quality hides produced in the region at a competitive price. Provided the region’s supply-side bottlenecks are addressed, which is not a formidable task, an opportunity for other SADC member state’s producers exist to supply a pre- existing market. Based on the calculation of annual average growth rates from 2000- 2005, the region’s emerging importers are Angola and Namibia. Tanzania and Malawi’s fall in imports over the period reflects is due to the respective government’s policy to place an embargo on the importation of skins and hides .

Exports

There is a fair amount of overlap between the top ten countries that import and export leather products. In 2005 eight of the top ten exporters were also top ten importers, however only three countries,China, Italy and France were net exporters. From 2000- 2005 growth in global exports, calculated on an average annual basis, was driven by the world’s top ten exporters. Countries that managed to record particularly impressive growth rates over the period were China, Italy France,Germany, Belgium and Spain. The fact that China, Italy and France; the market’s three largest exporters, posted strong growth is remarkable given their large export base.

Table 16: Leather Goods Industrial Structure in Pakistan

Cities Units Installed Capacity (Million Pcs.) Employment

Karachi 86 2.63 1,707 Sialkot 42 4.15 773

Islamabad 4 0.26 50 Gujarat 1 0.06 8 Lahore 1 0.40 35

Total 134 7.50

Product Mix 245

The proposed unit can produce a variety of leather products with the same infrastructure but it has been proposed in this study that the unit will produce the following products initially in the percentages mentioned below:

Product Mix Details

Description Production Percentage Ladies Handbags 10% Wallets 30% Belts 50% Briefcases 10% Total Production 100% Production Capacity

The production capacity of the project is based on 12 stitching machines, which have a capacity to produce a product mix of 3,000 ladies handbags, 9,000 Wallets, 15,000 belts, and 3,000 briefcases per annum at 100% capacity. Capacity utilization for the first year is 60%, with 5% annual growth in production capacity and the maximum capacity utilization for the project of 90%.

Table : 16Capacity Details Description

Maximum Production Utilization 1st Year (60%) per Year 100% Ladies Handbags 3,000 pieces 1,800 pieces Wallets 9,000 pieces 5,400 pieces Belts 15,000 pieces 9,000 pieces Briefcases 3,000 pieces 1,800 pieces Total 30,000 pieces 18,000 pieces

246

Findings:

• Pakistan has greater opportunity of capturing in specific segment of leather industry. Its easily cover the whole leather market. • Major contribution in a exporting leather products and Services • Major benefits through help of technology especially internet has helped in reduce costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere with access to an internet connection. • Mostly officials and business man (Almost 60%) use bank website for online payments. • Pakistan is the 10th largest exporter of leather products in Asia. This sector contributes 9.4%11 to the GDP and provides employment to about 15 million people i-e 27% of the 49 million work force of the country. • Pakistan is the sixth most populous country in the world, with an estimated population growth rate of more than 2 percent per annum.

• Livestock is an important component of farming systems. It accounts for 26.4% of all the value of agricultural production. Livestock is raised for draft power, milk and meat.

• Forest and woodland amounted to only 4.4% of the land area in 1993 . Many of wooded areas are severely depleted as a result of . Forestry production declined from 1.07 mills.

247

• Surveys have revealed that a woman works 12 to 15 hours a day on various economic activities and household chores. Women from an average farm family remain extremely busy during the two farming seasons in sowing and harvesting. • Pakistan's population was officially estimated at 131.6 million in January 1996, comprising 47.5% women and 52.5% men. The population growth rate remains as high as 2.8% per annum. Based on a 1993 survey, 46.1% of the population is under 15 years of age and 4.1% over 65.

Conclusion

Trade in leather products has experienced strong growth of 7% from2000-2005, off a large base of US$ 27,321 million to be worth US$38,067 million in 2005. Exclusively considering the market’s growth obscures and detracts from the market’s attractiveness for SADC’s producers. A nether aspect which is even more important to consider is the nature and distribution of the market’s growth. The global market for leather products is geographically dispersed and comprises a multitude of products. As a result SADC’s producers can avoid head-on head competition with other suppliers, provided they capitalize on trading products that infuse cultural design with western functionality. A although trade statistics illustrate that the top ten global importers and exporters dominate global trade, it hides the fact that the bottom end of the market is fairly fluid and sufficiently large in comparison to obtaining similar market shares in other commodity type markets. Furthermore, the demand for leather products in these smaller markets is growing a faster pace than larger developed markets. Given the changes in the global economic structure these smaller markets are on the cusp of consolidating their position in the global economic system. The implication is that SADC’s producers could enter these markets and grow with the market, providing opportunities to become an entrenched supplier to a stable, large market. T he scope and diversity of products made from leather is increasing. This trend can generically be broken down into three components: the rise of the middle class coupled with the deepening of a consumer culture, the creation of portable micro technologies and the “cocooning” concept that was pioneered by Popcorn. T he rise of these trends has

248

created new organic markets for leather products, such as lampshades, storage boxes, couches, notebook bags, iPod cases, sunglass cases, picture frames, cell phone cover, etc.

