Pakistan's electricity demand has soared 21% in just two years. Rapid electrification is positively impacting all sectors of Pakistan's economy. thanks to 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%). It is stimulating demand for a variety of products ranging from air conditioners and refrigerators to washing machines and electric scooters/motorbikes. As a result, Pakistan’s Large-Scale Manufacturing (LSM) sector grew by 6.5% in the fiscal year, rebounding from a –0.69% contraction the previous year. The fiscal year saw a 61.66% surge in automobile production.
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| Impact of Solar Energy Revolution in Pakistan |
Soaring electrification is accelerating sales of electric vehicles and home appliances in Pakistan. Electric vehicle adoption is exploding in the two-wheeler sector due to soaring fuel costs and the new Pakistan Accelerated Vehicle Electrification (PAVE) program. Electric-bike registrations surged by 322% year-on-year with cumulative sales reaching 125,511 units by May, capturing over 10% of the monthly two-wheeler market. In the first half (H1) of 2026, Haier achieved an all-time record by selling 690,000 AC units—surpassing its entire sales volume for the full year of 2025. Haier alone commands over 45% of the total market share in Pakistan. The country's refrigerator market accounts for 56% of its major household appliances sector. Market penetration sits around 51-56%, with unit sales expected to surge 20% to 339,000 units in CY26.
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| Solar Deployment in Different Sectors. Source: Ember |
Mass deployment of solar energy is helping Pakistan's economy become more resilient to external energy shocks, such as the Strait of Hormuz crisis. It is making energy affordable for the ordinary folks. Increased energy availability and security are transforming almost all sectors of the economy, which is not reflected in the official statistics provided by the Pakistan Bureau of Statistics.
Related Links:
Pakistan's Digital Public Infrastructure
Pakistan Projected to Be World's 6th Largest Economy By 2075
Pakistan's Electricity Consumption Up 21% in Just Two Years
Pakistan's New Infrastructure Investments and Trade Routes
ASER Pakistan Reports Substantial Progress in Enrolling Out-of-School Children
Pakistan Household Survey Raises More Questions Than It Answers
Pakistan at 75
Growing Presence of Pakistani Women in Science and Technology
Riaz Haq's Youtube Channel
25 comments:
- "Rapid electrification is positively impacting all sectors of Pakistan's economy.. It is stimulating demand for a variety of products ranging from air conditioners and refrigerators to washing machines and electric scooters/motorbikes."
The positive impact of "electrification" on the economy ultimately depends on whether its powering the expansion of domestic production and exports, or whether its simply accelerating consumption of imports. For instance, how much of these A/Cs, refrigerators, washing machines and EVs on sale are "manufactured" from domestic sources (as against CKD assembly and imports)?
If the net outcome of "electrification" were to drive up the country's import bills more than its export earnings and remittances, the net impact on the economy would be negative with yet another balance of payments crisis and IMF bailout.
On a general note, higher consumption (or even higher living standards) does not necessarily equate to sustainable economic growth or stability. An example of this seeming paradox is Kerala, my home state. Kerala has very high living standards in comparison to other Indian states and likely tops the country in the per-capita consumption of electricity, food and industrial items, and other consumer products. But the state is a net importer of nearly all consumables and contributes very little to the country's exports. Much of Kerala's affluence is instead supported by remittances sent by legions of Keralites who work outside, either abroad in other countries or in other industrialized states of the country. (Kerala has a very high proportion of expatriates in relation to its population.) The state government here is essentially bankrupt with its only source of revenues being sales of lottery and liquor, and taxes on fuel. It borrows money to pay salaries and pensions to state govt employees and to fund social welfare programmes. This is in stark contrast to the neighbouring Tamil Nadu state which, while less affluent than Kerala, is a highly industrialized state that contributes a large part of country's GDP and industrial exports.
If Kerala were a country, even with all its affluence it is highly likely it would have been right behind Pakistan in the queue for an IMF bailout. Being part of a larger country that supplies it with all the essentials is all that sustains Kerala's consumption-driven economy and help support its relatively affluent lifestyle.
Now, one might argue Kerala is only a state in India and its situation cannot be compared to an independent country. Though Kerala is the smallest and least populated state of southern India, it still has a population that is bigger than Sri Lanka and Nepal. (In fact, with its reputation of high social development and living standards, and dependence on worker remittances and tourism as sources of revenue, Kerala's social and economic situation can in many ways be compared to that of Sri Lanka.)
