A 2024 joint study of the International Labor Organization and the Small and Medium Enterprise Development Authority (SMEDA) estimated Pakistan's undocumented economy at $457 billion. While other South Asian nations, particularly Bangladesh and India, do include estimated undocumented GDP figures in their official GDP, Pakistan's official GDP figures do not include such estimates. If the Pakistani government decides to include estimates of the informal economy in its official figures, the country's GDP would jump to $1,059 billion in market exchange terms and over $4,000 billion in PPP terms.
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| Pakistan's Total GDP, including Undocumented, Estimated at over $1 Trillion |
In 2023 when the ILO-SMEDA study was conducted, Pakistan's official GDP was $340 billion (34% less than the undocumented GDP), bringing the total real GDP for 2023 to $797 billion. Pakistan's official GDP figure for 2025-26 is projected to be $452 billion. Assuming that the undocumented GDP has grown at the same rate as the official GDP, the undocumented GDP today works out to $607 billion, bringing the total GDP (documented and undocumented) to over $1 trillion. In terms of purchasing power parity, the total national economy, including the informal economy, is estimated to be over $4 trillion, which translates to over $16,000 per capita.
Being the largest employer, Pakistan's undocumented sector acts as a critical shock absorber for the labor force and sustains millions of low-income households. But it also restricts the government tax collection which could be invested in education, healthcare and infrastructure development. There is a temptation in Pakistan to force documentation of the entire economy as the Indian government has attempted to do. However, it will create a mass unemployment problem as many small businesses would be forced to close.
India is an example of what can go wrong in attempting to bring the informal sector into the tax net too quickly. Demonetization and GST taxes together have decimated the informal sector. But the Indian government continues to significantly overestimate its annual economic growth, particularly by misjudging the size and trajectory of the country's informal (undocumented) sector. Because of these estimation errors, researchers, including India's former Chief Economic Adviser Arvind Subramanian, estimate that the absolute level of India's real GDP may be overstated by 22% to 31%. This implies the average citizen's actual standard of living is lower than official data suggests.
Related Links:
RAAST: Pakistan's Instant Payment System
Pakistan's Digital Public Infrastructure
Pakistan Projected to Be World's 6th Largest Economy By 2075
Will Gwadar Become Pakistan's Shenzhen?
Pakistan's New Infrastructure Investments and Trade Routes
CAREC: More Landlocked Central Asian Republics Look to Use Pakistani Ports
Solar Power Boom in Pakistan
Pakistan at 75
Growing Presence of Pakistani Women in Science and Technology
Riaz Haq's Youtube Channel
Pakistan's Digital Public Infrastructure
Pakistan Projected to Be World's 6th Largest Economy By 2075
Will Gwadar Become Pakistan's Shenzhen?
Pakistan's New Infrastructure Investments and Trade Routes
CAREC: More Landlocked Central Asian Republics Look to Use Pakistani Ports
Solar Power Boom in Pakistan
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Riaz Haq's Youtube Channel
46 comments:
I have been discussing this with Pakistanis for a long time. The “Informal” or cash based economy is larger than the taxed economy there.
So, Riaz Sb estimates that Pakistan's economy has a size of $1 Trillion while India with its 6 times larger population has an economy that is actually only 3.5 times larger at around $3.5 Trillion (accounting for this supposed 22% over-estimation)?
But I find it counter-intuitive that a $1 Trillion economy with a population of 250 million (one-sixth that of India's) sell 11 times fewer two-wheelers and 22 times fewer cars than the $3.5 Trillion India, which according to this estimation must have significantly lower living standards than Pakistan. (As I have pointed out before, though cars seem to be quite pricey in Pakistan compared to India, the prices of commuter two-wheelers - that much of the middle classes of both countries depend upon for personal mobility - are at par after currency conversion. So, why is a supposedly more affluent Pakistan seeing disproportionately smaller car and even two-wheeler sales than India?)
Secondly, why is this $1 Trillion economy so chronically dependent on IMF bailouts to prevent bankruptcy? And why is its foreign exchange reserves so low? (At the time of writing, Pakistan's forex reserves stand at $22 billion while India's is at $670 billion.)
And what exactly are the industrial products that this $1 Trillion economy manufactures and exports other than the relative low-value items like textiles, surgical instruments and sports goods?
If you ask me, the claim of Pakistan being a $1 Trillion economy just doesn't add up. It sees so few sales of motor vehicles despite not having a developed public transportation system. It is chronically dependent on IMF bailouts to keep itself afloat. Its forex reserves are quite low (much smaller Nepal has as much forex reserves as Pakistan, while Bangladesh has larger). And it seemingly has few industrial exports to support this supposed $1 Trillion economy other than low-value products like textiles, surgical instruments, sports apparel etc.
If Pakistan's economy were that big in proportion to India's, their relative size should reflect in other economic indicators and numbers.
Most of Modi’s achievements in India can be tied to the regularization of India’s economy by digital buying and selling.
Ras: “ Most of Modi’s achievements in India can be tied to the regularization of India’s economy by digital buying and selling”
You should read Ashoka Mody’s “India is Broken”. He’s a Princeton economist who argues that Modi’s efforts to document the economy, such as demonetization and GST implementation, have killed the informal sector and caused mass unemployment in India. Millions of Indians have returned from cities to farms to eke out a living. Other top independent economists agree with Ashoka Mody’s assessment.
Vineeth: “But I find it counter-intuitive that a $1 Trillion economy with a population of 250 million (one-sixth that of India's) sell 11 times fewer two-wheelers and 22 times fewer cars than the $3.5 Trillion India“
1. Vehicle sales comparison is not a good indicator of economy in countries with low levels of motorization.
2. Most vehicle sales are financed by bank credit which is not prevalent in countries with large informal economies.
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Data from Google AI:
Vehicle ownership rates in India and Pakistan show a similar trend: high two-wheeler ownership but very low car ownership. In both countries, motorcycles are mass-market commuter vehicles, while passenger cars remain primarily aspirational and concentrated among wealthier urban households.
India
Two-Wheelers: Over 60% of households own at least one motorcycle or scooter.
Cars: Less than 10% of households own a car or a jeep. Overall car penetration sits at roughly 7.5% to 8% nationally.
Pakistan
Two-Wheelers: Approximately 53% to 58% of households own a motorcycle, mirroring India's widespread two-wheeler adoption.
Cars: Car ownership is notably low, with an estimated 6% to 8% of households owning a car. The overall national average is roughly 11 cars per 1,000 people.
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Vehicle debt levels in India and Pakistan differ significantly in volume and market penetration, reflecting the contrast between their respective automotive industries and broader economies.
Key Comparison Points
Market Penetration: In India, auto loans are highly pervasive, with approximately 80% of passenger vehicles financed. Conversely, Pakistan's vehicle debt penetration is lower relative to its overall population due to higher inflation and more prohibitive auto loan regulations.
Volume and Values: Outstanding auto loans in Pakistan have recently seen a resurgence, crossing the PKR 369 billion mark in financing stock, driven by a slight uptick in local kit imports and sales recovery. In India, the sheer scale is significantly larger; for example, out of roughly 4.5 million cars registered in a recent year, around 3.6 million were bought on credit.
Interest Rates & Policy: Both nations have navigated macroeconomic hurdles affecting consumer debt. In Pakistan, high interest rates have historically pressured the financing market, although auto loans have periodically risen as the State Bank of Pakistan implements temporary policy relief and targeted programs like the proposed AIDEP (2026-2031) to make locally assembled cars more affordable. India's massive vehicle debt market is buoyed by a robust domestic manufacturing sector, but remains sensitive to policy shifts like high import tariffs (up to 60%) that dictate overall car pricing and accessibility.
What I was referring to were Modi’s accomplishments as they appear on paper. The slogan of the world’s 4th largest economy etc. is fueled by regularization. India’s problems are significantly greater than Pakistan. The kind of poverty that I saw there in 2004 has not disappeared under Modi.
Google AI and ChatGPT show both countries include informal sector in their estimate GDP estimates PARTIALLY but what is left out is a higher percentage in Pakistan than in India.
In case of Pakistan informal sector size ranges from 35% to 64% of total economy. Including it fully would boost Pakistan gdp from 610B to 741B.
But regardless, it is clear that these gdp numbers from all, but specially from 3rd world countries are highly questionable. So any gloating or grieving based on these numbers is rather amusing.
See: https://www.google.com/search?q=Does+Pakistan+include+informal+economy+in+its+gdp+estimates%3F&ie=UTF-8&oe=UTF-8&hl=en-us&client=safari&udm=50&fbs=ABfTbFVyMZGZf1hfvX9uKjN_-G8cY2oODYyTyZk24Xz37_7FQ33TJTgGUSXMPMOdfjOY7e2Q30AopdyVXXfWdu5WnLoZ7OaK7xKq84xDlGjllpbuklNXWFey9etu4YRNzS0WK-BybrRSk9QXwdUtZ7MbgTlE89bOBLa6ttjzIFGMIAbpvOXU3BJIRjkY_XjX2S3MBJCquDDlHtkYXGIk05s679mEMaY0IQ&aep=10&ntc=1&mstk=AUtExfCOQSoIXeNrkna34VgGRh6vTe2KsYMrXOUfyM57rqbvkIzFM7xElodprof-2OZ6UGz3-mwEtJdOwNC1mcg1MGq0P1GLLWTQH2T7NRMyQOGIMO4yeY2w5yKdsPIY5LpbjqI0iRGEcOuZ3V8_qxuINXjh4Btx_iGvJ6gFZ-COt3LZ_WteH-9sn9PGzwP02l6FxLQE7TZa4XMYcaY5QygrXF3IATHEldXzh-9UKXT3hLTYRPqr25G2pjeEoyRMbCSyqNjgU4AhBrhPDeK4MEdms4RLLAfb6q6xrCtWeqgb-Oua1Pc_zMgA-5NTxbq8BEidahspXUxQDwqTpA&aioh=3&csuir=1&mtid=fHI1arvCNsWm0PEPyrHE2Ag
Riaz Sb,
Do not trust your life on AI. These AI algorithms aren't perfect (yet). They often miss out on nuances and often misread their sources. It would be better to quote from the actual sources for these numbers.