In present day Pakistan, Islamic parties, particularly sunni orthodox parties, are still the main beneficiaries of the political space provided by military regimes, including Zia’s Ismalisation process that distorted the legal and judicial systems and Musharraf’s ceding of two of four provinces to the MMA through the rigged 2002 elections. There are number of weaknesses and deficiencies in Pakistan’s election system and processes. Pakistan’s political leaders have not given electoral reforms the prominence it deserves. The recent political and popular unrest has shown that the country faces a broader set of democracy and governance challenges. Pakistan’s political parties are chronically undemocratic institutions that are personality-driven, lack any real ideological grounding, and often do not provide genuine representation to their constituencies.

As a new generation of voters and politicians enters the political system, including women and youth, the PPP, PML-N and other moderate parties have an opportunity to build new constituencies. As the attempt to rebuild their political machinery in the hope of regaining power, they must tackle in earnest the internal weakness that previously impeded them in governance. Throughout the Pakistan’s history, a weak and polarized political system has enabled the military to seize and maintain power. Sectarian politics are, in fact becoming increasingly violent, as more Islamic parties and groups espouse militancy as the most effective method to promote their interest. A rising economic crises is adding to the political instability in the country. The essential of globalization and integration with the world economy dictate that the countries that are not reactive and do not grasp the opportunities at the right time are likely to be losers. What is encouraging is that the economic policy stance of both major parties in Pakistan is identical, i.e., liberalization of the economy. We have made a head start and let us not lose this momentum by narrow-minded and purely self-serving interests. The destiny of a nation depends upon the hard work, discipline and internal cohesion of its people and the vision of its leaders. Let our future generations not blame our leaders for failing to leave a legacy of prosperity and hope for them. Despite world-wide recession Pakistan’s leather industry registered an increase of 21% during the financial year 2007-08.

249

Exports valued at $1.25 billion were recorded, slightly improved than government projections for $1.13 billion. Pakistan is planning to capture 5% of the global market in the next 10 years. The augment in exports can be attributed to factors as the advancement in technology, investment in Hi-Tech machinery and improved livestock in the country. With the help out of universities and industry resources the cause of damage to raw hides and skins has been identified and the government is striving hard to eliminate these shortcomings at farm level. Due to the demand of Halal Food they require for Pakistani Beef and Meat has increased in the Middle East resulting in the establishment of modern slaughter houses all over the country.Under top level hygienic conditions the animals are slaughtered in these newly established abattoirs and large quantities are being exported to U.A.E, Bahrain, Saudi Arabia, Qatar & other nations.

With recent findings in Europe that slaughtered animals with maximum blood drain are more hygienic than those carrying leftover blood in the veins of slaughtered animals the demand of Hilal meat has increased.This has opened further opportunities & we see more abattoirs in future.The second major reason for the increase in exports can be attributed to the establishment of combined and individual waste management plants. In the World Bank’s final report of Pakistan’s Environmental Assessment it stated:“The leather industry represented by the Pakistan Tanners Association (PTA) has demonstrated tremendous commitment and farsightedness by initiating a number of cleaner production technologies program in Punjab & Sindh. The strong commitment is gauged from the fact that in spite of a weak enforcement climate individual tanneries and the PTA have initiated at least five major projects with technical assistance of Royal Netherlands embassy in Pakistan .Pakistan is the least protected economy in south–east Asia. Tariffs used to be high in the past but now in non agricultural products max. Tariff is 25%. There is no accredited laboratory in the country. Now such laboratories are being established with the assistance of the World Bank and Asian development bank. India Pakistan trade relations are carried out at a level where there are 1057 items which are in the positive lists. India and Pakistan trade relations are the relations are carried out on the basis of the most favored nations. India Pakistan has tariff barriers and non tariff barriers for the trading purpose. There is various government interventions set up for the trading between the neighboring countries. These

250

interventions are different for India as well as Pakistan for the same Trading polices are established by the neighboring countries for trading with the other nations. Trade relations between India and Pakistan are getting strong through wagha border, attari check post for trading between the two member nations also. There are various risk associated for trading between the two nations world wide