So, the bottom line - beware of higher consumption and demand, if that were sustained by imports rather than domestic production and export revenues.
Riaz,
I hope you are doing well and fully recovered.
A great article, as always.
I have my own stories of electrification. What it has done, what i think it will do because I have been visiting Pakistan about three times a year.
Will chat someday.
Jalil,
I’m doing well.
I’d love to your first hand account of the impact of fast electrification in Pakistan.
Electrification in developing countries catalyzes socioeconomic growth by enhancing public health, boosting agricultural and business productivity, and improving educational outcomes. By replacing polluting fuels, it prevents respiratory illnesses, while grid access powers reliable refrigeration for clinics and allows children to study after dark.The profound advantages of electrification extend across several vital pillars of development:Public Health and Environment: Access to electricity eliminates the need for kerosene lamps and indoor wood-burning stoves, significantly reducing severe household air pollution and dangerous burn hazards. It also enables 24/7 emergency services, safe vaccine storage, and the operation of water pumps to provide clean, potable drinking water.Education and Gender Equality: Electric lighting extends study hours for students, particularly in rural areas. Furthermore, it reduces the time women and girls spend gathering traditional, manual fuels (like wood and dung), allowing them to pursue education or formal employment.Economic Development: Electrification powers microenterprises, cold storage for farmers, and modern manufacturing. While short-term income gains are often localized, studies on universal access projects (like those modeled by the UNDP Data Futures Exchange) estimate massive long-term GDP growth.Modern Transportation (E-Mobility): Transitioning to electric two-wheelers, three-wheelers, and buses in urban centers drastically lowers operating and maintenance costs for low-income commuters compared to traditional internal combustion engines.
Just to clarify, the gist of my comments above was not regarding the benefits of electricity over fossil fuel burning with regards to environment and public health, but the statement in the writeup that highlighted increasing demand for A/Cs, refrigerators, washing machines etc as evidence of the positive effect of "electrification" on the economy. My take is that for a country in Pakistan's economic situation that faces recurring balance of payments issues over import bills exceeding the ability to pay for it, such increase in sales of household appliances can only be considered beneficial for the economy if the increasing demand is met via domestic production rather than imports. I do not know whether these A/Cs, refrigerators and washing machines sold in Pakistan are domestically "manufactured" with parts mostly sourced from local suppliers, or "assembled" locally from mostly imported parts, or imported "as is" (i.e CBU). If it is the latter two, the net effect on the economy would be the drain of forex reserves.
As for EVs, in Pakistan's case it seems most of the electric cars and scooters sold in the country are either Chinese imports (CBU or CKD) either under their original Chinese branding or rebranded under Pakistani names. Perhaps such dependency on Chinese imports for "electrification" of transport isn't a big issue for Pakistan from the perspective of strategic autonomy (unlike for India), but unless the drain of forex reserves through such imports is offset by an equivalent or more reduction in oil import bills it could put strain on the country's balance of payments situation. In India, there is an ongoing debate whether encouraging EV sales actually make sense from a strategic perspective if it only serves to replace dependency on imported oil with an even more problematic dependency on Chinese battery tech, particularly so since the manufacture of ICE powertrains have been largely localized in India. As of now, Indian EV makers largely design and manufacture the vehicles domestically, but the battery cells that power them still come from China which skews bilateral trade in China's favour even more.
"Pakistan's economic stability was purchased, and the bill is coming due"
https://www.dawn.com/news/2015800
Khurram Husain
There are many reasons to be bullish about Pakistan these days, not least the hard-fought stability in the external sector following a few years of near-catastrophic depletion of reserves. But there are now a growing number of reasons to be concerned about the underlying fragility of it all.
The stability is real. There is no doubt about that. A wall of high repayment obligations that first loomed into view back in February 2021 and remained persistently high since then has finally started to come down. They not only met all these obligations and paid down their debt, but also built reserves through it all — organically — and not borrowed reserves.
The return of stability to Pakistan’s external sector after the near catastrophic volatility of 2021-2023 is one for the history books. The most ferocious inflationary fire in our history was doused. The most precarious foreign exchange reserves position was rebuilt. The most runaway fiscal train wreck was returned to surpluses on its primary balance. The state saved itself well.