Anyways, lets take these numbers at face value. If one were to conclude that 60% of Indian households own a motorcycle/scooter while nearly as much (53-58%) of Pakistani households own one too, how do we explain the greater disparity of India's new two-wheeler registrations for 2025 being nearly 10-12 times (i.e. nearly double in per-capita terms) than Pakistan? Or the car ownership among Indian households being 7.5-8% compared to 6-8% among Pakistani households, even as India's new car registrations for 2025 were a whopping 22 times that of Pakistan's (even accounting for the latter's used car import market)?
Is it that a far greater proportion of car and two-wheeler purchases among Pakistani households tend to be for older "used" or "pre-owned" cars and two-wheelers rather than new ones (due to lack of affordable vehicle credit for new purchases) compared to India? India has a pretty large used-car market too (6 million units in FY2026) rivalling the size of the new car market (4 million units in FY2026).
https://www.autocarindia.com/car-news/indias-used-car-market-to-reach-10-million-units-by-fy31-redseer-report-439745
Leaving aside the story of vehicle sales, another point to note here is that if Pakistan's "informal" (and "untaxed") economy were as large as it is made out to be, then Pakistani households should have a greater disposable income in comparison to their Indian counterparts. This should in turn reflect in greater consumer spending (if people were to keep their money in their pockets and do not spend them, economy wouldn't grow). Do we see greater per-capita spending on consumer items among Pakistanis in comparison to Indians? You have explained away the disparity in vehicle sales as due to the lack of vehicle credit. How about consumer spending in other sectors that do not usually need a credit?
Question: Does consumption indicate higher informal gdp in Pakistan?
Yes, exceptionally high consumption—relative to official Gross Domestic Product (GDP)—is one of the primary macroeconomic indicators pointing to a massive informal economy in Pakistan.Here is how the relationship works:Consumption-Led Growth: Household final consumption in Pakistan typically accounts for 80% to 85% of its GDP. This is significantly higher than the global average (around 65%).The Income Discrepancy: High consumption requires money. In Pakistan, tax-to-GDP ratios are very low and official incomes often seem insufficient to support the observed spending. The money to fuel this purchasing power comes from undocumented, untaxed, or informal economic activities.The True Size of the Economy: Because of this hidden income, studies estimate that the informal economy actually makes up anywhere from 35% to 56% (or more) of Pakistan's total true GDP.The Institute for Strategic Studies, Research and Analysis notes that this shadow economy employs the vast majority of the workforce and acts as a vital survival mechanism for the population. However, it severely limits government revenue, as detailed by the Global Political Review.
Ras Siddiqui,
"India’s problems are significantly greater than Pakistan."
India's problems looks "significantly greater" likely because its population size is significantly greater. No doubt there are a lot of poor in India, but if you were to take the average or median of the whole population India's could be slightly worse, at par or slightly better than Pakistan's depending on the social or economic indicators you are looking at.
Either way, the bottom line I see here is that irrespective of whether Pakistan's informal, untaxed economy acts as a "buffer" or "shock absorber" or whether it encourages spending by leaving greater (i.e untaxed) disposable income in the hands of the population, Pakistan has no choice but to formalize these and bring them under the tax net (as India has done) if it wants to stabilize its macro-economic fundamentals and pursue sustainable growth. It is well known that Pakistan's previous growth spurts have been consumption-driven that drove up imports rather than exports and these time and again brought it to the familiar territory of a balance-of-payments crisis and an IMF bailout programme soon after.
But if Pakistan were to bite the bullet by "formalizing" and taxing this "informal" economy it would inevitably face the similar situation as India, wouldn't it? Greater taxation would leave smaller disposable income in the hands of the people and consumer spending would go down as well (bringing down these touted GDP numbers with it). Ultimately, Pakistan needs to increase its tax base, reduce its imports and increase domestic manufacturing and exports to balance its accounts. That's where the real test for Pakistani economy lies in the long term, and not the "cushion" of its informal economy (which is actually responsible for driving the country towards default time and again).
And by the way, India's real success at formalizing its shadow economy seems to have been through popularizing digital payments based on UPI, not demonetization or GST. Today its common to see even road-side vendors and small shops advertising QR Codes for cashless digital payment to their accounts. When I go for a walk every morning I pay the roadside tea vendor through Google Pay. Saves the hassle of carrying cash and coins.
Since you're into figures, please let me know the comparison of GDP (including informal sectors that are included in the officially announced figures of Bangladesh and India) and annual exports (goods and services, not including overseas workers remittances) for the following:
1. Exports to GDP proportion of Pakistan (GDP excluding informal sector, figures as reported officially)
2. Exports to GDP proportion of Pakistan (GDP including estimates of informal sector).
3. Exports to GDP proportion of Bangladesh.
4. Exports to GDP proportion of india.
Hamid,
Pakistan’s exports and tax revenues look much worse when you include informal gdp. Clearly exports and tax collections are Pak weaknesses.
Certainly the undocumented sector of Pakistan's economy is large, but taking both sectors into account hasn't Pakistan lost its lead over India? In 1990 per capita GDP was 50% higher in Pakistan over India, now it is reportedly 50% higher in India. If we look at other markers like electricity consumption, meat and dairy consumption, consumer durables etc isn't India ahead (except meat, as many Hindus are vegetarian). After Musharraf Pakistan has had slow GDP growth. Other indicators like life expectancy and infant mortality and literacy also favor India as doing better. Pakistan needs to get its act together. The current hybrid system has a technocrat at the Finance Ministry, hopefully we can see growth pick up to 6-8% per year and keep it there. The country also needs to devalue the rupee and double exports.
@Nayyer Ali,
I did come across a recent Gallup poll which reported that Pakistani households surpassed their Indian counterparts in the ownership of several consumer appliances like refrigerators and washing machines (but reportedly trailing India in TV ownership).
https://gallup.com.pk/post/39622
Assuming the comparative survey is accurate, I'm not sure if this data is a reflection of real incomes or spending priorities of families in both countries. But having a very large undocumented (read 'untaxed') economy in Pakistan would obviously leave greater disposable income in the hands of its population than otherwise. However, while this may seem helpful in raising living standards of its people, its a double-edged sword at best as it ends up undermining macro-economic stability of the country by lowering tax revenue for the government and increasing imports. (I'm making a guess here that a larger portion of these consumer durables like TVs, refrigerators and washing machines that are sold in Pakistan are imported rather than locally manufactured.)
https://fatehaliaamir.medium.com/pakistan-imports-everything-india-didnt-and-that-changed-everything-67b8240358a1
In effect, I think the phenomenon of Pakistan having a far larger proportion of undocumented economy in comparison to India needs to be read together with its recurring macro-economic instability and chronic dependence on IMF bailouts.
Nayyer Ali: "In 1990 per capita GDP was 50% higher in Pakistan over India, now it is reportedly 50% higher in India. If we look at other markers like electricity consumption, meat and dairy consumption, consumer durables etc isn't India ahead (except meat, as many Hindus are vegetarian)."
What you're quoting is questionable data.
Why is it questionable?
1. Multiple studies (including ILO/SMEDA study) have shown that Pakistan's GDP is understated by as much 50-60%. On the other hand, India's GDP is overstated by 22%-31%, according to former Chief Economic Adviser Arvind Subramaiam and Professor Arun Kumar. https://www.riazhaq.com/2026/03/modis-ex-chief-economic-advisor-indias.html
2. Pakistan's official electricity consumption excludes the massive solar electricity deployment in recent years, according to Ember and other research studies that showed satellite images of pervasive rooftop solar panels all over the country. https://www.riazhaq.com/2024/07/solar-power-boom-in-pakistan.html
3. Wheat, meat and dairy consumption in Pakistan is grossly understated. I explained it in recent blog: https://www.riazhaq.com/2026/01/pakistan-household-survey-hies-2024-25.html
4. India has had no census, meaning no real data on key metrics, in a long time.
Postponing India’s census is terrible for the country
But it may suit Narendra Modi just fine
https://www.economist.com/asia/2023/01/05/postponing-indias-census-is-terrible-for-the-country
Narendra Modi often overstates his achievements. For example, the Hindu-nationalist prime minister’s claim that all Indian villages have been electrified on his watch glosses over the definition: only public buildings and 10% of households need a connection for the village to count as such. And three years after Mr Modi declared India “open-defecation free”, millions of villagers are still purging al fresco. An absence of up-to-date census information makes it harder to check such inflated claims. It is also a disaster for the vast array of policymaking reliant on solid population and development data.
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Three years ago India’s government was scheduled to pose its citizens a long list of basic but important questions. How many people live in your house? What is it made of? Do you have a toilet? A car? An internet connection? The answers would refresh data from the country’s previous census in 2011, which, given India’s rapid development, were wildly out of date. Because of India’s covid-19 lockdown, however, the questions were never asked.