251

References • Aziz- ul-Islam (1999) Globalization and development revisited in the light of Asian experience. Asia-Pacific Development Journal 6:2. • Kemal,A.R. (2001) Globalization and South Asia. Mahbub ul Haq Human Development Review, 1(1). • Arndt, S.W. (1997) Globalization and Trade: A Symposium. The World Economy, 20(5). • Cornia, Giovanni Andrea (1999) Liberalization, Globalization and Income Distribution (Helsinki, UNU/WIDER). • Faiz Bilquees (1992) Trends in Inter-sectoral Wages in Pakistan. The Pakistan Development Review 31:4. • Government of Pakistan, Economic Survey (Various Issues), Economic Advisor's Wing, Finance Division, Islamabad. • Helliwell, J.F. (1994) Trade and Technical Progress in L.L. Pasinetti and R.Solow (eds) Economic Growth and the Structure of Long-Term Development, New York: St. Martin Press. • Katsumi Sugiura (1999) American 'Globalism' and Asian 'Regionalism' in the Age of Transformation of the World System. Journal of International Economic Studies, No. 13. • Krugman, P. (1995a) Growing World Trade Causes and Consequences. Brookings Papers on Economic Activity, No. 1. • O'Rourke, Kevin H. and Jeffery G. Willianson (2000) When and Did Globalization Begin? Working Paper # 7632, National Bureau of Economic Research, Cambridge. • Riordan, E. Mick and T.G.Srinivasan (1995) Pakistan's International Linkages: Evolution and Prospects, World Bank International Economics Department, Washington, DC. • Social Policy and Development Centre (2002) Social development in Pakistan – Annual Review 2001, Oxford University Press. • Torres, R. (2001) towards a socially sustainable world economy: An analysis of the social pillars of globalization, Geneva, International Labour Office. • United Nations (1999) World Investment Report, UN Publication. World Bank (2000) Entering the 21st century - World Development Report, Oxford University Press. • PAKISTAN AND INDIAN ECONOMIES COMPARED - - ISHRAT HUSAIN • Doing Business in Pakistan Communicaid Group Ltd. 2009 • Pakistan-India Relations: An Indian Narrative, PILDAT – Pakistan Institute of Legislative Development And Transparency. Jan 2011 • WTO Trade data base, World Development Indicators, Federal Bureau of Statistics, Pakistan Revenue Automation Pvt. Ltd. (PRAL) 252

• Science and Technology based Industrial Vision of Pakistan’s Economy and Prospects of Growth: The Case of Textiles and Leather by Musleh ud Din and Ejaz Ghani • Mahmood, A. (2005), Export Competitiveness and Comparative Advantage of Pakistan's Non- Agricultural Production Sectors: Trends and Analysis, Pakistan Institute of Development Economics, Paper presented at 20th AGM & Conference, Islamabad, Pakistan. • Comparative Advantage of Leather Industry in Pakistan with Selected Asian Economies International Journal of Economics and Financial Issues Vol. 3, No. 1, 2013, pp.133-139,ISSN: 2146-4138 • PTA annual reports Volume Oct/Nov 2012 • Proposals / suggestions of Pakistan tanners association for trade policy 2011-12 • S. Rajamani; “Biotechnology Reduction of Sulfide in Industrial primary Wastewater Treatment System – A Sustainable and Successful Case Study” Proceedings of International Conference on Cleaner Production and Sustainable Development’99 December 13-17, 1999, Taipei, Taiwan R.O.C. PP. 139-146 • S. Rajamani, R Suthanthararajan and T Ramaasami “A Successful and Sustainable Industrial Scale Chromium Recovery and Reuse System in Tanneries” Proceedings of International Conference on Cleaner Production and Sustainable Development’99 December 13-17, 1999, Taipei, Taiwan R.O.C. PP. 332-338 • E Ravindranath, R Suthantharajan et. al. “A Generation of Bioenergy in the Treatment of Tannery Wastewater Adopting Upflow Anaerobic Sludge Blanket (UASB) System” Proceedings of International Conference on Cleaner Production and Sustainable Development’99 December 13-17, 1999, Taipei, Taiwan R.O.C. PP. 316-321 • Responding to Environmental Challenge, Pakistan’s Leather Industry, A Brochure Published by Federation of Pakistan Chambers of Commerce and Industry under Environmental Technology Program for Industry (ETPI) Project (1999). • Leather Research Institute (2004), “Problems and Solutions” Pakistan Council of Scientific and Industrial Research, Karachi