But in order to do so it wrecked the livelihoods of its own people and nearly choked its own economy to death. Inflows were — in fact still are — diverted ruthlessly to state coffers. Interest rates were hiked to historic highs that were unthinkable even a few years ago.
Taxes weighed like a millstone around the necks of firms and wealth creators. Nobody was allowed to make money or breathe too freely during the years the state was busy rebuilding its accounts. That’s the stability they now tell us is their signature success.
Admittedly, nobody wanted to see the instability persist. And now that it has been surmounted, at least to the extent that inflation no longer ravages the land and reserves no longer teeter on the edge of a cliff, it is worth asking whether it has not returned in some other form. Beneath the floor that feels solid, can we feel powerful forces moving?
Some of the persistent instability can now be seen in the growing disaffection of populations along the periphery of Pakistan’s heartland of central Punjab and upper Sindh. This is a disturbing trend and must be taken very seriously. To the extent that it has economic roots, the growing struggle that day-to-day life has become for the common citizenry can be said to lie at the heart of it.
A population immersed in deprivation and misery is more amenable to the message of movements and parties that preach rebellion or advocate the politics of disruption and division. None of the parties fomenting rebellion, disruption or division on Pakistan’s periphery these days can be said to be the carrier of progressive or even pro-people politics. But they are all reaping a harvest of hate that has been nurtured and fertilised with deprivation.
(contd..)
(contd..)
"Pakistan's economic stability was purchased, and the bill is coming due"
https://www.dawn.com/news/2015800
With rising discontentment at home leading to the spread of disaffection, the leadership is stuck in a quagmire. The hard-fought stability they tout as their success rescued the state from the throes of its own non-viability. But now instability has returned and is churning up growing numbers of people and leading them to gather around messages that the state would prefer to stamp out with violence. And the much-vaunted peace dividend has been pushed into a more distant future while there are no organic drivers of growth at home.
This is where the danger lies. The stability we have today was purchased with suppressed demand, and suppressed demand cannot be a permanent state of affairs. Sooner or later, the economy, along with the people, must be allowed to breathe again. And the moment that happens, the old appetites will reawaken — for imports, for credit, for dollars.
The state has built no shock absorbers for that moment. Reserves look healthy against the drought of recent years, but measure them against the import bill of an economy growing at even four per cent and the picture changes quickly. And should the flare-up in the Gulf drag on, and oil prices catch fire the way freight and insurance rates already have, the arithmetic changes quicker still.
The rulers face a choice they would rather not acknowledge. They can hold the economy in its induced coma indefinitely, and watch the harvest of hate on the periphery grow richer with each passing season. Or they can release their grip and risk squandering the stability they paid for with the people’s livelihoods.
None of these are palatable. Hence the situation is now best described as a quagmire. What they cannot do is continue to celebrate. The floor beneath their feet may feel solid, yes. But the ground below it is moving.
Chen Zhou Katrina
India’s services exports are set to overtake merchandise exports for the first time: $421 billion versus $442 billion in FY2025–26. Services already cover nearly two-thirds of India’s goods trade deficit.
I’ve long argued that India has the same weakness in services and manufacturing, it does increasingly sophisticated work for global companies but creates too few Indian companies that own the final products.
India now hosts over 1700 global capability centres employing 1.9 million people. Yet some work once outsourced to TCS and Infosys is simply moving into foreign companies’ captive centres. Indian engineers still do the work and India records the export income, while the foreign parent controls how that work becomes a global product.
That is the real story here. India is becoming indispensable to global companies much faster than Indian companies are becoming indispensable to the world.
https://x.com/southernm46171/status/2077999752810320136?s=61&t=mgTxrmITUbpo9NntN5677Q
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India's services exports growth highlights limits of manufacturing Push
https://asia.nikkei.com/economy/india-s-services-exports-growth-highlights-limits-of-manufacturing-push
BENGALURU -- India's services exports are on the cusp of overtaking merchandise exports for the first time, underscoring how the country is increasingly dependent on information technology for growth even as policymakers push to transform the nation into a manufacturing powerhouse.
Services exports reached a record $421 billion in the fiscal year that ran through March, just shy of the $442 billion earned from merchandise exports, according to government data, as export growth in goods slowed down to about 1% amid disruptions from U.S. tariffs and the West Asia crisis in March.
