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Sindh's industrial units, except for thoseconcerned with consumer products, were tillmid-2002, closing down either because of thehigher costs of production; the unfavourablelaw and order situation; and/or because taxholidays granted for a certain period were nolonger available. Some investors tookadvantage of bank loans and preferred todeclare the units bankrupt so that their debtswould be written off. As a result, an increasingtrend is observable where investors areswitching over from manufacturing to trading orthe services industry.

The strategy for industrialisation in Sindhpromoted the creation of planned industrialestates and an engineering base. The firstindustrial estate to be established was theSindh Industrial Trading Estate (SITE) beyondthe Lyari River in Karachi in 1947, which wasmeant to be the industrial hub of the country,not just Sindh. SITE Karachi was provided withinfrastructure such as water, roads and asewerage network with the specific conditionthat it would be used only if the effluent from thefactories was treated according to therequirement of the Factories Act of 1934. Theplants and systems put up by industrialists werenot equipped to treat the effluent. It was arguedthat this would raise the cost of production.Instead of rejecting this argument, the stateallowed the industries to pollute the air andwater systems. Industrial estates in Landhi(1953), Korangi (1959) and North Karachitownships (early 1970s) were establishedsubsequently2.

The establishment of industries brought aboutintensive land-use change, much of which wasnot foreseen or planned for. This causedconsiderable degradation of the physicalenvironment. Unlike SITE, Korangi, or Landhi,in the North Karachi Industrial Estate, space forsmall scale and medium size units, and forbuilding of stores and warehouses wasprovided. The managers of these units did nottake into consideration the environmentaldegradation that they would cause because ofthe high population density.

SITE was not profit-oriented. Plots were allottedat nominal rates and infrastructure wasprovided by the state. The SITE engineer wasauthorised to allot land, providedentrepreneurs were committed to establishindustries on it. SITE Limited was allowed tomanage its financial affairs without assistancefrom the government, or interference from thebureaucracy. SITE was assigned to establishother estates in Karachi, Hyderabad, Sukkur,Kotri, Nooriabad, Nawab Shah, Mirpurkhas,Khairpur, Tando Adam and other importanttowns. As a result, 24 large and small industrialcomplexes were established, but theinfrastructure facilities were insufficient andsubstandard. Bureaucratic red-tape and later apoor law and order situation prevented thesesites from developing optimally. Many of themhave remained unoccupied and inactive overthe last decade.

Inadequate infrastructure facilities haveretarded industrial development in the province.The level of urbanisation in Sindh reflects this.The ratio of urban to rural population in theprovince is 49:51. When 30 percent of thepopulation becomes urban it suggests a highthreshold of economic development and over45 percent suggests a take-off stage3. The ratiofor Sindh suggests that the province is at anadvanced stage of development which is notthe case. The population of Karachi,Hyderabad, and Sukkur combined makes up for73 percent of the urban population of Sindh.Moreover, Karachi is the primary city of thecountry and the main centre of commercial andindustrial activity. It has a population that istwice as much as that of the rest of the urbanpopulation of Sindh, which goes to show thatinterventions aimed at the dispersal ofindustries throughout the province, were afailure.

Due to the reasons given above, domestic andforeign investment has not been forthcoming.The brain drain is a persistent problem asprofessionals and entrepreneurs move toforeign countries. Increasingly insecure capitalis seeking investment abroad.

1. Agriculture Statistics of Pakistan, 1997-98; Agricultural Statistics of Pakistan 1992-93,1997-98; Development Statistics of Sindh, 19982. Beg , M.A.A. "The New Economic Order, Where do we Stand?" Sindh Tribune, Nov. 19953. Mumford,L. Natural History of Urbanization, in The Ecology of Man: An Ecosystem Approach, R.L. Smith, Harper and Row Publishers,

New York, 1972

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Public sector industries are being privatisedunder the Structural Adjustment Programme yetthere has been very little direct foreigninvestment in industry. Information technology,oil and gas, food, tobacco and beverages, arethe only components of the industrial sector thathave received substantial ($50 million USDeach) investments. Massive devaluation hasreduced the return in dollar terms, andenhanced the cost of plant, machinery andimported industrial raw materials.

Refer to Map 16.1 for the location of IndustrialEstates in Sindh.

THE SERVICE INDUSTRYThe service industry is a key component ofindustrial infrastructure at the primary stages. Itcaters to the handling of agricultural products atfarm level which includes threshing, storage,enhancing the shelf life of the products andfreighting. This industry has remaineddisorganised and has yet to respond to theneeds of the export market efficiently. Thisimplies that an awareness of the export marketrequirements must be created among thegrowers, packers, and forwarding agents. In theabsence of a suitable service industry, theeconomy has suffered because exportedcommodities do not conform to internationalstandards.