253

• Malik, Afia (2000), “Demand for Textile and Clothing Exports of Pakistan.” The Pakistan Development Review , Volume 39, (Winter 2000) PIDE, Islamabad. • Ministry of Industries & Production (2004), “Pakistan Investment Guide”. Experts Advisory Cell, Ministry of Industries & Production, Islamabad. • Ministry of Planning & Development, Government of Pakistan, “Industrial Efficiency Improvement and Development Strategy Study: Textile Subsector Report”. Volume 18, Technical Assistance Project Cell, Islamabad. • Small and Medium Enterprise Development Authority, “Textile Vision 2005”. Mid Term Review, July 19, 2002. • Small and Medium Enterprise Development Authority, “Textile Vision 2005”. • SMEDA (2003), Leather Sector of Pakistan. • Aziz- ul-Islam (1999) Globalization and development revisited in the light of Asian experience. Asia-Pacific Development Journal 6:2. • Kemal,A.R. (2001) Globalization and South Asia. Mahbub ul Haq Human Development Review, 1(1). • Arndt, S.W. (1997) Globalization and Trade: A Symposium. The World Economy, 20(5). • Cornia, Giovanni Andrea (1999) Liberalization, Globalization and Income Distribution (Helsinki, UNU/WIDER). • Faiz Bilquees (1992) Trends in Inter-sectoral Wages in Pakistan. The Pakistan Development Review 31:4. • Government of Pakistan, Economic Survey (Various Issues), Economic Advisor's Wing, Finance Division, Islamabad. • Helliwell, J.F. (1994) Trade and Technical Progress in L.L. Pasinetti and R.Solow (eds) Economic Growth and the Structure of Long-Term Development, New York: St. Martin Press. • Katsumi Sugiura (1999) American 'Globalism' and Asian 'Regionalism' in the Age of Transformation of the World System. Journal of International Economic Studies, No. 13. • Krugman, P. (1995a) Growing World Trade Causes and Consequences. Brookings Papers on Economic Activity, No. 1.

254

• O'Rourke, Kevin H. and Jeffery G. Willianson (2000) When and Did Globalization Begin? Working Paper # 7632, National Bureau of Economic Research, Cambridge. • Riordan, E. Mick and T.G.Srinivasan (1995) Pakistan's International Linkages: Evolution and Prospects, World Bank International Economics Department, Washington, DC. • Social Policy and Development Centre (2002) Social development in Pakistan – Annual Review 2001, Oxford University Press. • Torres, R. (2001) towards a socially sustainable world economy: An analysis of the social pillars of globalization, Geneva, International Labour Office. • United Nations (1999) World Investment Report, UN Publication. World Bank (2000) Entering the 21st century - World Development Report, Oxford University Press. • A mission for Accomplishment of a Comprehensive sector study regarding the opportunities of Complementarities and Industrial Integration in the Leather and Shoes Sector in the Member Countries of the Agadir Agreement ( Egypt - Jordan - Morocco & Tunisia) by Mahmoud Qattous and Terry McCallin Amman, September 2009 • Comparative Advantage of Leather Industry in Pakistan with Selected Asian Economies by Sadaf Shahab1 School of Economic Sciences, Federal Urdu University of Arts, Science and Technology, G-7/1, Islamabad, Pakistan.

• Pakistan’s trade policies: future directions by Garry Pursella, Ashraf Khanb and Saad Gulzar

255

• Websites

• http://en.wikipedia.org/wiki/Economy_of_Pakistan

• http://www.mongabay.com/reference/country_studies/pakistan/ECONOMY.html

• http://www.google.co.in/url?sa=t&rct=j&q=%20overview%20of%20stock%20mark et%20in%20pakistan&source=web&cd=2&ved=0CDMQFjAB&url=http%3A%2F %2Fmpra.ub.uni- muenchen.de%2F11868%2F1%2FMPRA_paper_11868.pdf&ei=8oDJUJbYDYq HrAfBr4DQBw&usg=AFQjCNGYRcw417- VIgY61ROzNez4gIRT4A&bvm=bv.1355272958,d.bmk&cad=rja

• http://www.mongabay.com/history/pakistan/pakistan-manufacturing.html

• http://www.samn.eu/index.php?q=economic-pakistan

• http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-77.pdf

• http://www.riazhaq.com/2010/08/pakistans-middle-class-responds-to.html

• http://www.google.co.in/url?sa=t&rct=j&q=information%20on%20poverty%20allev iation%20expenditures%20in%20pakistan%20in%20early%2090&source=web&c d=2&ved=0CDMQFjAB&url=http%3A%2F%2Fpide.org.pk%2Fpdf%2Fpublication s%2FMonograph%2FPoverty%2520Reduction%2520in%2520Pakistan.pdf&ei=r 5TJUIyoLcPqrAeGGw&usg=AFQjCNGhQFBaOwQ- 2m1WgesUAV2HCf47MA&bvm=bv.1355272958,d.bmk&cad=rja