Since coming to power in 2014, Indian Prime Minister Narendra Modi has positioned the country as a manufacturing hub for everything from iPhones to solar panels, particularly as companies and countries look to shift supply chains away from China. But while services exports have grown at a compound annual rate of 9.3% over the past 12 years, goods exports have grown at barely a third of that pace.
Underpinning this shift has been the rise of IT services companies such as Tata Consultancy Services and Infosys, which have captured outsourced tech spending, and more recently global capability centers (GCCs) -- entities owned by multinationals handling tasks such as IT development, research and data science.
"If current growth rates persist, services exports could overtake goods exports next year, making services India's bigger export category for the first time," said Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).
The crossover would mark a symbolic shift in the structure of the Indian economy. Economists say the resilience of services exports has helped cushion India's widening merchandise trade deficit, easing pressure on the country's external account. However, they warn that relying too heavily on the IT sector -- parts of which are seen as threatened by the rise of artificial intelligence -- risks leaving India without the manufacturing growth needed to create millions of jobs and diversify exports.
In the April 2025 to February period, services exports generated a net surplus of $201 billion, which offset 64.7% of the merchandise trade deficit, according to an analysis of trade data by the government's top think tank, NITI Aayog.
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These factors, combined with India's relatively low wages, have led to a GCC boom in the country. There are more than 1,700 of the centers, employing over 1.9 million people, according to the government.
Still, economists point to weaknesses in the services sector, such as an overreliance on IT services and the U.S. market, which have left the middle class it once powered vulnerable to a slowdown in job creation as more and more businesses rely on AI to automate and shorten tasks.
- "But while services exports have grown at a compound annual rate of 9.3% over the past 12 years, goods exports have grown at barely a third of that pace."
It shouldn't be surprising that goods exports (especially from industrial manufacturing) aren't growing as fast as services exports like IT. For IT services exports all that is needed are PCs, net connectivity and an office. If people are doing WFM or freelancing, even an office infrastructure becomes unnecessary. On the other hand, manufacturing is more capital intensive as you need to find land, establish a factory with necessary machinery and arrange supply of raw materials and components. It takes a lot of time and effort to establish a manufacturing ecosystem.
Having said that, India's weaknesses in manufacturing (in comparison to China) are nothing new. After the socialist years when manufacturing growth was shackled under the License Raj (with govt even limiting how many two-wheelers and cars can be produced in a year by private firms), Indian leadership chased IT as the magic bullet for economic modernization in the '90s while manufacturing continued to be under relative neglect. It apparently didn't dawn on them that service sectors like IT largely benefit those relatively well off and having a college degree, while manufacturing can give jobs to the poor and those with only basic school education and thereby lift their living standards. One of the results of this lopsided approach is India's acute weakness in many areas of manufacturing like electronics. To make it worse, Indian IT industry remain stuck in outsourcing and services (as that guaranteed quick and easy money) but had no long term vision in terms of product development. Thus they were eseentially caught blind-sided by the AI boom.
But it also needs to be pointed out that some sectors like automobile manufacturing have bucked this trend and has been able to mature and spread its wings in recent times. Starting out as licensed manufacturers of foreign models or as local manufacturing partners for Japanese brands, Indian auto companies like Tata, Mahindra, Hero, Bajaj, TVS, Royal Enfield, Eicher, Ashok Leyland etc have established themselves as independent manufacturers with a steadily growing global footprint (though they are still a long way from reaching the scale of their Chinese counterparts). India's challenge is to find a path to replicate this success in other sectors of manufacturing.
A bit off-topic, but even as India's space agency ISRO is reeling from back-to-back failures of its worhorse PSLV rocket and mass resignations of its experienced scientists/engineers leaving for better opportunities in the private sector, a private Indian space startup Skyroot staffed mostly by youngsters conducted the inaugural orbital flight of their small satellite rocket Vikram-1 that successfully put its payloads into orbit.
https://www.reuters.com/science/indias-skyroot-launches-vikram-1-first-private-orbital-rocket-mission-2026-07-18/
https://youtu.be/lucZzdzGmRI?si=ITFb31ZsJauuuTWX
Quite remarkable I would say, since they were a young team (but no doubt helped and guided by retired and serving ISRO personnel) and this was their very first orbital launch attempt.
