Key Takeaways
- Pakistan’s merchandise exports fell by 5.9% from $32.04 billion to $30.14 billion in FY2025–26.
- The government aims for $60 billion in export growth over the next five years, but practical steps are needed.
- Improving productivity, quality, and value of exports is crucial for sustainable industrial growth.
Pakistan’s industrial policy, aimed at boosting exports and competitiveness, faces a reality check as the country’s merchandise exports declined by 5.9% from $32.04 billion in fiscal year 2024–25 to $30.14 billion in 2025–26. The government has set a target of $60 billion in export growth over the next five years, but the current trajectory suggests a significant gap between ambition and practical outcomes.
According to the World Bank, Pakistan’s exports have declined from an average of 16% of gross domestic product (GDP) in the 1990s to approximately 10.4% in 2024. This underscores the need for a comprehensive strategy that goes beyond mere production to focus on improving the quality and value of exports.
While there are encouraging signs of recovery in manufacturing, with large-scale manufacturing growing by 4.98% in FY2025–26, the challenge lies in ensuring that this growth translates into increased competitiveness in international markets. High energy costs, taxation, expensive financing, and unpredictable regulations can hinder even well-managed businesses. The government must address these constraints through predictable policies and an efficient regulatory environment.
The textile sector, for instance, faces significant challenges. Competing mainly on the price of basic fabric leaves manufacturers vulnerable to cost pressures and international competition. Specialized fabrics, technical textiles, and better-designed garments can create greater value. Similar opportunities exist in surgical instruments, sports goods, leather products, food processing, and engineering. Moving towards higher-value products requires modern machinery, technical skills, product design, quality control, and a better understanding of international buyers.
To support this transition, the government should work closely with industry associations, exporters, and technical institutions to identify practical barriers to upgrading and help businesses overcome them. Providing industrial facilities that smaller firms cannot afford to establish independently is also crucial. This approach will build capability, not dependence, on the government.
The government’s National Industrial Policy presents an important opportunity to strengthen Pakistan’s industrial base, increase exports, and create a more competitive business environment. However, the real test is not just in announcing ambitious targets but in ensuring that businesses become more productive, develop higher-value products, and compete successfully in international markets.
In conclusion, while Pakistan has capable entrepreneurs and established manufacturing sectors, its industrial potential has not translated into sustained export growth or sufficient diversification. The government must focus on practical steps that can improve productivity, quality, and the value of what the country sells to achieve its export targets.