All cash crops (fruits and vegetables, liveanimals, dairy products, and fisheries) and theminerals of Sindh are usually freighted to thenearest urban centre where they are processedon an industrial scale. Small scale processingindustries (rice mills, flour mills, oil expeller units,power crushers for sugarcane at the farm level,ginneries) have been established in theundersized towns as well. Value addition to farmproducts at the small town level is picking upslowly with an improvement in infrastructurefacilities. Establishment of large storagewarehouses, cold storage houses and vegetableand fruits preservation units facilitate storage ofperishable farm products during the glut period.

PACKAGING INDUSTRY

Over 90,000 tonnes of jute products areproduced in three jute mills in the province.They provide the Hessian cloth and bags forpacking wheat, rice, millets and other farmproducts. Production of cardboard and papersacks required for packaging solids or powderssuch as cement is carried out in over 15 mills.Of the units manufacturing paper and pulp inPakistan, 20 percent are located in Sindh4.

RICE AND FLOUR MILLSOver 2 million tonnes of rice and an average of2.3 million tonnes of wheat per year areproduced in Sindh and generate considerableindustrial activity. Paddy is dehulled andpolished in about 1,200 rice mills (250 inLarkana, over 700 in Upper Sindh and 250 inthe rest of the province). Wheat and grain cropsare ground in about 126 flour mills in Sindh5, outof which about 45 to 50 percent are roller flourmills. Approximately, 50 to 55 percent of theflour mills are small scale grinders called chakkithat are spread throughout the province and arefound in practically all villages.

Straw from rice, wheat, and other grain crops isshredded mechanically and utilised as livestockfeed. Rice husk is burnt on the field to driveaway insects that lay their eggs in the soil. It isalso used as fuel in brick kilns near the ricegrowing areas.

FARM PRODUCTSAround 510,000 tonnes of fruit is grown inSindh. These include mango, banana, guava,dates, and citrus fruits. Sindh cultivates onions,chillies, and tomato which are 40 percent, 81percent, and 35 percent respectively of the totalproduction in Pakistan. Fruits and vegetablesare canned and preserved in seven medium-sized units and scores of smaller ones havemushroomed at the cold storage warehouses

4. Summary Release of Census of Manufacturing Industries 1995-96, Bureau of Statistics, Planning and Development Department,Government of Sindh, 2001; Monthly Survey of Industrial Production & Employment in Sindh, June 2001

5. Development Statistics of Sindh, 1998; Summary Release of Census of Manufacturing Industries 1995-96, Bureau of Statistics, Planningand Development Department, Government of Sindh, 200; Monthly Survey of Industrial Production & Employment in Sindh, June 2001;Dawn October 26, 1999 and January 14, 2003

and near the fruit and vegetable markets6.These use metallic cans and plastic bottles forcanning the produce. Packaging materials arebeing processed in units which import rawmaterial for their production.

Onion, chillies, coriander, spices and freshvegetables (particularly potato, cauliflower,cabbage, peas, radish and carrots) and fruitsproduced at the farm level have attained thestatus of important export commodities. Theyhave to be adequately packed according to therequirement of the consignee in the destinedcountry. Packaging and marketing of theseproducts is not entirely in the informal sector butthose in the organised sector are faced withtough competition from the small informal foodproduction units.

VEGETABLE PRODUCTSVegetable produce related manufacturingindustry in Sindh accounts for 158,253 tonnes,out of a total 734,518 tonnes produced in thecountry7. Many of these products are exported

but the associated packaging industry andforwarding needs improvement sincemishandling of the crops accounts for 15 to 20percent losses at the post-harvest stage.Further losses of over 10 to 15 percent occur asa result of lack of quality control andmaintenance of standards in grading,preserving, storage and packing.

Livestock Products

Productivity in the livestock industry is lowbecause the rangelands which provide 90percent of the feed to animals have beendegraded by overgrazing, cutting of forage forfuelwood, and low agricultural production,particularly during winter. Supplemental feed isexorbitantly expensive and has to betransported from different parts of Sindhthrough non-metalled roads to the range areas.