While China already has a plethora of private launch providers that has been supported by its govt, India is attempting to follow the same playbook and has atleast two private contenders - Skyroot and Agnikul Cosmos - actively developing small SLVs. But the bigger challenge than developing these rockets is their integration in a larger domestic space ecosystem and have them compete with each other and coexist with govt entities in a sustainable way. China has seemingly accomplished it. India's success at privatization of its space industry remains to be seen.
As Vikram-1 reaches orbit, Skyroot faces a steep climb to business success
https://www.thehindu.com/business/as-vikram-1-reaches-orbit-skyroot-faces-a-steep-climb-to-business-success/article71238228.ece
A single launch — crucial though it is — will not catapult Skyroot to success. The global small-satellite launch market is evolving and there are still considerable challenges, including domestic demand and market uncertainties
Updated - July 19, 2026 08:03 am IST
Vasudevan Mukunth
India had its first private orbital rocket launch at 12.05 p.m. on July 18. So far, all orbital rockets India had launched as part of its space programme had been state-funded and led by the Indian Space Research Organisation (ISRO). Hyderabad-based Skyroot Aerospace changed that by launching its small-satellite launch vehicle Vikram-1 to a low-earth orbit. The mission has been dubbed ‘Aagaman’, Hindi for ‘arrival’.
Since 2020, the Indian government has opened the domestic space sector to private companies by creating institutions such as IN-SPACe and allowing private firms to build launch vehicles and use ISRO infrastructure. Thus far, worldwide, only a small number of private companies have successfully developed orbital launch vehicles, including SpaceX, Rocket Lab, Firefly Aerospace, and a clutch of Chinese firms. A similarly short list of others, including ABL Space Systems and Isar Aerospace, are still searching for success.
Significant feat
A successful first flight is a significant feat. Many rockets, including the storied Falcon 9, have failed their maiden flights. But the same feat also shows the full context in which Skyroot is now operating. As a commercial entity, a single launch — crucial though it is — will not catapult the company to success. The global small-satellite launch market is evolving and there are still considerable challenges, including domestic demand and market uncertainties.
Former ISRO engineers Pawan Kumar Chandana and Naga Bharath Daka founded Skyroot Aerospace in 2018. It had its first milestone in 2022 when it successfully launched Vikram-S, the first privately developed Indian rocket on a suborbital flight.
Vikram-1 is a four-stage rocket. The first three stages use solid fuel and the fourth uses liquid fuel. Skyroot has said that once its manufacturing has been streamlined, it will be able to produce one Vikram-1 rocket per month.
Mission Aagaman was a developmental flight of Vikram-1. This means the company tested the rocket by putting it through its paces, especially to check parameters that cannot be fully understood unless the rocket is flying. According to the company, Mission Aagaman was to validate stage separation, propulsion, guidance and navigation, structural performance, avionics, fairing deployment, upper-stage separation, and orbital insertion.
Inserting itself into the intended orbit would have been the mission’s hardest part, as the launch vehicle would have had to accelerate to high speed while maintaining its guidance and propulsion.
It also carried some payloads, although the primary mission focused on the rocket itself. Vikram-1 has a payload capacity of 290 kg to a 500-km sun-synchronous orbit and 480 kg to a low-inclination orbit at similar altitude. Skyroot has said it will have two more developmental flights after this before the rocket will be deemed market-ready.
“The company’s roadmap includes Vikram-2, capable of carrying up to 1,000 kg to low-earth orbit, with its maiden flight targeted for 2027, and a fully reusable launch vehicle, with both booster and upper stage engineered for recovery and reuse,” the company said in a post-launch statement.
(contd..)
(contd..)
https://www.thehindu.com/business/as-vikram-1-reaches-orbit-skyroot-faces-a-steep-climb-to-business-success/article71238228.ece
Building a business
Building rockets is one thing. Building a business is another — and arguably significantly more valuable. Broadly, the small-satellite launch market in which Skyroot is hoping to excel has become challenging. A successful business today requires growth as well as industrial maturity and access to demand.
In the half-decade until 2021, many forecasts anticipated a boom in the demand for launching satellites weighing 100-500 kg. While the demand has grown since, not every entrant has been equally profitable. Launch vehicle revenues have been growing more slowly than those of satellite manufacturing, creating consolidation pressure. The forecast had assumed demand would be diffused across enterprises but following a series of geopolitical realignments, demand is today increasingly concentrated in satellite constellations.