Almost three years later, and though India has officially left the pandemic behind, there has been no attempt to reschedule the decennial census. It may not happen until after parliamentary elections in 2024, or at all. Opposition politicians and development experts smell a rat.
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For a while policymakers can tide themselves over with estimates, but eventually these need to be corrected with accurate numbers. “Right now we’re relying on data from the 2011 census, but we know our results will be off by a lot because things have changed so much since then,” says Pronab Sen, a former chairman of the National Statistical Commission who works on the household-consumption survey. And bad data lead to bad policy. A study in 2020 estimated that some 100m people may have missed out on food aid to which they were entitled because the distribution system uses decade-old numbers.
Similarly, it is important to know how many children live in an area before building schools and hiring teachers. The educational misfiring caused by the absence of such knowledge is particularly acute in fast-growing cities such as Delhi or Bangalore, says Narayanan Unni, who is advising the government on the census. “We basically don’t know how many people live in these places now, so proper planning for public services is really hard.”
Pakistan Surpasses India in Washing Machine Ownership (58% vs 20%) and Refrigerator Ownership (56% vs 50%) Despite Lower GDP per Capita.
(Islamabad), 23rd January 2026
https://gallup.com.pk/post/39622
Pakistan today trails India on GDP per capita, a headline indicator often used as shorthand for living standards. On paper, this would suggest that Pakistani households are significantly worse off. However, household asset ownership data tell a more nuanced story. Evidence from Pakistan’s Household Integrated Economic Survey (HIES), benchmarked against comparable Indian household estimates, shows that Pakistani households match or exceed India in ownership of several everyday consumer durables, despite lower average incomes.
India continues to lead in television ownership (around 66%, compared to 50% in Pakistan), although Pakistan’s TV ownership was comparable to India’s as recently as 2019. In contrast, refrigerator ownership is higher in Pakistan (about 56%) than in India (around 50%). The largest gap appears in washing machines, owned by nearly 58% of Pakistani households compared to roughly 20% in India. Motorcycle ownership is similar in both countries (India ~55%, Pakistan ~53%), while car ownership remains low, with India holding only a small lead (~8% vs ~6%).
These patterns suggest that, despite lower GDP per capita, Pakistani households historically placed greater emphasis on labour-saving domestic appliances, while Indian households invested more in entertainment assets and, later, automation.
The broader lesson is that GDP per capita does not translate mechanically into household living standards. Consumption choices, relative prices, infrastructure, gender roles, and historical preferences all shape how income is converted into daily welfare. Living standards, in short, are shaped by more than income alone.
This analysis was conducted and released by Gallup & Gilani Pakistan, the Pakistani affiliate of Gallup International. It draws on long-run household asset data from the Household Integrated Economic Survey (HIES) compiled by the Pakistan Bureau of Statistics, covering the period 2000–2025, alongside comparable Indian household estimates. (Gallup Pakistan Digital Analytics Dashboard)
Riaz Sb,
On the question of Indian census, Modi govt has finally started the process with a revised questionnaire (covering ownership of more consumer items). But there are still considerable challenges as many would be hesitant to share accurate data to authorities. For instance, they might fear that revealing ownership of a TV, vehicle, washing machine or refrigerator may lead to cancellation of their government social security benefits. Conversely, in some states there is also governmental pressure on enumerators apparently to not record lack of toilets or LPG connections as they were flagship schemes launched by Modi govt that they brag about in political rallies.
Hence, as there are pressures to both under-report and over-report, how far the new census data would accurately reflect the social and economic reality in the country is anybody's guess.
https://www.thehindu.com/news/national/census-2027-the-pressures-of-counting-india/article71123306.ece
"The 2027 Census marks several firsts: it is India’s first fully digital Census, the first to collect caste data, and the first to allow residents to self-enumerate.."
"The HLO phase involves the collection of data on housing conditions, household composition, basic amenities, and assets to assess living standards. It captures information on the structure of dwellings; access to water, sanitation, and energy, ownership of consumer goods, and the number of people living in a household. It also collects residents’ mobile numbers for official communication."
But coming back to the original topic of whether Pakistan is a $1 Trillion economy or not due to the size of Pakistan's undocumented economy, I think the real question you need to ponder is whether it is beneficial at all for the country in the long run. Is the undocumented and untaxed economy actually contributing to country's growth and stability in the long term or hindering it? Why is a $1 Trillion economy still dependent on IMF bailouts to keep itself afloat?
Pakistan’s FY27 budget aims to accelerate export-led growth, finance minister says
https://www.arabnews.com/node/2647930/pakistan
Aurangzeb says budget seeks to build on economic stabilization achieved over past two years
Minister cites manufacturing growth, remittances and IT exports as signs of economic recovery
ISLAMABAD: Pakistan’s proposed budget for fiscal year 2026-27 is designed to accelerate export-led growth and build on economic stabilization achieved over the past two years, Finance Minister Muhammad Aurangzeb said on Saturday as he wrapped up a parliamentary debate on the government’s fiscal plan.
The Rs18.9 trillion ($67 billion) budget, unveiled on June 10, seeks to maintain fiscal discipline while supporting growth in an economy recovering from a balance-of-payments crisis that pushed Pakistan to the brink of sovereign default in 2023.
The proposals sparked days of debate in parliament, with lawmakers raising concerns about taxation, revenue collection measures, relief for households and the pace of economic recovery.
“The fundamental goal of our government and this budget is export-led growth, which should be sustainable and inclusive, which should increase productivity and create jobs,” Aurangzeb told the National Assembly in his speech on the budget debate.
He said the government believed the economy had moved beyond a period of stabilization and was now positioned for stronger growth, pointing to improvements in key economic indicators over the past year.
“Today our industry is doing well,” he said, adding that large-scale manufacturing had recorded growth of around 6.5 percent, the highest in four years.
Aurangzeb said Pakistan’s external account had also remained stable, noting that the country had posted a current account surplus during the first 11 months of the current fiscal year, while remittances from overseas Pakistanis were expected to reach $41 billion by year-end.
He also highlighted growth in the technology sector, saying information technology exports had increased by 20 percent during the year and were expected to exceed $4.5 billion, while Pakistani freelancers had generated record earnings of $1.6 billion.
The finance minister said the government had sought to shift the focus of fiscal policy toward expanding the tax base rather than imposing additional burdens on existing taxpayers.
“We have changed this trend through this budget and have focused on broadening and deepening instead of burdening,” he said, adding that the government had sought to provide relief to salaried workers, exporters, industries and small businesses while improving tax compliance and enforcement.
Aurangzeb also highlighted ongoing reforms at the Federal Board of Revenue, saying the government was introducing a new operating model aimed at increasing digitization, reducing discretionary powers and improving transparency in tax administration.
The budget debate took place amid Pakistan’s efforts to sustain economic recovery under reforms linked to a $7 billion International Monetary Fund (IMF) program.
The government has projected economic growth of 4.2 percent in the next fiscal year and says lower inflation, a stronger external position and rising exports provide a foundation for faster expansion.
The Finance Bill is expected to be approved by parliament before the start of the new fiscal year on July 1.
@SouthernM46171
Goenka’s remarks reveal a real shift in Indian business thinking. The fear is no longer simply that China may dominate India. It is that India may fall behind while other Global South countries work with China and enter the next round of industrial growth. Refusing cooperation will not create autonomy. For many developing countries, it may mean being left behind altogether.
But his proposed solution reveals an old Indian fantasy. He argues that India should skip traditional stages of industrial development and move directly into digitally integrated, low-touch manufacturing.
This mistakes China’s destination for a shortcut. China automated only after it had learned how to organize production on a vast scale. India cannot automate a manufacturing system it has not yet built.
The hardest part of industrialization is making factories produce reliably, year after year. That capacity comes from long practice. It cannot be imported together with advanced equipment.
Low-touch manufacturing may create a few impressive factories. It will not build a broad industrial economy or provide work for India’s vast labour force.
That is the contradiction in Goenka’s argument. He understands that India cannot afford to stay away from China, yet still hopes to purchase the outcome of industrialization while skipping the process that produces it.
#India #China #MakeInIndia #Manufacturing #GlobalSouth #SupplyChains
If youre not at the table, youre on the menu: FICCI presidents China message businesstoday.in/india/story/if… via @business_today
https://x.com/southernm46171/status/2068906504179319223?s=43
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FICCI President visited China's corporate giants, including BYD. His 3 biggest takeaways - BusinessToday
https://www.businesstoday.in/industry/story/ficci-president-visited-chinas-corporate-giants-including-byd-his-3-biggest-takeaways-538519-2026-06-22
FICCI President Anant Goenka has shared his observations from a recent CEO delegation visit to China, describing the country's business environment as an intensely competitive ecosystem shaped by aggressive market-share battles, heavy investments in research and development, and extensive state support.
In a post on social media on Monday, Goenka said he led a FICCI CEO delegation to China and visited major companies including BYD, Geely, Midea and Mindray.
'A no-frills fighting ring'
Goenka said China operates as an exceptionally competitive market where companies are willing to sacrifice profitability in pursuit of scale and market dominance.
"China is like a no-frills fighting ring. Extremely competitive. Businesses operate at margins (2-3%), and global boards would never approve. Only market share matters, and there is no concept of ROI. The few who survive are the toughest and the best," he wrote.
According to Goenka, the intensity of competition creates an environment where only the strongest companies emerge as long-term winners.