• http://en.wikipedia.org/wiki/Demographics_of_Pakistan

• http://en.wikipedia.org/wiki/Tourism_in_Pakistan

• http://www.google.co.in/url?sa=t&rct=j&q=overview%20on%20tourism%20in%20 pakistan&source=web&cd=5&ved=0CEcQFjAE&url=http%3A%2F%2Fprr.hec.go v.pk%2FChapters%2F7S- 5.pdf&ei=zK3JUIXHI8bTrQeqo4DoDQ&usg=AFQjCNGVLL8jfQLkJZLnQbc_N2Zi kWNtSw&cad=rja

• http://en.wikipedia.org/wiki/Pakistani_rupee

• http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=22 • http://www.indexmundi.com/pakistan/net_migration_rate.html • http://www.indexmundi.com/g/g.aspx?v=67&c=pk&l=en • http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-68.pdf • http://en.wikipedia.org/wiki/File:Literacy_Rate_in_selected_Pakistani_Districts_over_tim e_(1981-2007).png • http://www.scribd.com/doc/37989635/Updated-Report-on-Education-of-Pakistan-2010 256

• http://ezinearticles.com/?Population-Of-Pakistan---People-of-Pakistan & id=887617 • http://www.tradingeconomics.com/india/employment-to-population-ratio-ages-15-24- total-percent-wb-data.html • http://data.worldbank.org/indicator/SL.EMP.TOTL.SP.ZS • http://www.indexmundi.com/pakistan/unemployment_rate.html • http://www.tradingeconomics.com/pakistan/employment-to-population-ratio-ages-15-24- total-percent-wb-data.html • http://www.tradingeconomics.com/india/employment-to-population-ratio-ages-15-24- total-percent-wb-data.html • http://data.worldbank.org/indicator/SL.EMP.TOTL.SP.ZS • http://www.indexmundi.com/pakistan/unemployment_rate.html • http://www.tdap.gov.pk/tdap-statistics.php • http://www.economywatch.com/economic-development/pakistan.html) • http://www.cbr.gov.pk). • http://go.worldbank.org/E4GRINENAO • http://www.cbr.gov.pk • http://go.worldbank.org/E4GRINENAO • http://www.blurtit.com/q657436.html • http://www.agricorner.com/pakistan-exported-agricultural-products-worth-rs-288-18- billion-last-year/ • http://journal-archieves23.webs.com/980-996.pdf • www.tdap.gov.pk/word/review.doc ) • http://www.guesspapers.net/2924/major-imports-of-pakistan • http://pakistan.visahq.in/customs/ • http://www.ustr.gov/countries-regions/south-central-asia/pakistan • WTO Trade data base, World Development Indicators, Federal Bureau of Statistics, Pakistan Revenue Automation Pvt. Ltd. (PRAL) • http://www.economywatch.com/economic-development/pakistan.html • Article http://www.thehindu.com/business/Industry/pakistan-to-double-tea-imports-from- india-by-2015/article3300857.ece

• http://www.investorwords.com/5030/trading.html#ixzz2 EtzoOw61

• http://paktribune.com/news/Pakistan-India-agree-to-promote-trade-relations- 249104.html

• http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/national/05-Sep-2012/pakistan-india-to-sign-three-trade-pacts

• http://www.business-standard.com/india/news/one-year-on-india-pakistan-trade- relations-leapfrog/472745/b

• http://www.guardian.co.uk/world/2012/aug/02/pakistan-trade-boost-india-lifts-ban • http://csis.org/event/india-and-pakistan-evolving-trade-ties-transforming-relations

• http://summit.sdpi.org/contents/ppts/C1%20-%20Waqas%20Masud.pdf

• http://www.economist.com/node/21554526 257

• http://www.pildat.org/publications/publication/FP/TradeRelationsbetweenPakistan AndIndia_IndianPerspective_Jan2012.pdf

• http://blogs.ft.com/beyond-brics/2012/04/13/india-and-pakistan-opening- economic-ties/#axzz28uUvjnni

• http://www.eastasiaforum.org/2012/06/06/managing-india-pakistan-trade- relations/

• http://pakistan.exportersindia.com/suppliers/

• http://www.alibaba.com/countrysearch/PK/import-and-export-products-in-india- supplier_2.html

• http://www.presstv.ir/detail/2012/11/06/270798/indian-delegation-eyes-trade- relations-with-pakistan/