On the cost front, many small-satellite makers are flying their payloads as rideshares on larger rockets, especially the SpaceX Falcon 9. The launch fee has thus dropped dramatically. For added measure, while a launch vehicle dedicated to small satellites will offer flexibility and the option to pick specific orbits to deploy into, satellite-makers still have to pay something of a premium over the lower costs offered by rideshare launches.
The PSLV itself is such a launcher, although public confidence in its abilities has come under a cloud thanks to two successive failures, the reasons for which the government has refused to disclose.
That said, Vikram-1 may have an advantage in the form of India’s lower manufacturing and labour costs, access to ISRO’s infrastructure, and the country’s increasing focus on manufacturing, including of satellites.
Next, startups across Europe, the U.S., China, Japan, and Australia are also developing small-satellite launchers — and many have folded or pivoted away after struggling to secure launch contracts from what is already a small pool of customers. Vikram-1 will also compete with ISRO’s own new Small Satellite Launch Vehicle.
Third, launch services are low-margin and capital intensive, especially when compared to satellite manufacturing, downstream applications, data services, and communications. Then come the costs of compliance for debris mitigation and other regulatory obligations. Of course, Skyroot itself may diversify in future after it has established itself in the sector. India’s own commercial space ecosystem is only just beginning to expand and includes potential future collaborators like Pixxel, Bellatrix Aerospace, and Dhruva Space. Even so, the domestic market remains relatively limited.
Big picture
The big picture is that the Skyroot factory capable of producing 12 Vikram-1 rockets every year will be an asset if there is demand for 12 Vikram-1 launches every year. But even ISRO does not launch 12 small satellites a year today. In other words, Skyroot will have to find and secure international customers.
When it does, it will still have to contend with a simple fact: even when small satellites account for a third of all satellites launched, as some projections have said will be the case in the decade until 2035, they will only account for less than one-tenth of the total launch mass.
None of this diminishes what Skyroot achieved on Saturday. Designing, building, testing, and flying an orbital launch vehicle on the very first attempt is a rare accomplishment anywhere in the world. It is certainly a milestone for India’s private space sector. But it remains that the companies that endure have repeatedly reached orbit through a trustworthy process, at prices customers are willing to pay.
With the success of Mission Aagaman, Skyroot now has an opportunity to build that kind of business.
"Record $2bn CKD imports expose low localisation"
https://www.dawn.com/news/2016604
Pakistan recorded an all-time high import of semi- and completely knocked-down (SKD/CKD) kits by local auto assemblers of over $2 billion in FY26, signalling either low localisation in new and old models amid robust auto sales.
As the local industry awaits the new auto policy after the current policy expires on June 30, followed by changes in taxes and duties in the budget 2026-27 and other policy initiatives, auto sales may remain upbeat in the coming months, in view of a 92pc increase in the import of CKD/SKD kits to $2.118bn in FY26, from $1.101bn in FY25.
Sales of cars in FY26 stood at 155,631 units, while SUV, pickup, van, and jeep sales totalled 50,814 units.
The previous all-time high import of parts and accessories by the assemblers was $1.7bn, recorded in FY22, when car sales stood at 234,180 units, followed by SUV, jeep, and van sales at 45,087 units. Total import bill of SKD/CKD has crossed over $6bn dollars from FY22 to FY26.
Old assemblers claim localisation levels between 50-70pc, but many vendors argue that local parts in new models they are introducing are less than 50pc. Some new players, especially Korean assemblers, claim localisation of 35-40pc, while Chinese players are not ready to share their localisation.
State Bank of Pakistan’s foreign exchange reserves remain under pressure below $18 billion as of July 10.
In the current situation, it is critical that we utilise foreign reserves wisely. An open import policy is not in the national interest and will further strain the economy, said Mashood Ali Khan, auto parts maker and exporter.
To protect local industry and conserve foreign exchange, the National Tariff Policy must be reviewed immediately, he said, adding that a balanced tariff structure is essential to support domestic manufacturing, reduce unnecessary imports, and ensure long-term economic stability.
Pakistan’s local auto parts manufacturers are facing severe challenges due to the increasing import of SKD/CKD kits.