Long-term bets on R&D and automation
The FICCI chief said one of the most striking features of the companies he visited was their commitment to long-term investment in innovation and manufacturing efficiency.
"R&D and automation are at the highest levels. The scale of automation and R&D investment at these companies is built for a 10-year time horizon, not a quarterly one. They celebrate innovators, have walls of patents and dark factories with unmatched efficiency," he said.
His remarks highlighted what he viewed as a sustained focus on technological advancement and future-oriented industrial planning.
‘The state is a silent shareholder everywhere’
Goenka also pointed to the role of state support in shaping China's industrial competitiveness, arguing that access to low-cost capital and policy backing significantly alters business economics.
“The state is a silent shareholder everywhere. Cheap capital, land, power, and policy support at a scale that fundamentally changes unit economics. As long as you service interest (@ only 2-3%), debt doesn’t have to be paid back. This isn’t a level playing field,” he wrote.
Data from the Department of Telecommunications indicates that of the roughly 1.04 lakh public Wi-Fi hotspots installed across rural Gram Panchayats, only 766 are active. This massive discrepancy highlights a severe implementation and last-mile connectivity crisis within the Demand for Grants 2026-27 Analysis : Telecommunications report.Key roadblocks include:Infrastructure Hurdles: While fiber is laid out to Gram Panchayats, it often fails to reach community hotspots or individual households, as detailed in the BharatNet's last mile woes: just 45 per cent connections active coverage.Policy & Operations: The Demand for Grants 2026-27 Analysis - PRS India report flags faltering maintenance, confusing tariff structures, and leakage of funds as primary factors causing underutilization.Low Adoption: Out of 13.23 lakh total commissioned fixed connections, only about 8.01 lakh are actually active, pointing to a lack of awareness and demand-side subsidies.Would you like to know more about the proposed revival strategies for BSNL or explore the details regarding satellite connectivity in remote areas?
- "The fear is no longer simply that China may dominate India. It is that India may fall behind while other Global South countries work with China and enter the next round of industrial growth. Refusing cooperation will not create autonomy. For many developing countries, it may mean being left behind altogether."
Indian industry continues to import the raw materials and components it wants from China and has been relaxing post-Galwan restrictions on Chinese investments as well. However, what India refuses to do (unlike many other countries) is to open its market to a torrential flood of cheap Chinese imports produced under Chinese govt subsidy. China cannot expect that sort of "cooperation" from India as the latter wants to protect and develop its own manufacturing industry and not simply become yet another dumping ground for Chinese products.
- "India cannot automate a manufacturing system it has not yet built. The hardest part of industrialization is making factories produce reliably, year after year. That capacity comes from long practice. It cannot be imported together with advanced equipment."
There are few, if any, developing countries that can match the sheer scale of China's manufacturing. Most economies across the world - including those of the developed world - are dependent on imports from China. India is no exception, and definitely cannot hope to match that scale anytime soon.
But to assume that India has not developed factories that "produce reliably, year after year" would be absurd. Perhaps the Chinese author who wrote the piece was under the impression that Indian factories shut shop intermittently due to forex restrictions and unavailability of CKD kits as it happens in Pakistan.
Since we were talking above about Chinese auto giants like BYD and Geely, lets take a look at the news coming out of India's (admittedly smaller) auto manufacturing scene in recent months to see how it compares, starting with motorcycles.
(Note that I'm mentioning only Indian auto brands below, and not the Japanese and European two-wheeler brands like Suzuki, Honda, Yamaha, Kawasaki, Vespa and Aprilia who also manufacture and export two-wheelers from their Indian plants.)
TVS:
TVS manufactures the 450cc BMW F 450GS motorcycle for the Indian market and exports. After TVS bought the British motorcycle brand Norton, it intends to manufacture and export the newly developed 585cc Norton Atlas ADV motorcycles from its Indian plant.
https://www.autocarindia.com/bike-news/bmw-f-450-gs-launched-from-rs-470-lakh-439528
https://www.autocarindia.com/bike-news/norton-atlas-spotted-testing-in-india-again-439578
https://www.autocarindia.com/bike-news/new-tvs-160cc-maxi-scooter-under-development-439897
https://www.autocarindia.com/bike-news/tvs-motor-to-add-15-million-units-of-manufacturing-capacity-in-next-12-months-439728
BAJAJ:
Bajaj manufactures Triumph's 400cc motorcycles for the Indian market and exports. After Bajaj bought out the Austrian motorcycle manufacturer KTM, it intends to make twin-cylinder KTM motorcycles here for sale in the Indian market and overseas. It already manufactures and exports KTM's single-cylinder motorcycles.
https://www.autocarindia.com/bike-news/triumph-bonneville-400-spotted-testing-in-india-439469
https://www.autocarindia.com/bike-news/bajaj-auto-completes-acquisition-of-ktm-438478
ROYAL ENFIELD:
Continuing from its existing 350, 450 and 650cc motorcycle range, Royal enfield is currently testing its new 750cc motorcycles for the Western markets. It operates CKD plants in Brazil, Colombia, Bangladesh, Nepal and Thailand and is now evaluating a new CKD plant in Mexico.
https://www.autocarindia.com/bike-news/royal-enfield-himalayan-750-spotted-testing-with-accessories-439698
https://www.autocarindia.com/bike-news/royal-enfield-evaluates-setting-up-a-ckd-plant-in-mexico-439807
HERO
Hero is the world's largest two-wheeler manufacturer by volume, though until recently its product line was mostly commuter motorcycles and scooters in the 100-160cc range. But in recent times they have been gradually expanding to larger ADV motorcycles and maxi-scooters. They also manufacture 440cc Harley-Davidson motorcycles for the Indian market.
https://www.autocarindia.com/bike-news/hero-xpulse-421-spotted-testing-in-the-mountains-439976
https://www.autocarindia.com/bike-news/harley-davidson-sprint-440-cruiser-to-launch-in-2026-439670
On the EV side of two-wheelers, existing two-wheeler manufacturers like TVS, Bajaj, Hero and startups like Ather, River and Ultraviolette dominate the Indian market.
https://www.autocarindia.com/bike-news/tvs-crosses-1-million-electric-scooter-sales-439935
https://www.autocarindia.com/bike-news/bajaj-chetak-crosses-7-lakh-cumulative-sales-439656
https://www.autocarindia.com/bike-news/hero-motocorp-ramps-up-ev-production-sub-rs-1-lakh-vida-due-in-august-439633
https://www.autocarindia.com/bike-news/ather-expands-with-over-700-experience-centres-across-india-439426
https://www.autocarindia.com/bike-news/ultraviolette-sales-surge-in-2026-as-baas-lowers-upfront-cost-439720
(Contd..)
While India is currently the larger two-wheeler market in comparison to China, its growing car market is still significantly smaller at one-sixth of latter's size (4 million vs 24 million). Despite this smaller size, Indian car brands Tata and Mahindra have risen to become the No:2 and No:3 sellers behind the market leader Maruti Suzuki and ahead of other Japanese, Korean and European rivals in the Indian market. On EV sales in the Indian market they remain the top two manufacturers. Though Tata and Mahindra have quite a long way to go to challenge Chinese auto giants in the global arena, they have been making significant strides in in-house development and manufacture of both ICE and EV models during recent times.
https://www.autocarindia.com/industry/may-2026-car-sales-tata-retains-second-place-over-mahindra-439853
https://www.autocarindia.com/industry/may-2026-ev-sales-tata-crosses-10000-units-for-the-first-time-439849
Meanwhile, other foreign brands like Suzuki, Renault, Toyota, Honda, Hyundai, Kia etc continue to use their Indian plants for exports supported by the large component supplier ecosystem.
https://www.autocarindia.com/car-news/renault-commences-exports-of-duster-from-india-440029
https://www.autocarindia.com/car-news/maruti-hits-its-highest-ever-exports-with-4-48-lakh-units-in-fy2026-439586
https://www.autocarpro.in/news/honda-cars-india-crosses-200000-export-milestone-128900
Suzuki intends to position its Indian plants as its sole manufacturing base for its upcoming EVs.
https://www.autocarindia.com/industry/all-global-suzuki-evs-will-be-made-in-india-toshihiro-suzuki-434286
https://www.autocarindia.com/car-news/maruti-suzuki-e-vitara-exports-to-europe-begin-from-gujarat-plant-436962
Interestingly, both Suzuki and Honda also export some of their India-built models back to Japan.
https://www.autocarindia.com/car-news/honda-exports-nearly-7000-elevate-suvs-to-japan-430961
https://www.autocarpro.in/news/maruti-suzuki-commences-export-of-suv-fronx-to-japan-122013
These companies have been steadily expanding their manufacturing capacity in India by building new plants to cater to exports.
https://www.autocarindia.com/car-news/new-maruti-suzuki-gujarat-plant-will-be-brands-fifth-in-india-438848
https://www.autocarindia.com/industry/toyota-to-build-new-manufacturing-plant-in-maharashtra-439699
Now, I leave you to decide for yourself whether your impression that India's "$4 Trillion" economy (or is it "$3 Trillion" as per the economists you quoted?) as an over-hyped and exaggerated one-trick pony that would go bankrupt with the AI wave in IT services still holds true, and where Pakistan's under-hyped and understated "$1 Trillion" economy and manufacturing industry stands in comparison.