• http://www.brecorder.com/articles-a-letters/187/1197196/

• http://business.mapsofindia.com/trade-relations/south-asia/india-pakistan.html

• http://tribune.com.pk/story/397712/lifestyle-will-pakistani-products-find-space-in- indian-shelves/

• http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the- newspaper/business/13+nontariff-barriers-hindering-export-to-india-420-za-08 • http://www.piie.com/publications/pb/pb09-15.pdf • http://www.pharmj.com/Editorial/20061202/articles/p668indianmedicines.html • http://www.icrier.org/publication/WorkingPaperno200.pdf

• http://internationalbusiness.wikia.com/wiki/Pakistan_Trade_Barriers_with_India? oldid=68333

• www.teriin.org/events/docs/wtopresent/bajwa8.ppt

• http://www.dailytimes.com.pk/default.asp?page=2012\02\16\story_16-2- 2012_pg1_2 • http://internationalbusiness.wikia.com/wiki/Pakistan_Trade_Barriers_with_India? oldid=68333

• http://www.dailytimes.com.pk/default.asp?page=2012\02\16\story_16-2- 2012_pg1_2 http://www.youthparliament.pk/ • http://www.pildat.org/publications/publication/fp/MFNStatusandTradebetweenPakistanan dIndia_PakPerspective_Jan2012.pdf • http://www.fibre2fashion.com/news/images/newspdf/Indo_pak_trade_69945_50777.pdf • http://www.researchcollective.org/Documents/Gains_from_Trade.pdf • http://www.tdap.gov.pk/word/SAARC_REPORT_2011.pdf • http://www.indexmundi.com/pakistan/environment_current_issue.html • http://www.google.co.in/search?q=pakistan+livestock • http://www.google.co.in/search?q=pakistan+population 258

• http://www.google.co.in/search?q=pakistan+forest • http://www.google.co.in/search?q=pakistan+ • http://www.google.co.in/search?q=pakistan+polution • http://www.google.co.in/search?q=pakistan+water+resources • http://www.google.co.in/search?q=pakistan+coast

• https://docs.google.com/viewer?a=v&q=cache:9DIA98- Qmu0J:www.finance.gov.pk/survey/chapter_12/highlights.pdf+highlights+filetype: pdf+pakistan+economic+sectors&hl=en&gl=in&pid=bl&srcid=ADGEESgFAe46Bp 0pdPcYiQfmN_6hhjXrLxTgrMCRDaTrfVRFXPoczUapbV- Qob4wNzHNhEq81qfdPL_flCpHs4vK- 7nCooLtRaxrX8hSuoNeDpp9zU1Z0juWPvpbR- AtX4NzDzNyslm&sig=AHIEtbTapAy0zHeApuIwVACc8im7yvv38A • http://www.google.co.in/imgres?imgurl=http://4.bp.blogspot.com/_dj7hueuj- U0/SgzfNOxVszI/AAAAAAAABEs/6hOpGtrt0m8/s400/Pakistani%2BEconomy%2 BGraphs.gif&imgrefurl=http://www.riazhaq.com/2010/01/incompetence-worse- than-graft- in.html&usg=__LZ013PZ1gx1XarhA9EajpHxLBf0=&h=400&w=366&sz=83&hl=e n&start=5&zoom=1&tbnid=fqEoHoX8o6Bx4M:&tbnh=124&tbnw=113&ei=2PC2U PSKJYfNrQecroHwAQ&prev=/search%3Fq%3Dtransportation%2Band%2Bcom munication%2Bgraphs%2Bof%2Bpakistan%26hl%3Den%26sa%3DX%26tbo%3 Dd%26biw%3D1366%26bih%3D664%26noj%3D1%26tbm%3Disch&itbs=1 • http://upload.wikimedia.org/wikipedia/commons/2/2b/Pakistan_gdp_growth_rate. svg • http://answers.yahoo.com/question/index?qid=1006022402018 • http://www.chineseleather.org/news/?id=208 • http://www.pakonomy.com/2012/01/18/a-brief-analysis-of-pakistans-leather-industry/ • http://www.thefreelibrary.com/Leather+industry+in+Pakistan.-a010555422 • http://www.leathernews.cn/english/show.php?itemid=161 • http://www.fashionnetasia.com/en/IndustryNews/BusinessResources/Detail.html?id=228 5 • http://www.nexpk.com/leather-industry-is-the-2nd-largest-foreign-exchange-earner-after- textiles-in-pakistan/ • http://www.environmental-expert.com/Files/0/articles/2226/2045.pdf • http://www.nsdcindia.org/pdf/leather.pdf • http://home.iitk.ac.in/~sgupta/tannery_report.pdf • http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/business/09-Oct-2012/leather-industry-potential-3b • http://www.pakistantanners.org/about_us.html • http://www.nexpk.com/leather-industry-is-the-2nd-largest-foreign-exchange- earner-after-textiles-in-pakistan/ • http://wwwpakmag.blogspot.in/2009/08/pakistan-leather-industry-survey- report.html

