Industrialization is regarded indispensable for rapid development of the state since industrial revolution. The states which simply rely on agribusiness have remained under developed, whereas states which developed industries achieved high rates of development. The advanced states encourage industrialisation on big graduated table and transferred advantages to agriculture. They achieved balance of growing in assorted sectors of economic system. Pakistan at the clip of divider in 1947 has negligible industrial base. The authorities has been using all available resources for rapid development of the fabrication sector.A We examine the industrial public presentation as follows:

From 1947 to 1950

In 1947, in the West Pakistan the major merchandise was cotton but there was no large mill to procedure and industry the cotton whereas East Pakistan was the chief manufacturer and provider of jute. Out of 921 Pakistan merely got 34 industries. Government of Pakistan being cognizant of the importance of industrialisation called an industrial conference in dec. 1947. The conference recommended the constitution of industries which used locally produced natural stuff like jute, cotton and tegument. The private sector was encouraged to set up industries. For the execution of above a development board and Pakistan industrial and Credit Corporation were established in 1948. The part of industrial sector to GDP was 6.9 % in 1950.

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From 1950 to 1960

The private sector did non put in heavy industries due to miss of capital, proficient knowhow and absence of entrepreneurship. The authorities took enterprise and established PIDC in 1952. The major investing of PIDC was in paper and poster board, cement, fertiliser, jute Millss and suigas grapevines. The part of industrial sector to GDP rose from 9.7 % to 11.9 % .

From 1960 to 1970

This twelvemonth covers 2nd five and 3rd five twelvemonth program. In 2nd five twelvemonth program 22.2 % of the entire spending was for the growing of industrial sector. The state achieved self sufficiency in indispensable consumer goods. The part of industrial sector to GNP went up to 11.8 % from 1960-65. The 3rd five twelvemonth program could accomplish a partial success due to war with India in 1965. The growing rate was 7.8 % against the mark program of 10 % .

Growth in 1970s

The industrial public presentation of production, growing and exports was let downing from 1971 to 1977. The chief ground were separation of east Pakistan, suspension of foreign assistance, autumn in exports due to loss of market ( east Pakistan ) , devaluation of rupee up to 131 % , nationalisation of industries, labour unrest, recession in universe markets and decrease in investing inducements. The one-year growing rate fell up to 2.8 % .

Growth from 1977 onward

The authorities took figure of enterprises to revise the economic system. Some industries were denationalized and private sector was encouraged to put. The growing rate was 5.7 % in 1989-90.

Current Growth

Harmonizing to the economic study of Pakistan, 2009-2010, fabricating histories 18.5 % 0f GDP and 13 % of entire employment. Large scale fabrication and little graduated table fabrication accounts 12.2 % and 4.9 % of entire GDP severally.

Manufacturing Sector in Regional Countries

Role of industrialisation in economic development

The function of industrial sector is summarized as follows:

In industrialisation there is optimal use of scarce resources. The quality and measure of fabrication sector addition. It increases the national income of the state.

It increases the production of goods and services. The labour receives higher rewards. The income of workers addition and at that place populating criterion besides improves

When industrial production addition that increase exports and grosss of the authorities.

It generates new employment chances.

Industrialization provides machinery like tractors, thrashers, reapers and spray machines to increase the production of agribusiness sector.

As the industrial sector expands, its production additions and cost of production lessenings. The quality of merchandises improved due to engineering

Industrialization increases the supply of goods for internal and external markets. The authorities receives gross in the signifier of usage and excise responsibilities, gross revenues and income revenue enhancements from the industrialists due to which authorities gross additions.

Causes of industrial retardation in Pakistan

The chief causes of industrial retardation are divided as follows:

Historical Causes

The British gathered natural stuff for their industries from subcontinent on the one manus, on the oilier ; they captured this country for concluding merchandises. So no industry in this country.

The countries with Muslim bulk were kept rearward to prefer Hindus.

The few industries, which were apparatuss in India, were in coastal metropoliss of Calcutta, Tamil Nadu and Bombay.

Raw stuff and skilled labour were non available in the country that is now in Pakistan.

Economic Causes

The substructure required for the growing of industries is unequal. For the surrogate mobility of labour, capital, conveyance and communicating installations are in sufficient. It is blockading enlargement of industries in Pakistan.

The sum if capital required in the capital intensive industries like steel, Fe, chemical and automobiles rather high. Huge capital is besides required to set up and spread out industries like fabric, rug, sugar and paper etc.