I do not know how many people actually use govt-owned BSNL or BharatNet internet connections these days in India. Its the private sector players like Jio, Airtel and Vodafone Idea that dominate the telecom scene. They launched 5G services here years ago while the govt granted 4G license to BSNL only recently and it has no 5G operations as yet. Landline broadband connectivity also seems to be dominated by Jio and Airtel, at least in cities and small towns. Ideally, govt telecom entities should stay out of this highly competitive business or restrict themselves to the rural or border regions where the coverage by private players may be patchy or absent.
Here's another recent piece of news that illustrates how India's domestic auto manufacturing ecosystem is steadily maturing similar to how China's did in the past.
Stellantis which has a manufacturing partnership with Tata Motors in India intends to use the ARGOS platform of Tata's recently launched SUV Sierra for Jeep's own new global SUV which will be manufactured and exported from India.
https://www.autocarindia.com/car-news/upcoming-jeep-global-suv-to-use-tata-sierras-argos-platform-439839
https://www.autocarindia.com/car-news/new-jeep-suv-to-be-built-on-a-tata-motors-platform-439785
"Stellantis has confirmed it will use a Tata Motors platform to develop and manufacture an all-new Jeep SUV in India for global markets. The announcement came at the group’s 2026 Investor Day, where Grégoire Olivier, Stellantis Asia Pacific COO, said Tata Motors would provide “a highly competitive platform” for a new Jeep vehicle that will be “developed in India, assembled in India, in our Stellantis-Tata JV in India, for the world.” The SUV is targeted for a 2028 launch and will be exported to over 50 countries across Asia Pacific, the Middle East, Africa and South America."
For the context, Tata Motors had launched the ICE version of Sierra a few months back and the EV version is expected to be launched shortly.
https://www.autocarindia.com/car-news/tata-sierra-ev-teased-with-awd-440019
Can India’s auto sector match China’s?
India’s auto sector has the potential to become a global manufacturing hub, but matching China’s scale, vertical integration, and EV dominance is a massive, multi-decade challenge. While India is the world's third-largest vehicle market, China’s auto industry is six to seven times larger and dominates the global supply chain.Why Matching China is ChallengingAbsolute Scale: Catching up with China's $1.5 trillion auto ecosystem would require unprecedented compound growth, as China has over 100 domestic automakers and deep vertical integration.Supply Chain Dependency: India currently faces a 20-30% cost disadvantage in EV manufacturing because it relies heavily on China for critical components, raw materials, and rare earth magnets.Domestic Competition: The Indian passenger vehicle market is tightly concentrated, with just six major manufacturers controlling over 90% of sales. This narrow base limits rapid market evolution compared to China's fiercely competitive environment.Where India is ThrivingRapid Market Growth: India's light vehicle sales are projected to grow by 7.5% in 2026, sharply outperforming slowing markets in the US and China.The "China-Plus-One" Pivot: Escalating geopolitical tensions and slowing demand in China have led global players like Toyota, Honda, and Suzuki to invest over $11 billion into India as an alternative production hub.Engineering & Talent: India benefits from a massive, cost-effective talent pool that global automakers are tapping into for rapid vehicle design and software development.Ultimately, rather than directly challenging China's scale, India is positioning itself as the next major growth engine and an alternative manufacturing hub for the global auto industry.
- "India currently faces a 20-30% cost disadvantage in EV manufacturing because it relies heavily on China for critical components, raw materials, and rare earth magnets."
This is a reality at present. Though companies have begun assembling EV batteries in India, their cells still come from China as the latter has managed to build a virtual monopoly on end-to-end manufacture of Lithium-based EV batteries. Even if Indian companies were to acquire the capability to manufacture the EV battery cells as well, I would still expect some kind of component dependency on Chinese suppliers to persist. This is a predicament that confronts not just Indian EV manufacturers, but also Western ones. However, the development of alternate battery chemistries that could be economically manufactured within India *could* alter the situation in the future.
- "The Indian passenger vehicle market is tightly concentrated, with just six major manufacturers controlling over 90% of sales. This narrow base limits rapid market evolution compared to China's fiercely competitive environment."
As I mentioned in an above comment, India's car market is only one-sixth the size of China's at present if we look at yearly sales numbers (around 4.4 million vs 24 million in 2025). This naturally restricts the number of brands that can compete effectively as companies need economies of scale to operate profitably. As India enters into FTA with other countries or regions (eg: UK, EU etc) that reduces or eliminate tariff barriers for automobile imports it opens opportunities for more companies to invest in India for export-driven manufacturing. As it stands now, its fair to assume that the size of India's domestic passenger car market only has space for 1/6th the number of competitors to operate profitably compared to China.
However, what's remarkable here is how despite the limitations of its smaller economy and auto market India has managed to create domestic auto brands that are increasingly taking over foreign brands (eg: JLR, Daewoo Trucks, IVECO, KTM, Norton), acquiring their know-how and expertise in the process, and have begun supplying platforms for others as well (eg: ARGOS for Stellantis) - essentially replicating what China did earlier.
The bottom-line is that unlike what our Chinese friend assumed above, India does have a credible manufacturing ecosystem (atleast in some sectors like automobile manufacturing) with factories that "produce reliably, year after year".
More on how the relatively smaller size of India's car market (in comparison to China's) has resulted in top 6 manufacturers cornering over 90% of the sales..
https://www.autocarindia.com/industry/may-2026-car-sales-tata-retains-second-place-over-mahindra-439853
Maruti Suzuki - 1,90,337
Tata - 59,090
Mahindra - 58,021
Hyundai - 47,837
Toyota - 30,574
Kia - 27,586
MG - 6,048
Skoda - 5,760
Honda - 5,111
Renault - 4,113
Nissan - 2,948
Volkswagen - 2,619
Citroen - 525
As can be seen from the above sales data for the month of May 2026, of the 440,119 cars from the top 13 car brands that were sold in the Indian market, the top 6 brands (Suzuki, Tata, Mahindra, Hyundai, Toyota, Kia) cornered nearly 94% (412,995) of the sales while the bottom 7 brands (MG, Skoda, Honda, Renault, Nissan, Volkswagen, Citroen) constituted the rest of the 6% (27,124).
However, to put these numbers in context, do note that the combined sales of these bottom 7 brands (27,124) that made up only 6% of the total sales in India was still double the total number of passenger cars sold in Pakistan during the same time period of May 2026 (13,211), which shows the stark disparity in the sizes of Indian and Pakistani car markets at present.
https://www.thenews.pk/print/1420046-passenger-car-sales-up-19pc-in-may
"Total passenger car sales rose to 13,211 units in May 2026 from 11,143 units sold in the same month last year."
But back to India's sales, aside from the relatively smaller size of the Indian car market in comparison to China, the other factors that has skewed bulk of the sales towards the top 6 brands in India are their extensive sales and service network across the country (including smaller towns), popularity and desirability of their models (primarily SUVs and Crossovers) and their relatively affordable prices due to high levels of localization in their manufacture.
In fact, if one were to look further at the model-wise breakdown of car sales in India for May 2026, there is an unmistakeable trend that can be noted.
https://www.autocarindia.com/car-news/top-10-bestselling-cars-in-may-2026-maruti-models-hold-top-three-ranks-439903
1 Maruti Dzire - 24,546
2 Maruti Fronx - 20,686
3 Maruti Ertiga - 20,350
4 Tata Punch / EV - 20,208
5 Tata Nexon / EV - 19,100
6 Maruti Baleno - 18,396
7 Maruti Wagon R - 18,076
8 Maruti Swift - 17,519
9 Mahindra Scorpio / N - 15,774
10 Hyundai Creta / EV - 15,253
With the exception of the top-selling model Suzuki Dzire (which is a compact sedan based on the Suzuki Swift) and the Wagon R and Swift at the 7th and 8th positions, all other entries among the top ten are either SUVs, MPVs, Premium hatchbacks or Crossovers. The two cheapest cars on sale in the Indian market - the budget hatchbacks Suzuki Alto and Spresso - doesn't figure anywhere among the top 10 sellers.
On the other hand the Pakistani car market paints a starkly different picture with the Suzuki Alto still dominating sales by a significant margin.
https://www.pakwheels.com/blog/may-2026-car-sales-suzuki-fronx-beats-cultus-and-every/
"Suzuki Alto, as usual, led the market with 5,964 units sold in May. This was 21% lower than April, but Alto still remained far ahead of every other model."
Perhaps the high car prices and the lack of affordable vehicle credit (as you mentioned) in Pakistan are the reasons for the much smaller car sales and the continuing dominance of the sales of budget hatchbacks like Suzuki Alto over more expensive models.
"Chinese EV makers are shut out of India - but their tech isn't"
https://www.reuters.com/world/china/chinese-ev-makers-are-shut-out-india-their-tech-isnt-2026-06-24/
Chinese automakers may be shut out of India, but their electric-vehicle technology is starting to make inroads in the world's third-largest car market.
New Delhi has largely blocked Chinese companies from entering the market since 2020 and now Beijing is clamping down on the export of its tech know-how. Yet ties between the two countries' carmaking industry are only growing.
Tata Motors said earlier in June it will use Chery's carmaking platform to manufacture premium EVs in India. The deal doesn't involve an equity stake, and both companies stressed it is a supply arrangement without any transfer of technology know-how to Tata, highlighting the political sensitivities.
India ramped up scrutiny of Chinese businesses after a 2020 border clash between the two countries killed soldiers on both sides. While New Delhi and Beijing are working to improve ties, some friction remains.
"If India wants to expand its manufacturing sector and be a bigger part of the global supply chain, partnership with China is inevitable. If Chinese companies want to be global leaders, they cannot wish away India and its economic potential," said Santosh Pai, partner at law firm Dentons Link Legal.