259

• http://www.pakonomy.com/2012/01/18/a-brief-analysis-of-pakistans-leather- industry/#.UXYoqbVvBZR • http://answers.yahoo.com/question/index?qid=1006022402018 • http://www.thefreelibrary.com/Leather+industry+in+Pakistan.-a010555422 • http://www.pakistantoday.com.pk/2011/11/10/news/profit/animal-sacrifice-big- boost-to-dying-leather-industry/ • http://www.google.com.pk/url?sa=t&rct=j&q=activities%20of%20leather%20indus try%20in%20pakistan&source=web&cd=26&ved=0CFQQFjAFOBQ&url=http%3A %2F%2Fwww.pafkiet.edu.pk%2FLinkClick.aspx%3Ffileticket%3DwDeTwwpe44 Y%253D%26tabid%3D515%26mid%3D1805&ei=Dil2Ub6cBYSIrAfLk4HgCw&us g=AFQjCNGOR7Y9haXAtYC7jmIsAdqRx_usfw&bvm=bv.45512109,d.bmk&cad= rja • http://www.google.com.pk/url?sa=t&rct=j&q=activities%20of%20leather%20indus try%20in%20pakistan&source=web&cd=50&ved=0CGAQFjAJOCg&url=http%3A %2F%2Finfohouse.p2ric.org%2Fref%2F18%2F17863.pdf&ei=FC52UdywFMmzr AeHsIDYBw&usg=AFQjCNGmHZ4s15fyebcBLPPNXozZNGW28g&bvm=bv.455 12109,d.bmk&cad=rja • http://www.lpdi-skt.com/ • http://www.mikeredwood.com/userfiles/File/Potential%20for%20brand%20market ing%20in%20the%20leather%20sector.pdf • http://www.ibisworld.com/industry/default.aspx?indid=367 • http://www.ercindia.org/files/EIA%20Manuals/EIA%20Manual_Leather%20Indust ry.pdf • http://pakistan.itrademarket.com/comp/Apparel_&_Fashion/Leather_Garment/0.h tml • http://moip.gov.pk/Ind%20Policy%20Draft%2014%20Sept%202010%20TH1.pdf • http://www.finance.gov.pk/poverty/pakistan-income-inequality-growth.pdf • http://tribune.com.pk/story/458842/leather-industry-in-pakistan-continues-to- decline/ • http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/business/09-Oct-2012/leather-industry-potential-3b • http://www.dailytimes.com.pk/default.asp?page=2012%5C05%5C12%5Cstory_1 2-5-2012_pg5_16 • http://answers.yahoo.com/question/index?qid=1006022402018 • http://www.chineseleather.org/news/?id=208 • http://www.pakonomy.com/2012/01/18/a-brief-analysis-of-pakistans-leather- industry/ • http://www.thefreelibrary.com/Leather+industry+in+Pakistan.-a010555422 • http://www.leathernews.cn/english/show.php?itemid=161 • http://www.fashionnetasia.com/en/IndustryNews/BusinessResources/Detail.html? id=2285 • http://muneertannery.com/?p=125 • http://thebeautifulpakistan.blogspot.in/2010/01/leather-forecast.html • http://www.nexpk.com/leather-industry-is-the-2nd-largest-foreign-exchange- earner-after-textiles-in-pakistan/ • http://business.onepakistan.com.pk/news/general/6819-export-quota-of-livestock-to-ruin- leather-industry-pta.html

260

• http://www.google.co.in/url?sa=t&rct=j&q=leather+industry+of+pakistan&source=web&c d=107&ved=0CFEQFjAGOGQ&url=http%3A%2F%2Fwww.itglwf.org%2Fdocs%2FPakist an%2520- %2520PNTLGGWF%2520(EN).doc&ei=pfBLUaHEEcfHrQfY7YHIAw&usg=AFQjCNHfny B8H5WEorHTXVLZXoyCP4IRzw&cad=rja • http://tribune.com.pk/story/458842/leather-industry-in-pakistan-continues-to-decline/ • http://en.wikipedia.org/wiki/Leather_production_processes • http://www.eagleottawa.com/index.aspx?PageId=37&cid=EN&gid=2&lid=10 • http://www.iisc.ernet.in/currsci/jul10/articles16.htm • http://www.thefinancialdaily.com/NewsDetail/153931%20.aspx • http://www.pakistantanners.org/industrial_statistics.html • http://www.thenews.com.pk/article-93651-Pakistan-leather-apparel-exports-at-$234mn- in-7-months

