The political instability, continuing threats of terrorism and poor power supply systems have adversely impacted the overall business conditions in the country. The country has been drifting in and out of political instability this has adversely affected the key macroeconomic fundamentals of Pakistan. However, government of Pakistan launched a stimulus plan for the textile industry 2008 and Textile Policy in 2009 with provisions to:
Seek duty-free access to USA market.
Fast track incentive claims to improve liquidity.
Allocate US$.484 million to export.
Establish an Investment Support Fund.
Growth in GDP is seen by 4.1% (becorder). Inflation remains the biggest threat to the economy. Severe recession, the worst since 1930's, engulfed the world in 2008 including key players in the international textile trade USA, UK, Europe, India, and China (Ministry of
Finance, 2008). This Global recession has translated into declining textile imports of developed countries, which resulted into falling textile exports of not only Pakistan, but also of its regional competitors; India and China, although at a lower magnitude.
Interest rates and tax rates are high.
War against terror and law and order situation in country has affected the sales and growth rate immensely.
ECOLOGICAL AND SOCIAL AWARENESS Issues such as polluting dyes, child labor, unhealthy working conditions are in the firing line of the industry. Textile industry is the largest employer of the work force. The shift of population from the agrarian society to the urban areas has increased the supply of labor (Federal
Bureau of Statistics, 2009d) although this labor forces have low productivity, due to low literacy rate and the absence of technical training institutes and government programs, as supply remains largely unskilled.
There is a high gap between