For Tata, India's third-largest automaker, Chery's platform offers a quicker way to launch EVs. Tata plans to eventually shift from relying on imported kits from China to developing components locally - a move seen favourably by some Indian policymakers because it would boost Indian manufacturing.
"We are supportive of deals that lead to more local manufacturing or supply-chain shifts down the road. That is a good way to approach China," said a senior Indian government official.
For Chinese carmakers grappling with a slowdown at home and excess manufacturing capacity, such deals could be the answer to boosting revenue without violating Beijing's export control orders.
GROWING MARKET
The Tata-Chery deal shows that, despite its best efforts, India can't keep China's EV industry completely out.
The world's most advanced EV industry is likely to continue to make inroads into India, a huge and still growing market.
That's bad news for Japanese automakers and others who are investing big in India – in part because they don't face major competition from Chinese rivals there now.
Chinese EV makers understand the importance of gaining a foothold in India through such supply deals, said Gao Hua, a former director at China SAE and now an independent analyst.
"If Chinese firms don't participate, others from different countries will step in," Gao said.
Chinese partnerships are increasingly appearing in sectors long dominated by Japanese, Korean and European firms, and they are challenging the incumbents with technologies that many analysts say are cheaper and faster to deploy.
For instance, Indian component maker Uno Minda (UNOI.NS) has a joint venture with China's Inovance (301656.SZ) to manufacture EV powertrains in India - a sector where Bosch (BOSH.NS), Nidec (6594.T), and Aptiv (APTV.BN) are already present.
(Contd...)
(Contd...)
https://www.reuters.com/world/china/chinese-ev-makers-are-shut-out-india-their-tech-isnt-2026-06-24/
BATTERY CO-OPERATION HALTED
Technology licensing deals between India and China started to gain traction in the aftermath of the 2020 investment restrictions.
But it wasn't all smooth sailing. In 2025, Beijing's export control curbs in retaliation to Trump's tariffs, forced Indian battery maker Amara Raja (AMAR.NS) to end its licensing deal with China's Gotion (002074.SZ) for lithium-ion cell technology for EV batteries.
"All technical collaboration has stopped," Amara Raja's executive director Vikramadithya Gourineni told Reuters.
"The main things we were able to take away was understanding on factory and line layouts, technology roadmaps ... and connecting to the vendor base," Gourineni said.
Because the licensing deal was no longer possible, Amara Raja is instead ramping up investment in in-house R&D and talent, he said.
The company is now importing equipment, battery cells and other material from Chinese suppliers to meet its cell manufacturing ambitions, but it struggles to get enough visas for engineers to come from China for operational support.
CHERY'S OTHER INDIAN PARTNER
Last year, steel-to-cement billionaire Sajjan Jindal's maiden carmaking venture, JSW Motor, agreed to a partnership with Chery similar to Tata's.
Under the deal, JSW has secured rights to use and adapt multiple Chery platforms to build a range of hybrids and EVs for India, sources familiar with the plans told Reuters. This involves an upfront payment of about 20 billion rupees ($209 million) plus royalties, one of the people added.
JSW, which is investing $3 billion in the venture, is targeting sales of 300,000 vehicles by 2030, the sources said.
The initial vehicles will largely come as imported kits from Chery with JSW gradually building out an Indian supply chain and scaling up car production at its factory in western India, they added.
JSW Motor and Chery did not respond to requests for comment.
"This highlights the importance of nuanced approaches. Cutting ties is not always the best option," Gao said.
To give the context about the Tata-Chery deal, Tata has so far relied on dual-purpose platforms for its EV designs. Their early EV models were essentially repurposed ICE platforms converted to EVs by swapping the ICE powertrain with electric motors and batteries housed under the floor. The repurposing of ICE platforms allowed them to bring relatively affordable EV models into the market rapidly and dominate it early on. As a result of this appraoch, most ICE models of Tata from small hatchbacks to mid-size SUVs have an EV counterpart as well, enabling them to field a relatively large EV portfolio in the Indian market.
As the next phase, the Tatas developed a new platform ARGOS that is designed from the ground up to accomodate both ICE and EV powertrains. ARGOS is used in the newly launched mid-size SUV Tata Sierra and will be reportedly used by Jeep for their own new SUV targeted at developing markets.
As part of the third phase, Tata originally planned to launch premium born-EVs under an "Avinya" brand using JLR's inhouse skateboard EMA architecture. However, this was not found to be cost-effective for Tata's needs leading them to opt for the Chery-JLR platform instead.
As for JSW Motors (which has ambitions to become the third Indian domestic car brand after Tata and Mahindra), they have an ongoing collaboration with China's SAIC in manufacturing the latter's ICE and EV models under the MG brand in India. They have now signed a deal with Chery as well to launch Chery's own models under JSW brand in the Indian market.
"Tata Avinya EVs to use Chery-JLR’s Freelander platform"
https://www.autocarindia.com/car-news/tata-motors-to-use-chery-jlrs-freelander-platform-for-avinya-evs-439867
Tata Motors has overhauled the technology strategy for its Avinya premium electric vehicle programme, replacing the previously planned JLR Electrified Modular Architecture (EMA) with a platform sourced from the Chery-JLR (CJLR) ecosystem. The move is expected to help Tata Motors shorten development timelines, improve cost competitiveness and bring its premium EV plans to market faster.
The first production model under the revised roadmap will be the Avinya X, codenamed P2. The P1, originally slated to be the first Avinya, is understood to have taken a back seat as Tata Motors focuses on bringing the Avinya X to production. Engineering prototypes are expected later this year, with a market launch targeted for 2027. The model will use Chery-JLR’s recently unveiled Freelander EV platform.
While the underlying mechanical architecture will come from the CJLR ecosystem, Tata Motors is reworking key parts of the electronics, software and vehicle systems for Indian market requirements. Tata Technologies’s engineering teams in China are understood to be involved in adapting the architecture alongside teams in India and the UK.
For Tata Motors, access to the CJLR platform provides a proven EV architecture while allowing the company to focus resources on localisation, software, connectivity and customer experience.
Battery strategy is also evolving. Industry sources indicated that the first Avinya models are likely to feature battery packs in the 65-80 kWh range, balancing range, weight and affordability. While Tata Group’s battery venture Agratas remains central to the company's long-term plans, initial vehicles could rely on existing battery ecosystem partners before Agratas reaches scale. Industry executives said battery sourcing, pack integration and localisation strategies continue to be refined as the programme progresses.
The Avinya programme is also emerging as a visible outcome of closer collaboration between Tata Motors and JLR. Over the past two years, the two companies have expanded cooperation across engineering, sourcing, electrification and software development. Industry executives believe the recent movement of Balaje Rajan to a larger role in the UK, first reported by Autocar Professional, is part of a broader effort to improve alignment across future vehicle programmes and technology initiatives.
Beyond Avinya X, Tata Motors is evaluating a larger three-row premium electric SUV as part of the Avinya family. The vehicle is expected to follow the first model and help establish Avinya as a standalone premium EV brand rather than a single-product programme.
Industry sources said the Chennai-Ranipet ecosystem is expected to play a key role in production. The assembly facility, already operational with a capacity of around 30,000 units a year, is likely to support initial manufacturing activities before localisation increases.
The facility could eventually assume greater significance. Sources indicated that JLR is also expected to leverage the broader architecture family for future global products, creating opportunities for shared sourcing, manufacturing and supplier investments between the two businesses.
Industry executives also pointed to another potential advantage. Chery is expected to supply architectures to multiple partners globally, including its proposed ventures in India. If products based on the same architecture family are eventually adopted by other manufacturers, including JSW Motors for future programmes, it could help create greater component commonality, improve supplier economics and accelerate localisation of key aggregates and systems in India.
Brofessor sb, Your country has been working with China for decades, including a decade of CPEC. How has it worked out for your manufacturing? Regards
Brofessor sb, Pakistan govt has been trying to increase its exports since 2007 when we first became colleagues on chowk. How has it worked out? Any reasons to believe that the future will be any different? Regards
The solarisation of Pakistan’s energy economy | Ember
https://ember-energy.org/latest-insights/the-solarisation-of-pakistans-energy-economy/
Highlights
+21%
Growth in national electricity demand in just two years, enabled by distributed solar.
22%
Pakistan’s true electrification rate, which now matches the global average
+27
Gigawatts of distributed solar deployed in just two years, the same as all the operating coal, gas and oil plants built in Pakistan ever.
About
This report examines Pakistan’s consumer-driven distributed solar transition, highlighting that it represents a broader energy system transformation rather than simply a change within the power sector. It maps approximately 38 GW of installed capacity across four sectors – residential, industrial, agricultural and commercial focusing on FY23 (July 2022-June 2023)-FY25 (July 2024-June 2025) and tracing the distinct role solar has played in each: unlocking suppressed demand, displacing fossil fuels, and absorbing demand growth outside the grid. This study also looks ahead at the next frontiers of solarisation across these sectors and transportation, where electrification has yet to meaningfully take hold.
Speaking of cars again, I just came across the below news in today's DAWN.
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"15,000 used cars get clearance window"
https://www.dawn.com/news/2010874/15000-used-cars-get-clearance-window
Industry sources report that an estimated 15,000 vehicles — roughly matching the entire annual sales volume of a major local manufacturer — are expected to arrive under this specific exemption window. Representatives contend that the sudden waiver bypasses the global safety and environmental standards established to protect Pakistani consumers on the road.