The livestock population of over ten millionconstitutes a valuable resource but, instead ofexploiting this potential for value addition, thestock is dispatched as live animals to the

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6. Ibid7. Development Statistics of Sindh, 1998

Sugar mill: An Agro-based industry

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nearest market. It is estimated that around350,000 animals reach Karachi from differentparts of the country during the first ten days ofEid-ul-Azha. The province does not have aregular slaughterhouse in any urban centre forthe hygienic production of a range of animalproducts. About 1.3 million animals areslaughtered in improvised slaughterhouses inSindh every year8.

Sindh has a large number of tanneries thatprocess raw hides and skins and produceleather goods for the local as well as the exportmarket. It has four mills that produce poultryfeed for the local industry. There are five bonemills that operate under substandard conditionsbut provide material for organic fertiliser that isexported and raw material for the localproduction of gelatine.

DAIRY INDUSTRY

The dairy industry is not well organised,although 32 million tonnes of milk is produced inthe province every year9. This can meet theneed of the population of the entire province,yet per capita availability is low. The productionsystem is in the informal sector and itsdevelopment along modern lines has oftenbeen resisted. The alternatives in the form ofmilk plants have not solved the problems facedby this sector.

POULTRY INDUSTRYRaw material for poultry feed is provided by theagriculture sector, and the feed as well as the

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8. Development Statistics of Sindh, 1998; Monthly Survey of Industrial Production & Employment in Sindh, June 2001; Dr Aslam PervezUmrani, Livestock Census and Role of livestock production in economy - Dawn (EBR section), 21 February , 2000

9. Ibid

million. nos.

93

36,548

Employment (in Nos.)

Table 16.1: Manufacturing, industrial production and employment

Selectedindustries

Unit FactoriesCovered

Production

Vegetable ghee "000" m. tonnes 23 191 1,673

Sugar "000" m. tonnes 29 1,331 18,969

Cement "000" m. tonnes 9 1,945 2,715

Fertilizer (Urea) "000" m. tonnes 2 1,397 1,401

Cotton yarn "000" m. tonnes 81 210 35,392

Cotton cloth million sq. mtrs. 85

Cigarettes million. nos. 2 10,527 875

Vegetable ghee "000" m. tonnes 23 187 1,607

Sugar "000" m. tonnes 29 959 16,022

Cement "000" m. tonnes 9 1,915 2,520

Fertilizer (Urea) "000" m. tonnes 2 1,423 1,391

Cotton yarn "000" m. tonnes 81 232

Cotton cloth million. sq. mtrs.

CIGARETTES 2 10,980 824

1998-99

Index of industrial production, 1999-2000(Base : 1980-81 = 100)

170.37

1999-2000

Source: Monthly Survey of Industrial Production & Employment in Sindh, June 2001

poultry products need to be processed.However, it has not attained the status of amodern consumer products industry.

MEDIUM AND LARGESCALE INDUSTRY

Cotton is one of the major fibre crops of Sindh,which produces over 2.3 million bales eachyear. The industries dependent on this crop areginning, pressing and textile processing. Thereare 154 ginning, pressing and baling mills inSindh. Around 2.1 million bales were pressed inthe year 2000. Ginning separates the lint fromcottonseed, which is used by the oil mills for theproduction of cottonseed oil and alsohydrogenated ghee. Textile processing is one ofthe major industrial activities in Sindh. Out of atotal of 650 textile processing units in Pakistan,350 are located in the province. These units areinvolved in every nature of textile activityincluding 95 units that are engaged in theproduction of ready made garments10.

Out of the 77 sugar mills in Pakistan, whichproduce over 4.2 million tonnes of refinedsugar annually, 32 are located in Sindh11.Molasses is also extracted in the sugar millsand from it alcohol is produced. Sindh has onlytwo of the nine sugar mills in Pakistan that usemolasses to produce alcohol, which isexported. The sugar industry in Sindh isplagued by many problems. On the one hand isthe high price of sugarcane, and on the otherhand heavy taxes on the industry andexorbitant bank charges.

The sugar industry in Sindh is one of the mostorganised sectors in its institutionalarrangements. Some of the reasons for themultiplication in the number of sugar mills aregrants of continuous incentives by thegovernment, establishment of local technologyvendors (heavy mechanical complex in Taxila),commitment and hard work of mill owners, andemployees, and the progressive roles of the

Pakistan Society of Sugar Technologists(PSST), and the Pakistan Sugar MillsAssociation (PSMA) which provide a forum tosugar technologists and mill owners to discussand share indigenous and internationaltechnological developments in this sector.