Most of exports are comprised of natural stuff, while our chief imports are machinery, gasoline which requires heavy foreign exchange. Due to shortage of foreign exchange, less imports of machinery, this leads to less development of industries.

Now yearss due to rising prices people have low degree of income that ‘s why they demand less industrial goods, it obstructs industrial development.

There is besides deficit of power like electricity and gas due to which many industries are closing down.

There is less foreign investing in the state due to terrorist act which is besides the chief hurdle in industrial development.

Due to recent inundation, the economic system of the state is traveling worst. Therefore people do non take hazard to put in Pakistan.

Political Causes

There have been frequent alterations in authorities since 1947 in Pakistan due to which local and foreign investors hesitate to put in long term undertakings.

Kashmir issue has been a bone of contention between Pakistan and India since independency. Peoples remain scared about the war between both states. This state of affairs leads low investing.

The authorities of Pakistan nationalized industrial sector in 1970s. Peoples still fear that the authorities may one time once more nationalise the economic system. Therefore they invest less.

Social and Geographical Causes

On the one manus there is less awareness to put in big graduated table industries due to deficiency of instruction and information. On the other manus the capital intensive industries require extremely qualified professionals which are in deficiency of Pakistan. So low industrial development.

Pakistan has utmost clime. Sometimes we have drought and other clip heavy rain and inundation. Furthermore most of the land is covered with mountains and comeuppances.


The chief industries of Pakistan are as follows:

Fabric Industry

It is the most of import and largest industry of the economic system of Pakistan. Pakistan received 17 textile units in 1947. The industry is confronting job like deficit of natural stuff, tough competition in international market due to domestic high monetary values.

Sugar Industry

In 1947, Pakistan received two sugar Millss. Now we have 78 sugar industries across the state. The industry is bring forthing 2.4mn tones of sugar against 2.9mn tines of demand. Pakistan is importing sugar since last few old ages. The production of sugar can be increased by giving inducements to husbandmans.

Chemical Industry

There was barely any chemical industry in 1947. Now Pakistan has 12 units but this industry is non meeting domestic demand of chemicals.

Fertilizers Industry

Fertilizer plays an of import function in increasing agribusiness production. At present 10 units are bring forthing different types of fertilisers which meets 70 % of the domestic demand. 30 % is imported from Germany, UK, USA and Norway.

Cement Industry

There are 25 cement workss in Pakistan. The installed capacity of these workss is 13mn tones per annum. This industry is based on local natural stuff.

Jute Industry

At the clip of independency there was non a individual unit of jute in Pakistan. At present 12 units are working in Pakistan but they are non run intoing domestic demands. Large measure is imported from China and Bangladesh.

Engineering Goods Industry

This industry got importance in 3rd five twelvemonth program. Now there are four industries like HMC Taxila, Heavy Foundry Taxila, Pakistan Machine Tool Factory Landhi, and Pakistan Steel Mills Karachi.

Pakistan Steel Mills Corporation

The factory was set with the entire cost of 25.550mn with the aid of Russia. Its productive capacity is 1.1mn tones of natural steel per annum. Now a twenty-four hours it is traveling down due to corruptness and misdirection.

Cigarette Industry

At present Pakistan has 22 mills bring forthing coffin nail at Jhelum, Akora Khattak. The natural baccy used in fabrication is produced domestically.


The public presentation of public industrial sector is the function of PIDC, so we review the function of PIDC.

Role of PIDC:

Pakistan industrial development corporation ( PIDC ) was established in 1952. It was the lone public sector involved in fabrication. It established industries in backward countries, created employment chances and decreased regional disparities. By June 1972, it had established 60 industrial undertakings. The nationalisation of industries under the economic reforms order affected the public presentation of PIDC. A figure of of import and net income giving up undertakings were transferred to other corporations under the Presidential Ordinance No. V of 1974. PIDC was left with merely 8 undertakings out of 60, which were non profit devising.


The authorities of Pakistan under the economic reforms order, 1972 nationalized 32 private industries. The 52 undertakings already under taken by PIDC and the 32 nationalized units were regrouped on functional footing and laced under 12 corporations. The corporations were:

Federal chemical and ceramic corporation ( FCCP )

Federal visible radiation technology corporation ( FLEC )

National design and industrial services corporation ( NDISC )

State heavy technology and machine tools corporation ( SHEMTC )

Pak tractor corporation ( PTC )

Pak car corporation ( PAC )

National fertiliser corporation of Pakistan ( NFCP )

State electrical corporation ( SEC )

Pakistan industrial development corporation ( PIDC )

Pak steel Millss corporation ( PSMC )

State cement corporation of Pakistan ( SCCP )

State crude oil refinery and petrochemical corporation ( SPRPC )

In 1974, PTC and SEC were merged in PACO and the figure of corporations was decreased from 12 to 10. Subsequently on FLEC, NDISC and SHEMTC were merged into province technology corporation ( SEC ) . The figure of corporation was decreased from 10 to 8.