“This trend is alarming for the survival of Small and Medium Enterprises in the auto sector. If the situation continues, many SMEs will be forced to shut down their plants,” he said.
Under the last automotive policy, the government gave Korean and Chinese OEMs the opportunity to operate under a 25pc tariff regime. “Unfortunately, we have not seen these OEMs develop new local auto parts vendors or source from existing manufacturers,” Mashood said.
In the past, this same model helped Japanese OEMs develop over 100 local auto entrepreneurs in Pakistan. “Today, if this continues, not only will small entrepreneurs be wiped out, but thousands of middle-class families dependent on this sector will also be severely impacted,” he said.
The main concern is that new Korean and Chinese OEMs are not sourcing from local manufacturers. We have already seen this pattern before: when old models were discontinued, many local enterprises closed due to lack of orders for new models, he said.
A similar pattern is now emerging in the bus and truck OEM segment, where parts are being imported under CKD and SKD, he said.
“It is therefore critical that the government reviews the upcoming automotive policy. The policy must prioritise local procurement instead of allowing unchecked CKD and SKD imports,” he said.
The current SKD policy, based solely on sub-assembler prices rather than localisation, has already damaged the industry over the last decade.
Given existing funding constraints, the local industry is not in a position to compete with massive imports of CBUs, CKDs, and SKDs. If this is not controlled, Pakistan risks losing its auto manufacturing base within the next decade, as happened in Australia, Mashood feared.
This is a game changer for Pakistan. https://www.dawn.com/news/2016952/china-to-train-03m-pakistani-youths-in-digital-skills-annually-says-ahsan-iqbal
All kids must mandatorily reach Chinese as mother tongue to benefit from this initiative
https://www.dawn.com/news/2016903
Three reports last Friday — a widening food trade gap, return to a current account deficit, and the government’s shift to daily fuel pricing amid renewed Gulf tensions — reveal how fragile Pakistan’s external sector remains, despite the recent macroeconomic stabilisation.
The headline current account deficit of just $139m in FY26 appears reassuring. But the composition of the external account tells an uncomfortable story: Pakistan avoided a large deficit not because it exported more, but because expats sent home $41.6bn. Without those remittances, the external account would have deteriorated sharply. Exports remained largely stagnant. Goods exports declined, while the modest increase in services exports merely offset part of the loss. Meanwhile, imports stayed elevated, producing a merchandise trade deficit exceeding $35bn.
The deterioration in agricultural trade is particularly worrying. Pakistan, an agrarian economy, saw food imports rise nearly 12pc to over $9bn while raw food exports plunged almost 30pc. Rice exports fell sharply. Vegetable exports collapsed by more than half, reflecting the disruption of trade with Afghanistan, once a major regional market. Pakistan was also forced to import unprecedented quantities of sugar after exporting the commodity only months earlier. Edible oil imports continued to rise.
Besides exposing structural weaknesses in agricultural planning, export diversification and food security, these figures also highlight the costs of inconsistent policy decisions that alternately encourage exports and imports of the same commodity under the influence of powerful business lobbies. Increased tensions in the Gulf are exacerbating matters. Pakistan imports roughly three quarters of its energy needs. Higher oil prices inflate the import bill, worsen inflationary pressures and further strain foreign exchange reserves. The decision to shift to daily fuel pricing is in response to this challenge. More frequent adjustments are expected to improve transparency and better reflect international market movements.
Whether daily pricing enhances market efficiency or creates uncertainty will depend on regulatory oversight. The government’s simultaneous stress on EVs shows that it is aware that Pakistan cannot indefinitely remain hostage to imported petrol. However, energy transition policies require consistent incentives and investment certainty, not whimsical reversals. The broader lesson is that stabilisation has bought Pakistan time but not resilience. Record remittances cannot compensate for weak exports, rising food import dependence and vulnerability to imported energy shocks. External shocks continue to expose the same weaknesses.
Sustainable external stability requires a growth model driven by export competitiveness, agricultural productivity, indigenous energy sources and policy consistency. Remittance inflows and administrative management of recurring crises can do only so much.
https://www.dawn.com/news/2016991/auto-policys-mixed-signals
Pakistan’s automobile industry has entered one of its most uncertain phases in over a decade. As part of the government’s tariff rationalisation commitments under the International Monetary Fund (IMF) programme, the protective gap between imported completely built-up (CBU) vehicles and locally assembled completely knocked-down (CKD) vehicles has been sharply reduced to just about 15 percentage points.