VEGETABLE OIL ANDGHEE

Vegetable oil and ghee processing iscategorized under food manufacturing. Rapeand mustard seed, groundnuts, sesame,sunflower and some coconut is pressed in thesmall expellers in urban centres to meet thelocal need for edible oil. Cotton seed producedduring ginning is pressed at 14 cottonseed oilmills. There are 3 that produce only vegetableoil and 15 medium-sized mills that producehydrogenated oils, or vegetable ghee. Thesemedium-sized units have integrated facilitiesfor manufacturing soap as a by-productwhereas the main raw material used is raw oilextracted from different oilseeds. Pakistanimports about 1 million tonnes of edible oil,mostly from Malaysia. About 700,000 to900,000 tonnes is produced locally, of whichSindh has a share of around 35 percent. Thevegetable oil units were, in the year 2000-2001, producing an average of 17,000 tonnesvegetable ghee, 7,500 tonnes of non-hydrogenated cooking oil, and 48 tonnes ofsoap. The animal feed producers utilise theoilseed cake as a source of fibre, oil andprotein12.

TANNING INDUSTRYThe tanning industry is an offshoot of thelivestock sector and of the slaughter houses inthe province. Presently, there are over 596tanneries in the formal sector in Pakistan andan equally large number in the informal sector.Of these, 170 are in Karachi while the otherurban centres of the province are processing

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10. Development Statistics of Sindh, 1998; Summary Release of Census of Manufacturing Industries 1995-96, Bureau of Statistics, Planningand Development Department, Government of Sindh, 2001; Monthly Survey of Industrial Production & Employment in Sindh, June 2001

11. Ibid12. Agricultural Statistics of Pakistan 1992-93, 1997-98; Development Statistics of Sindh, 1998; Summary Release of Census of

Manufacturing Industries 1995-96, Bureau of Statistics, Planning and Development Department, Government of Sindh, 2001; MonthlySurvey of Industrial Production & Employment in Sindh, June 2001

leather in the informal sector. For leatherproduction, locally available raw materials likehides, skins and imported processingchemicals, are used. The production of leatherwas 9.2 million m

2during the year 2000-2001

with seven recognised footwear industries inSindh. Another major product of the livestocksector is wool for which there are nine woollenmills engaged in spinning, weaving, andfinishing while the same numbers of units areengaged in carpet and rugs manufacture13. Allof these are in the formal sector. A flourishinginformal sector in carpet and rugs manufacturealso exists.

PHARMACEUTICALSThere are 43 pharmaceutical manufacturingunits in Sindh which use importedpharmaceutical raw material andpatented/proprietary medicine, convert it intothe desired form like tablets, liquid syrup,injection or capsules and market them inattractive packaging. Indigenous raw material

and intermediates have not found anyapplication in the established pharmaceuticalfactories. There are three units producingacids, alkalis, and salts, and eight unitsproducing paints and varnishes. There arealso 32 units producing miscellaneousplastics products14.

MINERAL-BASEDINDUSTRY

The mineral sector does not contributesignificantly to the industrialisation of theprovince. A number of commercially exploitableminerals like coal, natural gas, marble,dolomite, and china clay, have now foundindustrial use but, until the 1960s, onlylimestone, clay, silica sand and gravel werebeing used and that too for the production ofcement, glassware and as building material.The present contribution of the mining sector tothe GDP is less than one percent, out of whichoil and natural gas has a major share.

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13. Ibid 14. Ibid

A Textile factory: Out of 650 textile processing units in Pakistan, 350 are located in Sindh

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CEMENT

There are nine cement manufacturing units inSindh that are, at present, producing an averageof 150,000 tonnes of cement per month15. Thecement industry is deteriorating below par dueto the excessively high price of furnace oil andthe increased cost of power. These costs can bereduced substantially through the use of coal.Coal was being used in this industry as fuel buta switchover to gas as a clean and easilyavailable fuel sidelined its use.

SALTSalt works on the coast of Karachi werecatering to the requirements of all of Sindh untilthe late 1960s, but discharge of municipal andindustrial effluent into the two dry rivers, Lyariand Malir, contaminated the coastal waters andthe production of salt thereby declined. Six ofthe 12 salt works have had to close downbecause of these difficulties and also becauseone of their major clients producing soda ash (arequirement for salt extraction), in Karachi, wasforced to close down as a result of financial andmanagerial constraints16. The demand-supplygap has been filled by salt from the Salt Rangein the Punjab.