Reasons of Nationalization failure

The public fabrication sector was burdened with a figure of conflicting undertakings and aims which reduced its efficiency.

The corporations were over staffed and were largely managed by non-professionals individuals.

The labour unrest decreased public presentation.

The skilled forces migrated to Gulf States and caused deficit of skilled individuals.

The monetary values of natural stuff increased due to worsen in production of the corporations on history of inundation and prematurely rains.

The monetary value of crude oil merchandises increased and raised the cost of production.

Denationalization OF SOEs IN PAKISTAN

In the first four decades the authorities policy about the private and public sector has non clear. In 1988, the authorities issued disinvestment regulation to follow the policy of denationalization. The authorities ‘s denationalization policy is to off-load the populace sector ; the procedure would e carried out in three stages. Different establishments will be sold to private sector and the gross generated will by and large be used for debt retirement.

Meaning of Denationalization

“ A procedure of reassigning province owned endeavors to the private sector. ”

Aims of Denationalization

Minimizing budgetary support/deficit

Sale of portions of endeavors to make full budgetary spread

Incentives for the workers for efficient work

Developing portion market

Provision of portion ownership to workers or employees

Insulating the economic system from political intervention

Achieving rapid industrialisation

Methodology of Denationalization

The denationalization can be undertaken in the undermentioned ways:

Sale of single SOEs by ask foring commands from the private sector

Sale of portions of SOEs through stock exchange

Promoting employees to do direction groups and purchase endeavors

Promoting prospective investors to organize modaraba companies to buy the portions of SOEs

Entering into lease direction contracts with employees for a specific period to enable them to purchase out units

Denationalization of SOEs in Pakistan

The authorities of Gen. Zia-Ul-Haq on 16th July 1988 issued Disinvestment Ordinance and a National Disinvestment Authority was created under the chairmanship of

Aziz Zulfiqar. A denationalization committee was formed on July 22, 1991 to explicate recommendations for denationalization and deregulating. In the initial stage MCB, ABL had been privatized.


The policy of denationalization, deregulating and liberalisation has greatly widened the foreign investing in the state. The authorities has taken several steps to increase the flow of foreign private investing. The aliens can now avail pecuniary and financial grants every bit with the local investors. They can put in the Fieldss of their pick like power coevals, petro-chemical crude oil gas fertilisers, hello tech industries, agro based industries and export oriented industries.

Incentives to Foreign Investors

Foreign exchange controls have been relaxed for foreign investors.

Foreign investors can take part in local undertakings on equality footing.

Ceiling on payment of royalties abolished.

No demand of obtaining NOC from provincial authorities or turn uping the undertakings anyplace in the state except notified negative countries.


The chief beginnings of industrial finance are:

Industrial Development Bank of Pakistan

Investing Corporation of Pakistan

National Investment Trust

Equity Participation Fund

Bankers Equity Fund

Modarabas, Renting Companies


The bungalow and little graduated table industry has a great significance for a underdeveloped state. It forms as of import portion of the fabrication sector. It contributes 5 % to GDP and employees 80 % of the labour force. Its portion in fabrication sector export is approximately 30 % in Pakistan.

Bungalow Industry

The industry which is carried on in the place of the craftsman is known as bungalow industry. He is normally assisted in his work by the members of his household and the occupation may be whole clip or portion clip. E.g. wood work, hand-crafted rugs, toys etc.

Small Scale Industry

The houses using less than 10 individuals are classified as little graduated table industries in the national histories and its fixed assets do non transcend Rs. 2mn in Pakistan.


We can reason that fabrication is the 3rd sector of our economic system and it is the anchor of any state. It plays a really of import function in the economic development of a state. Pakistan has been a backward state in industrial sector due to different historic, political and economic causes. For the resurgence and growing of the industrial sector, these jobs should be solved. The jurisprudence and order state of affairs must be improved. The security of capital must be assured and the grade of bureaucratic control to be minimized. A clear cut policy should be chalked out for the local and foreign investors. The industrial growing can farther be accelerated by pealing ill industrial units into operation, put ining new mills and supplying maximal inducements to the working community.