Prime Minister Shehbaz Sharif spoke plainly on October 1. At a listing ceremony at the Pakistan Stock Exchange, he said several industries have received subsidies since the 1960s without significantly raising exports.
Prices rose instead, quality and productivity suffered, and the country still failed to replace imports with local production. He called this a bitter reality and urged exporters to drive growth led by exports.
Few officials say this in public. The government says it has provided Rs 2.3 trillion in tax breaks to support economic activity. Support of that size should produce sales abroad.
Why Conditions Matter
The numbers explain the concern. Pakistan exported $30.14 billion in FY26, down 6 percent from the year before. Textiles brought in $17.93 billion of that, about 60 percent, so one sector earns most of the country’s export income.
Imports reached $69.76 billion, the highest level in four years. A country with that gap needs dollars from abroad, and it cannot afford to support firms that sell mainly at home.
The design of support matters more than its size. Assistance should depend on results that can be measured: export volumes, value added, compliance with international standards, and sales across more products and markets.
Infant and strategic industries can still receive help, as long as it is limited in time, published openly and linked to export targets. For example, a mill that expands shipments abroad should receive more support than one that sells only to local buyers.
Early Signs of Improvement
Recent data gives some reason for optimism. Exports reached $8.42 billion between July and September 2026, up about 11 percent from $7.60 billion a year earlier.
September alone rose 17.61 percent compared with September 2025. Imports grew faster, however, up 13.21 percent to $19.22 billion, and the quarterly trade deficit widened to $10.79 billion. Export growth is real, but it has not yet closed the gap.
This is a good time to link incentives to firms that sell abroad. Success would bring more foreign exchange, less dependence on outside financing and better paying jobs.
Without change, protected industries keep their advantages while the economy stays exposed to repeated pressure on the balance of payments.
The prime minister has named the problem. What happens next depends on two things: whether the government applies conditions consistently, and whether the private sector accepts competition in global markets.
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