By Ayesha Saba

Pakistan’s National Industrial Policy 2026 proposes a 10% pass-through for venture capital and private equity investments, cheaper electricity, easier financing and regulatory reforms to strengthen the competitiveness of the manufacturing sector.

According to a document available with Wealth Pakistan, the policy states that the Securities and Exchange Commission of Pakistan has also drafted a dedicated Venture Capital Bill, 2026, while further reforms are envisaged to encourage reinvestment of retained earnings and mobilise domestic and international long-term capital.

These measures form part of the policy's recommendations aimed at repositioning Pakistan’s industrial sector as an engine of investment, productivity, employment and exports by tackling high input and energy costs, regulatory uncertainty, weak access to finance, inadequate industrial infrastructure and costly firm recovery.

On energy, the policy supports full implementation of the Energy Wheeling Policy and regular monitoring of its impact on export-oriented industries. It also proposes special electricity tariffs just above marginal cost for new high-technology greenfield sectors such as electric vehicles, batteries and data centres.

Industrial units consuming incremental power beyond specified thresholds are also proposed to receive reduced tariffs, alongside continued improvement of transmission and distribution infrastructure.

For exporters, the policy proposes a detailed review of tariff-like taxes affecting the industry. As fiscal space becomes available, it envisages gradual reductions in VAT and withholding taxes on imported inputs used for exports and faster clearance of refunds.

A major push is also planned to make industrial land easier to obtain. Special Economic Zones and Export Processing Zones are to be reformed through improved land availability, better zone performance and occupancy policies and stronger one-stop shops. The policy also proposes consolidation of a national industrial land bank, a move towards a land-lease model and improved connectivity to industrial estates.

The policy supports a phased reduction in the Super Tax as fiscal space improves, progressive reduction of corporate income tax, reform of direct export taxes and simplification of tax filing and audit procedures, while keeping the measures subject to fiscal space and macroeconomic commitments.

Access to finance, particularly for SMEs, is proposed to be widened through greater use of existing financing facilities, improved export credit mechanisms, reduced reliance on personal guarantees, lending incentives, long-term financing instruments and access to digital payment gateways. A special steering committee under the finance minister is expected to finalise and approve a programme aimed at increasing manufacturing lending and introducing performance-linked incentives for banks.

The policy also lays out a framework for revival and debt resolution of sick industrial units. It envisages restructuring viable distressed firms through tenor extensions, interest-rate adjustments, fresh working capital and appropriate pricing reductions based on viability assessments, while making greater use of corporate restructuring companies to acquire non-performing loans and support firm recovery.

On the trade side, the policy proposes lower port charges, a larger share of rail freight and transparent customs valuation aligned with the WTO/WCO approach of using transaction value rather than over-assessment. Product standards and domestic certification capacity are also targeted for improvement.

The government also wants industrial skills development to better match employers’ requirements, with industrial estates expected to prepare skills development plans. Priority will be given to export-potential sectors and gender-equal workplaces.

The National Industrial Policy was developed through eight thematic committees, more than 60 committee sessions and more than 20 consultations with sectoral associations, according to the document.

The Ministry of Industries and Production will coordinate the policy’s implementation, while the Prime Minister’s Delivery Unit will track progress through ministerial roadmaps.

Credit: INP-WealthPk