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Handicraft is a business of luxury items which are not primarily the necessities of life. In Pakistan, handicrafts market has seen tremendous growth in the last 10 to 15 years. The items which come under the umbrella of handicrafts are textiles, carpets/rugs and furniture. However, furniture shops are normally separate from handicrafts business. The main hub of the textile items is Sindh. Pakistan’s handicrafts have a remarkable business in other countries like UK,U.S.A., and Canada. A number of Pakistanis are selling local handicrafts in those countries from different sources. The handicraft sales have tumbled considerably (up to 80%) in the wake of economic meltdown. Handicraft items are usually purchased as a luxury item for interior décor hence the buying power of people has shrunk in the present circumstances which resulted in the decreased sales in the industry. There are still a number of people who have the capacity to spend on luxury items because of high income levels but even they are a little cautious now when it comes to luxury items.

The main hub of handicrafts in Pakistanis Sindh. Around 80% of handicrafts are being made in Sindh. People in Sindh are adept at making handicrafts. Nowadays large numbers of products are being made in Punjab also. Previously, only the government institutions accounted for the manufacturing of handicrafts but quite recently the private sector has followed the suit and in doing so has outdone the government in terms of production.
Most of the products from Sindh are delivered to Karachi and Lahore. A new businessman cannot go to Sindh for the purchase of handicrafts until or unless he has a proper setup in Sindh and has adequate links with the local manufacturers. You can purchase the items from Lahore and Karachi on wholesale rates. Once you have developed your name and customers in the market, then you can directly coordinate with the people in Sindh to order the customized products. The delivery of products is usually done through local transport of trucks,Pakistan post and TCS. The cheapest from all of these is the local transport of trucks. There are negligible chances of loss or damage to the products during transportation. There is a general perception in the market that the prices of handicrafts in Islamabad are higher than the rest of the cities. But actually there is a very minor difference in some products and some are even being sold on the same price.

  • Cities like Islamabad, Lahore, Karachi, Faisalabad and Peshawar have solid market for this business but Islamabad, Lahore and Karachi offer more favorable opportunities as compared to other cities. Karachi is known as the hub of handicrafts because of high sales in the region and also due to the presence of large number of exporters in the city who export handicraft items to foreign countries via port.
  • Lahore is also considered a favorable city for such business because of the lifestyle and high population of the city where people have the money to spend on such luxury items.Islamabad, on the other hand, has lesser number of local customers but since there is a huge concentration of government offices and embassies, the potential customers are the foreigners residing in the city.
  • Pakistani handicrafts are considered highly valuable in western countries and the customers abroad are willing to pay any price for them. A number of people have setup their businesses in the local markets as well as in U.S.A., Canada and European countries. In the absence of a proper setup, the products can be sold through a third party also.

The first Investment Policy by Board of Investment (BOI) was given in 1997 which opened services, social, infrastructure and agriculture sectors for foreign and local investors. It was a major step forward for integration of Pakistan’s economy into international markets as prior to this policy; foreign investment was restricted to manufacturing sector only. The 1997 Policy laid a solid foundation for the gains in FDI inflows experienced over the subsequent decade.

Foreign Direct Investment in Pakistan increased by 2761.10 USD Million in 2016. Foreign Direct Investment in Pakistan averaged 2651.26 USD Million from 2010 until 2016, reaching an all time high of 3184.30 USD Million in 2010 and a record low of 2099.10 USD Million in 2012.

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Pakistan has a fast-growing local produce and manufacturing sector tha accounts for major percentage of its exports.