Auto sector experts express deep concern over the economic fallout of the policy relaxation, estimating that the influx will drain $180 million from the national exchequer via unofficial flight channels, worsening the national import bill.
The local vendor industry expects a substantial blow, with anticipated losses reaching Rs22 billion for automotive part manufacturers and a subsequent Rs8bn deficit in government tax revenue.
With local assembly plants already operating at a heavily restricted 50 percent capacity due to economic pressures, industry analysts warn that such unpredictable policy reversals risk permanently fracturing foreign investor confidence.
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I have no idea why the Pakistani authorities have long allowed used car imports since this only serves to reduce demand for locally manufactured/assembled cars in an already small market, with the end result that without the economies of scale (that comes with greater demand) the manufacturers/assemblers have little incentive to invest in localization and instead turn to CKD assembly, thereby raising prices of locally produced cars. If I'm not mistaken, even an entry-level hatchback like the Suzuki Alto sold in the Pakistan is mostly assembled from CKD kits imported from Japan which could be the reason it costs twice as much as the heavily localized counterpart sold in India.
India on the other hand had followed a strict policy of discouraging car imports (both used and new) with heavy import duties that incentivised local manufacturing.
Report of another Chinese-linked investment into India's auto industry as Horse Powertrain - an ICE and hybrid powertrain manufacturer jointly owned by Renault and Geely - is seeking govt approval to set up a plant to manufacture strong-hybrid powertrains for Renault and Nissan (and potentially other car manufacturers as well) in the Indian market.
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"Renault-Geely joint venture expected to manufacture hybrid powertrains in India"
https://www.autocarindia.com/car-news/renault-geely-joint-venture-expected-to-manufacture-hybrid-powertrains-in-india-440053
India is expected to approve an investment of around USD 370 million (approximately Rs 3,500 crore) by Horse Powertrain, a joint venture between Renault and Geely, according to a Bloomberg report. If approved, the investment would rank among the largest manufacturing investments by a Chinese-linked company in India in years and allow Horse to invest in Renault's manufacturing operations in Chennai.
Horse Powertrain was established in 2024 as a joint venture between Renault and Geely. Saudi Aramco later acquired a 10 percent stake, leaving Renault and Geely with 45 percent each. The proposed investment also comes weeks after Renault announced plans to separate its powertrain manufacturing business into a dedicated entity in India as part of a broader restructuring of its local operations.
According to Bloomberg, the investment will be implemented in phases, beginning with Renault's Chennai plant. Horse plans to manufacture strong-hybrid powertrains and engines locally for future Renault and Nissan models sold in India, increasing localization and reducing reliance on imported components.
The upcoming Renault Duster Hybrid will use a 1.8-litre strong hybrid powertrain that's developed by Horse powertrain. The Bridger compact SUV, expected to follow the Duster, is likely to receive a Horse powertrain too.
The investment also comes as hybrid vehicles gain traction in India, with several manufacturers expanding their electrified SUV line-ups.
The approval would be among the first major Chinese-linked manufacturing investments since India eased foreign investment rules for neighboring countries earlier this year to encourage more local manufacturing. A Chinese automaker has not made a major investment in India since 2017, when state-owned SAIC Motor Corp. acquired a General Motors Co. plant to launch the MG Motor brand. That venture has since been restructured and is now majority-owned by Indian shareholders, led by JSW Group.
Speaking to Autocar India earlier this year, Carolina Mechai, Chief Sales and Business Development Officer at Horse Powertrain said the company was evaluating multiple routes to expand its presence in India beyond Renault. "We are discussing with our key partner and customer here (Renault), but also with other partners. It could be through development or co-development," she said, adding that local manufacturing could eventually support exports from India.
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Zehra Farooq
@ZehraFarooq
On January 20, 2022, Pakistan's GDP grew by Rs 8.1 trillion overnight. Not a single factory opened. Not a single additional tax was collected. Public debt, frozen at Rs 39.9 trillion, did not change by a single rupee. But the debt-to-GDP ratio fell from 83.5% to 71.8%, instantly.
This is a thread about the institution behind that number, and why it urgently needs to be better funded
https://x.com/ZehraFarooq/status/2070915475232702960?s=20
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Zehra Farooq
@ZehraFarooq
The Pakistan Bureau of Statistics is the most consequential institution most Pakistanis never think about. It computes GDP, tracks inflation, counts us in the census, and tells us how many people are poor, what they earn, and how they spend.
Every IMF negotiation, every monetary policy decision, and every poverty programme in this country is built on PBS data. When the numbers are imprecise, so is the policy that follows from them.
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Zehra Farooq
@ZehraFarooq
This thread is built on seven consecutive years of official budget documents, Demands for Grants Vol. III, from FY2018-19 through FY2026-27, extracted line by line across all 35 PBS offices nationwide. The pattern you are about to see is not the story of a bad year or two. It is structural.
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Zehra Farooq
@ZehraFarooq
Nine panels of seven years of data tell a consistent story. Total expenditure has grown from Rs 1.4 billion in FY19 to Rs 5.1 billion in FY27, which sounds like progress until you see that 71 paisa of every rupee still goes to salaries.
In FY23 that figure hit 91%, leaving nine paisa for everything else, travel, equipment, occupancy, and all operations combined. Travel as a share of the employee budget has never exceeded 14% in any year across this entire dataset. In FY23 it fell to 1.9%.
The institution doubled in nominal budget and remained structurally unable to sustain the fieldwork its mandate requires.
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Zehra Farooq
@ZehraFarooq
Budget 2026-27 allocates PBS a total of Rs 5.41 billion to run 35 offices and maintain 3,364 sanctioned posts. Of that, Rs 3.62 billion, 71%, goes to salaries and allowances before a single enumerator steps into the field.
The travel and transport budget, which funds all field data collection across the entire country, stands at Rs 298 million. The computer equipment maintenance budget is Rs 12 million. The capital investment budget for new equipment is zero.
PBS runs CPI from 35 cities, SPI from 17 cities every week, a quarterly Labour Force Survey, national accounts, and multiple sectoral data exercises on these allocations. This is a payroll that has been structured to look like a statistical agency.
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Zehra Farooq
@ZehraFarooq
Going back to January 20, 2022 when Pakistan rebased its national accounts, updating the reference year from 2005-06 to 2015-16.
Note that rebasing is standard and necessary practice, the IMF recommends doing it every five years, and Pakistan's base year was long overdue for an update.
The mechanics are straightforward: rebasing recalculates the economy's structure using more recent prices and broader sectoral coverage. The problem is that Pakistan lacked the underlying surveys to do it rigorously. There was no new livestock census, and no establishment survey adequately covering the informal sector.
The result was that GDP for FY2020-21 jumped from Rs 47.4 trillion to Rs 55.5 trillion overnight, the debt-to-GDP ratio fell from 83.5% to 71.8% without a single rupee of debt being repaid, the FBR tax-to-GDP ratio worsened from 9.6% to 8.5% because the denominator grew, and the FY21 growth rate was revised upward from 3.9% to 5.37%.
Nothing changed in the economy except for the measurement.
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Zehra Farooq
@ZehraFarooq
Had Pakistan never rebased in 2022, GDP in FY26 would read roughly Rs 108 trillion on the old methodology.
The official figure is Rs 126.9 trillion. That Rs 18.5 trillion gap is not real economic output, it is methodological uplift, and once embedded in the denominator, it automatically improves every ratio a government cares about. The sitting government at the time revised the FY21 growth rate from 3.9% to 5.37% overnight. Political fortunes and statistical choices were, as ever, deeply entangled.
https://x.com/ZehraFarooq/status/2070916736598303173?s=20
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Zehra Farooq
@ZehraFarooq
Legitimate concerns were raised about the quality of the 2022 rebasing. The livestock sector increased 18% at the base year without a livestock census to justify it. The construction sector was likely overstated by over 30% relative to available cement output data. The electricity sector showed a 75% jump in value added despite a circular debt crisis that implies distribution losses, not gains.
To be clear, I am not making an argument against rebasing — it is an argument for doing it properly, which requires better underlying surveys, which requires investing in
@PBSofficialpak
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Zehra Farooq
@ZehraFarooq
An here is more evidence of why: in FY2022-23, Pakistan's CPI averaged 29.2%, the highest since the 1970s. The State Bank used that number to set interest rates, the government used it for wage indexation, and the IMF used it for programme conditionality. In that same year, PBS had Rs 43 million to fund all field travel across all 35 offices for every survey it runs.
A back-of-envelope calculation makes the problem concrete: CPI collection across 35 cities, done to minimum international standards, requires roughly Rs 80 to 100 million in annual transport costs alone. Add the weekly SPI across 17 cities and the quarterly Labour Force Survey, and you are well past Rs 200 million before anything else is funded.
At Rs 43 million, the numbers do not add up. Something was cut, and the quality of Pakistan's most cited economic indicators in its worst inflation year in a generation was the consequence.
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Zehra Farooq
@ZehraFarooq
There is more: the HIES — the Household Integrated Economic Survey, which is Pakistan's only reliable source of poverty measurement, consumption data, and income distribution, was not fielded for six years.
It was last conducted in 2018-19 and completed again only in 2024-25.
Those six years encompassed the COVID income collapse, catastrophic floods, 29% inflation, a near-default, and the largest real wage contraction in a generation. Pakistan has no direct distributional evidence of any of it. The CPI basket still reflects 2015-16 consumption patterns. The World Bank estimated that roughly 9 million Pakistanis fell below the poverty line in 2022 alone.
