ISLAMABAD — The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday warned that Pakistan’s industrial sector is facing a severe crisis due to high energy tariffs and heavy taxation, which have triggered widespread factory closures and rising unemployment. Geo News has also reported these concerns, citing industry leaders and FPCCI officials.
In December, more than 100 spinning mills and over 400 ginning factories became non-operational due to unprecedented taxes, high electricity costs, and a surge in under-invoiced cotton yarn and fabric imports from China and other countries.
Speaking at a press conference in Islamabad, FPCCI President Atif Ikram Sheikh said that costly electricity had crippled industrial activity, particularly in the textile sector. He revealed that around 150 large textile units had shut down over the past two years.
Sheikh urged the government to abolish cross-subsidies imposed on industry and reduce the policy interest rate to single digits — first to nine percent and subsequently to seven percent — to revive investment and industrial growth.
Trader and business leader SM Tanvir said the crisis had also been highlighted in the World Economic Forum’s 2026 report, which increased Pakistan’s risk rating. He warned that business activity and employment opportunities were declining while the SME sector was rapidly weakening.
FPCCI officials cautioned that if the government failed to provide immediate relief on electricity tariffs, the industrial sector could come to a complete standstill. They criticised the Power Division for not passing NEPRA-approved tariff reductions to industrial consumers.
Industry leaders noted that Pakistan’s industrial electricity rate stands at around 12.5 cents per unit, compared with about 7.5 cents in India, making Pakistani exports less competitive.
They appealed to the prime minister to reduce taxes on the export sector, warning that Pakistan currently imposes one of the most punitive tax regimes in the region — including advance income tax, minimum turnover tax, super tax, and multiple withholding taxes — while sales tax refunds remain routinely delayed.
Analysts say that high and unpredictable energy costs, combined with heavy taxation, are severely undermining Pakistan’s export capacity and industrial growth.
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