• http://www.dailytimes.com.pk/default.asp?page=2012\10\04\story_4-10- 2012_pg5_14 • http://www.google.co.in/url?sa=t&rct=j&q=pakistan+export+regulations+for+leath er+to+india&source=web&cd=10&cad=rja&ved=0CGYQFjAJ&url=http%3A%2F% 2Fwww.sbp.org.pk%2Fpublications%2Fpak-india-trade%2FChap_2.pdf&ei=- wuGUay_GoXYrQefsoDIBQ&usg=AFQjCNE_ssCD4kACpsPg_HyQ99VCO8pqD Q • http://www.pakonomy.com/2012/01/18/a-brief-analysis-of-pakistans-leather- industry/ • http://www.thefreelibrary.com/Leather+industry+in+Pakistan.-a010555422 • http://www.leathernews.cn/english/show.php?itemid=161 • http://www.fashionnetasia.com/en/IndustryNews/BusinessResources/Detail.html? id=2285 • http://www.nexpk.com/leather-industry-is-the-2nd-largest-foreign-exchange- earner-after-textiles-in-pakistan/ • http://www.environmental-expert.com/Files/0/articles/2226/2045.pdf • http://www.nsdcindia.org/pdf/leather.pdf • http://home.iitk.ac.in/~sgupta/tannery_report.pdf • http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/business/09-Oct-2012/leather-industry-potential-3b • http://www.pakistantanners.org/about_us.html • http://www.nexpk.com/leather-industry-is-the-2nd-largest-foreign-exchange- earner-after-textiles-in-pakistan/ • http://wwwpakmag.blogspot.in/2009/08/pakistan-leather-industry-survey- report.html • http://www.pakonomy.com/2012/01/18/a-brief-analysis-of-pakistans-leather- industry/#.UXYoqbVvBZR • http://answers.yahoo.com/question/index?qid=1006022402018 • http://www.thefreelibrary.com/Leather+industry+in+Pakistan.-a010555422 • http://www.pakistantoday.com.pk/2011/11/10/news/profit/animal-sacrifice-big- boost-to-dying-leather-industry/

261

• http://www.google.com.pk/url?sa=t&rct=j&q=activities%20of%20leather%20indus try%20in%20pakistan&source=web&cd=26&ved=0CFQQFjAFOBQ&url=http%3A %2F%2Fwww.pafkiet.edu.pk%2FLinkClick.aspx%3Ffileticket%3DwDeTwwpe44 Y%253D%26tabid%3D515%26mid%3D1805&ei=Dil2Ub6cBYSIrAfLk4HgCw&us g=AFQjCNGOR7Y9haXAtYC7jmIsAdqRx_usfw&bvm=bv.45512109,d.bmk&cad= rja • http://www.google.com.pk/url?sa=t&rct=j&q=activities%20of%20leather%20indus try%20in%20pakistan&source=web&cd=50&ved=0CGAQFjAJOCg&url=http%3A %2F%2Finfohouse.p2ric.org%2Fref%2F18%2F17863.pdf&ei=FC52UdywFMmzr AeHsIDYBw&usg=AFQjCNGmHZ4s15fyebcBLPPNXozZNGW28g&bvm=bv.455 12109,d.bmk&cad=rja • http://www.lpdi-skt.com/ • http://www.mikeredwood.com/userfiles/File/Potential%20for%20brand%20market ing%20in%20the%20leather%20sector.pdf • http://www.ibisworld.com/industry/default.aspx?indid=367 • http://www.ercindia.org/files/EIA%20Manuals/EIA%20Manual_Leather%20Indust ry.pdf • http://pakistan.itrademarket.com/comp/Apparel_&_Fashion/Leather_Garment/0.h tml • http://moip.gov.pk/Ind%20Policy%20Draft%2014%20Sept%202010%20TH1.pdf • http://www.finance.gov.pk/poverty/pakistan-income-inequality-growth.pdf • http://tribune.com.pk/story/458842/leather-industry-in-pakistan-continues-to- decline/ • http://www.leatherindia.org/exports/current-export-trends-graph.asp • http://www.leatherindia.org/policy/ImportTariff.asp • http://economictimes.indiatimes.com/news/economy/finance/budget-2013-tax- sops-for-leather-precious-stones-exports/articleshow/18729489.cms

262