Pakistan had no domestic survey data to verify, challenge, or refine that number.
Zehra Farooq
@ZehraFarooq
Budget 2026-27 allocates PBS Rs 5.41 billion to measure and report the statistics of a Rs 126.9 trillion economy. That is less than 0.004% of the GDP it is responsible for measuring.
India's NSO operates at roughly ten times Pakistan's relative statistical spend as a share of GDP. Even Bangladesh's statistical bureau receives comparable proportional funding.
Pakistan is asking its statistical agency
@PBSofficialpak
to run a 240-million-person economy's data infrastructure on the annual budget of a mid-sized university department, and then making consequential decisions about taxation, energy pricing, and social protection based on what that agency is able to produce.
https://x.com/ZehraFarooq/status/2070917509218554201?s=20
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Zehra Farooq
@ZehraFarooq
The ask is not complicated.
Field the HIES on its original biennial cycle and protect that budget line from being crowded out when the next census comes. Increase operational and transport allocations to what surveys actually cost when done to international standards. Rebase the national accounts with proper underlying survey infrastructure so the numbers reflect the economy rather than a methodology change.
And invest in PBS's institutional capacity before the next macro crisis makes the data gaps visible again, by which point it will already be too late. Pakistan cannot run a data-driven state, make an honest case for its own economic performance, or design reforms that reach the people they are meant to reach, without a properly funded statistical system. Budget 2026-27 gives PBS Rs 5.41 billion.
The conversation that funding either enables or forecloses is worth considerably more - we need to measure before we govern.
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Pakistan Electricity Consumption Up 21% in Just Two Years
Pakistan is experiencing soaring demand for electricity across all of the sectors of its economy. The new demand is being met by rapidly growing deployment of distributed solar, estimated at 38 GW as of June, 2025. In 2025, 44% of solar deployment was residential, followed by industry (26%), agriculture (21%) and commercial users (9%). The expansion of distributed solar has enhanced electrification across the economy, lifting Pakistan's electrification rate to 21.7% in FY2025 from 17% in FY2023, close to the global average of 22%. This surge to over 200 terawatt-hours of electricity is not reflected in official data, according to a report by Ember Energy titled "The solarization of Pakistan's energy economy".
https://www.riazhaq.com/2026/06/pakistan-electricity-consumption-up-21.html
Out of School Children: ASER Pakistan Reports Substantial Increase in Enrollment
The Annual Status of Education Report (ASER) Pakistan 2025 national report, officially released on March 26, 2026, shows that the number of "Out of School Children" (OOSC) aged 6-16 years in Pakistan is now 5 million, not 25 million generally reported. "The findings on access are encouraging. Enrollment levels are high, with 92.2 percent of children aged 6–16 in school and only 7.7 percent out of school", says the ASER Pakistan 2025 report. ASER Pakistan is a citizen-led initiative, primarily led by Idara-e-Taleem-o-Aagahi (ITA) in collaboration with various national and international partners to promote foundational learning. It also works closely with over 10,000 volunteers and numerous local civil society organizations such as the Aga Khan Foundation (AKF), PAL Network (People's Action for Learning), UNESCO and federal and provincial government departments in Pakistan.
https://www.southasiainvestor.com/2026/04/out-of-school-children-aser-pakistan.html
Pakistan Household Survey HIES 2024-25 Raises More Questions Than It Answers
Recently released HIES 2024-25 household integrated economic survey by Pakistan Bureau of Statistics (PBS) raises more questions than it answers. For example, it shows that Pakistani households are buying lower amounts of basic food ingredients like wheat, meat and eggs in the last four years, implying that people are eating less to cover other expenses, like electricity and gas. But it doesn't explain why the households have reported significantly lower purchases of these items than production reported recently by the PBS. What is the source of this discrepancy? Is the data flawed? Or, is it missing a new trend toward less home cooking? Is the young urbanized population buying more prepared foods? Are they ordering out more often using ubiquitous food delivery services? Let us try and understand it in more detail.
https://www.riazhaq.com/2026/01/pakistan-household-survey-hies-2024-25.html
Can Technology And Skills Change Pakistan’s Growth Story? – OpEd
July 2, 2026 0 Comments
By Ali Mehar
https://www.eurasiareview.com/02072026-can-technology-and-skills-change-pakistans-growth-story-oped/?__cf_chl_f_tk=J17lfFyuEEvC0vyZ5p97GUW_u4nUsZfNW7ZP4spnXZg-1783096154-1.0.1.1-ly2SzpZOrldl1lxLlQMt5Gg11fWt4RTtQzVluwHInn0
Pakistan’s future will not be decided just by the size of its problems, only by how seriously it turns its strengths into national power. For decades, the country has been described through crisis, debt, energy shortages, climate vulnerability, weak productivity, and governance gaps. These challenges are still real and they cannot be wished away. However, there is another Pakistan showing up too: younger, more connected, more entrepreneurial, more digitally aware and increasingly mindful about sustainable development. The real chance now is to match this human energy with technology, clean power and modern farming practices.
Pakistan’s demographic picture gives it this kind of unusual, quiet advantage. Over 60 percent of Pakistan’s people are below age 30. That “youth bulge” can turn into a drag, if they’re left without work and without proper training. Or it can be, sort of the most reliable engine of growth, if they’re given practical know-how and tied into global markets. With more than 100 million internet users, Pakistan already has the basic digital floor to widen online work, technology exports, e-commerce, remote services, and even new kinds of digital entrepreneurship. So the mission is not really to argue that Pakistan has talent. The real challenge is organizing that talent into something like a productive economic force.
The rise of IT and freelancing basically shows what can happen when young Pakistanis get connected to opportunity. Technology exports hovering around US$4.2 billion during the first eleven months of fiscal year 2025–26 signals a big change in how the economy is moving. And IT exports aren’t only a few figures sitting on a balance sheet. They’re the software houses, startups, coders, designers, AI specialists, cloud engineers, and business process professionals earning income from international clients. In a country that’s often under strain due to foreign exchange shortages, every dollar made through knowledge-driven exports helps reinforce economic resilience.
Freelancing has become this more visible sign of the whole transformation, like you can actually see it now. Pakistani freelancers bringing in roughly US$1.6 billion during the first eleven months of FY2025–26 suggests that the digital economy is cracking open doors beyond the usual job arrangement. This matters, a lot, for a country where government-sector positions are limited and the private sector still does not take in enough people. Freelancing lets young folks monetize abilities from homes, small towns, universities and co working spaces, sort of in a low barrier way. It also gives women and students a flexible route toward income, especially when movement is hard, social barriers are real, or local hiring is just not there.
The following is a fintech and wider digital economic development view of the South Asian nation of Pakistan in 2026.
By Richie Santosdiaz
https://thefintechtimes.com/fintech-landscape-of-pakistan-in-2026/
Pakistan’s fintech story cannot be separated from the country’s wider economic challenges. For years, Pakistan has faced recurring balance-of-payments pressures, high inflation, currency volatility, fiscal constraints and the difficult task of expanding formal economic participation across a population of more than 240 million people. These structural pressures have shaped almost every part of the economy, including financial services.
That is why fintech in Pakistan matters. It is not simply about digital wallets, payment apps or startup valuations. It is about whether technology can help make one of South Asia’s largest economies more efficient, more inclusive and more formalised.
“Is Fintech the Key to Economic Revival in Pakistan?”was written by me and it highlighted how fintech could support financial inclusion, digital payments, small and medium enterprise (SME) finance, remittances and broader economic recovery. That argument remains highly relevant today, particularly as Pakistan continues trying to move more economic activity into formal and digital channels.
Pakistan’s economic scale is significant. Pakistan’s gross domestic product (GDP) stood at around $371.6billion in 2024, while GDP per capita was approximately shy of $1,500. The economy is supported by agriculture, textiles, manufacturing, services, remittances, construction, telecommunications and a large informal sector, all according to the World Bank. Karachi remains the country’s financial centre, Lahore is a major commercial and technology hub, and Islamabad serves as the political and regulatory capital.
Yet Pakistan’s biggest fintech opportunity may lie outside its formal banking system. Millions of people remain underbanked or financially excluded. The World Bank’s Global Findex Database continues to highlight the importance of account ownership, digital payments and mobile-enabled finance in expanding financial inclusion globally. In Pakistan, the gap between population size and formal financial usage remains one of the most important development challenges facing the sector.
This is where digital finance can have an outsized impact. A bank branch-based model alone cannot serve Pakistan’s entire population efficiently. Geography, income levels, informality and documentation barriers all limit traditional banking reach. Digital wallets, agent networks, mobile accounts and instant payments therefore offer a more scalable path to inclusion.
Payments are the clearest example. Pakistan has spent the past several years building the foundations for a more digital payments economy. The State Bank of Pakistan’s Raast Instant Payment System has become one of the country’s flagship financial infrastructure initiatives, designed to enable low-cost, real-time digital payments between individuals, businesses and government entities. The creation of Raast Payments Pakistan Pvt. Ltd. further signals the central bank’s ambition to institutionalise and expand the country’s digital payments infrastructure.
This infrastructure matters because payments sit at the heart of formalisation.
When salaries, merchant transactions, remittances, utility bills and government payments move digitally, they create records. Those records can support credit scoring, taxation, consumer protection and better financial planning. In a country where cash and informality remain deeply embedded, digital payments can gradually change the structure of economic participation.
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