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A textile company is a business that buys and sells various fabrics or textiles. There are many textile companies around the world, with textile mills supplying the raw materials used to create apparel and textile products. These mills process natural and synthetic materials, such as cotton and polyester, and transform them into fiber, yarn, and thread.
Yarns are strands of fibers in a form ready for weaving, knitting, or otherwise intertwining to form a textile fabric.
Textiles are made from many materials, with four main sources: animal (wool, silk), plant (cotton, flax, jute, bamboo), mineral (asbestos, glass fibre), and synthetic (nylon, polyester, acrylic, rayon). The first three are natural. In the 20th century, they were supplemented by artificial fibres made from petroleum.
The textile industry in Pakistan plays a crucial role in the country's economy, contributing 57% to the nation’s exports. It is the largest production sector in Pakistan, providing jobs and trade profits. The industry employs 40% of the workforce and contributes approximately 8.5% of the national GDP. By the start of 2018, the total value of the sector was estimated at USD 7.72 billion. Kakakhel Law Associates can assist you in setting up a textile business in Pakistan, offering services such as company registration, license acquisition, and site verification.
The textile industry is primarily composed of the following sectors:
The textile sector has recently received a setback due to power outages, scarcity of gas, thread price fluctuations, depreciating value of rupee and lack of technological advancements in the sector. However, by the end of 2020, Pakistan has seen a revival in the industry. Lifting the comprehensive lockdown in May has redirected all textile export demands to Pakistan as other exporting countries such as China and India are still in a lockdown. Incentives and export facilitations introduced by the government has also improved the export of textile in the country.
On March 2020, the government announced the introduction of a Textile Policy 2020-2025 which was set to improve the textile imports up to $28 billions in the next five years. The important initiatives under this policy include:
The Textile Policy 2020-2025 is yet to be approved by the cabinet for it to be implemented.
Incorporating a textile company in Pakistan is a straightforward process, with no requirement for additional licensing or registration with any other association. The primary requirements are registration with the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR). The process is as follows:
The SECP is the regulatory authority tasked with overseeing the corporate sector, including the incorporation of all public and private companies. The incorporation process is divided into three steps:
The first step in incorporating a company is to reserve an appropriate name in accordance with Section 10 of the Companies Act 2017. You must provide three proposed names that meet the specified criteria for approval. This reservation can either be done through a separate application or alongside the application for incorporation. There is no additional fee for reserving a name when done alongside the incorporation application. However, for a separate name reservation application, a fee of PKR 200 for e-applications and PKR 500 for physical applications is applicable.
After submitting the application and the required fees, the registrar will review the proposed names. If they meet the criteria, a certificate of name reservation will be issued for up to 60 days, within which the incorporation application must be submitted.
As mentioned, the application for company incorporation can either be submitted separately or alongside the name reservation application. The fee for incorporation depends on the type, capital, and size of the company, in accordance with the Seventh Schedule of the Companies Act 2017. The application must include the following documents:
Once all the relevant documents have been submitted to the Registrar, SECP, he shall examine the same and determine if all relevant documents are complete and all requirements have been complied with. Once the registrar is satisfied, he shall register the Memorandum & Articles of Association and other documents, and will issue a certificate for incorporation of company under his signatures and authenticated by his official seal.
Previously a separate application had to be made to the FBR for issuance of BNTN number, however the SECP has introduced a one window facility, whereby which the data collected by the SECP is sent to the FBR for registration of NTN number.