COALCoal could contribute substantially to the powersector but, unfortunately, is not being utilised forthat purpose. The Jamshoro Power Plant,despite using poor quality coal from Lakhra coalmines, has demonstrated its utility andefficiency. Tharparkar coal is mostly lignite(which means it has a lot of moisture) but thedeposits are the largest in the world with a netreserve of 185 billion tonnes. A coal deposit of300 million tonnes is a viable source of 1000megawatts for 30 years17.

CHINA CLAY

Even though Nagarparkar clay is of superiorquality it has not been utilized effectively for themanufacture of chinaware for the local or theexport market. There are four units in Sindhproducing chinaware and ceramics; 15 unitsproducing glassware, and one producing sheetglass18. Many of these units have foreignfranchises and hence use local products onlywhen they conform exactly to theirrequirements, otherwise they prefer to importthe material. China clay from Nagarparkar canbe upgraded to the required level but this is notallowed by the foreign franchise.

OIL AND GAS DEPOSITSDetails regarding oil and gas deposits havebeen given in Chapter - 17: Energy Resourcesof Sindh. In addition, the province has depositsof gas at Mazarani. Extraction from the wells islikely to commence in about two years.Thereare also wells which have, due to the presenceof 10 percent excess carbon dioxide, provedvery useful in the production of fertiliser at twofertiliser factories in Upper Sindh. These twounits produced 1.387 million tonnes urea and800,000 tonnes ammonia in the year 2000-200119. Yet another unit produces phosphatefertilisers for which phosphate rock is beingimported from Jordan.

There are also wells which have, due to thepresence of excess carbon dioxide in ten percentof them, proved very useful in the production offertiliser at two fertiliser factories in Upper Sindh.

PAKISTAN STEEL MILLSPakistan Steel Mills started operating in 1984,based on imported coal and imported iron ore. Itproduced 700,000 tonnes coke, 1.021 million222

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15. Ibid16. Beg, M.A.A, Mahmood, S.N. and Yousufzai A.H.K, 1979. Effect of the Polluted Lyari on the Coastal Environment, Proc. National and

Regional Seminar for the Protection of the Marine Environment and Related Eco?Systems, (Karachi, 1979)17. Beg, M.A.A. "Energy Production in Pakistan" Dawn (EBR section), February 2001; Pakistan Energy Yearbook, 2000, Hydrocarbon

Development Institute of Pakistan, January 2001 18. Development Statistics of Sindh, 1998; Summary Release of Census of Manufacturing Industries 1995-96, Bureau of Statistics, Planning

and Development Department, Government of Sindh, 2001; Monthly Survey of Industrial Production & Employment in Sindh, June 200119. Development Statistics of Sindh, 1998; Summary Release of Census of Manufacturing Industries 1995-96, Bureau of Statistics, Planning

and Development Department, Government of Sindh, 2001; Monthly Survey of Industrial Production & Employment in Sindh, June 2001

tonnes pig iron, 400,000 ton billets, and 941,000tonnes raw steel in the year 2000-200120.

AUTOMOBILESThere are 13 plants engaged in the assembly ofautomobiles. In the year 2000-2001, theyproduced 409 trucks, 555 buses, 471 heavyvehicles, 9584 light vehicles, 40,267motorcycles and 33,397 cars21.

EFFECTS OF INDUSTRIALUNITS ON THEENVIRONMENT

Emissions and DischargesThe units operating in the industrial estatesadequately control emission of noise and the

level recorded at the boundary walls of suchunits has not been found to exceed 75 db (A)during daytime and 70 db (A) during thenight22. In the NEQS, the limit of noise is givenas 85db.

Emission of gaseous pollutants from almost allthe industrial units is not physically controlled; itremains within allowable limits, except in a fewcases like the unit producing ultramarine blue inKorangi Industrial Area. The impact of thesepollutants on the ambient air is low.

There is discharge of aqueous effluents fromfactories in almost all the units in the SITEwhose quantities by far exceed allowablelimits23. This is especially true of the textile,tanning and chemical processing industries.The effluents are discharged into the nearestnala, which ultimately falls into a river, streamor the sea or into large ponds. The impact ofuncontrolled discharges on the environment isdestructive. The discharge of effluent from

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20. Ibid21. Ibid22. Beg, M.A.A. "Status of Noise pollution in Karachi" Report Submitted to EPA by Associated Consulting Engineers, 1994; Beg, M.A.A and

Shams, Z.I. Environmental Problems of Karachi: Noise Pollution due to Vehicular Traffic, 198823. Pakistan Energy Yearbook, 2000, Hydrocarbon Development Institute of Pakistan, 2001

Refinery in Korangi Industrial Area, Karachi

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