While the objective is to liberalise trade and gradually expose domestic manufacturers to greater competition, the industry argues that the reform has fundamentally altered the economics of local vehicle assembly.
“This has narrowed the protection available to local manufacturers who invested under two previous auto policies (of 2016-21 and 2021-26),” notes the chief financial officer (CFO) of a car company, refusing to give his name.
“Investors who established local assembly plants will now be competing against imported vehicles with substantially lower duty incidence.” For decades, Pakistan’s automotive policy relied on tariff protection to encourage companies to assemble vehicles locally rather than import finished vehicles. That protection justified billions of rupees invested in assembly plants, tooling, localisation and vendor development.
Reducing tariffs on imported cars has fundamentally altered the economics of local vehicle assembly.
The CFO argues that this makes local CKD assemblers uncompetitive against imported CBUs, shrinking the incentive to manufacture domestically besides putting tens of thousands of jobs at stake. “Existing manufacturing capacity may become idle, and the vendor industry will face closures while pressure on meagre foreign exchange reserves will rise.” Ali Asghar Jamali, chief executive officer of Indus Motor Company, says the revised tariff structure has created an anomaly where importing a fully built car is actually cheaper than importing CKD kits for local assembly.
“While this current inversion temporarily disincentivises assembling cars locally, I expect the government will step in soon to rectify this anomaly.” The industry’s anxiety is understandable given the achievements of the previous policy cycle. The auto policy 2016-21 marked a turning point by offering incentives to greenfield investors, attracting several new manufacturers and mobilising more than $1 billion in investment in assembly plants.
Greater competition reduced the dominance of the traditional assemblers and expanded consumer choice.
Building on that momentum, the auto policy 2021-26 sought to position Pakistan for the global transition towards cleaner mobility by extending incentives to battery electric vehicles, hybrid electric vehicles, plug-in hybrid electric vehicles, range-extended electric vehicles and fuel-cell vehicles.
That transition, however, now appears to have stalled, at least temporarily.
Former Pakistan Association of Automotive Parts and Accessories Manufacturers chairman Syed Nabeel Hashmi argues that tariff reform should not come at the expense of domestic industry. “Tariff rationalisation should improve competitiveness, not eliminate the economic case for manufacturing in Pakistan,” he says. “If importing a finished vehicle becomes almost as attractive as assembling it locally, investment will naturally move away from production.” The issue extends well beyond tariffs.
Pakistan’s automotive industry supports an ecosystem of more than 2,000 parts manufacturers and tens of thousands of skilled and semi-skilled jobs. A sustained shift from local assembly towards imports would reduce demand for domestically produced components, discourage investment in localisation and technology transfer, and weaken industrial capabilities that have taken decades to build.
“At a time when Pakistan urgently needs industrialisation, foreign direct investment, exports and productive employment, an import-biased tariff structure risks rewarding trading activity over domestic value addition,” notes the CFO.
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https://www.dawn.com/news/2016991/auto-policys-mixed-signals
Policy vacuum
The timing has amplified the industry’s concerns. The tariff rationalisation has taken effect just as the Auto Industry Development and Export Policy (AIDEP) 2021-26 expired on June 30. With its successor yet to be finalised, investors are left without a clear roadmap for the future.
While the broader auto policy is finalised, the government has extended the one per cent sales tax concession for locally assembled smaller electric vehicles (EVs) with battery capacities of up to 50kWh and light commercial EVs up to 150kWh until June next year.
Incentives for hybrids, however, have lapsed.
Sales tax on locally assembled hybrid and plug-in hybrid vehicles above 1,400cc has increased to 25pc, replacing the earlier concessional rates of 8.5pc for engines below 1,800cc and 12.5pc for engines above 1,800cc. Hybrids with a capacity below 1,400cc pay a sales tax rate of 18pc.
Consequently, hybrid technologies now face a tax burden much closer to conventional internal combustion engine (ICE) vehicles following the withdrawal of concessional sales tax. “This effectively stalls the rollout of locally assembled hybrid vehicles by wiping out their price advantage over comparable ICE models,” the CFO says. “Several manufacturers have already suspended CKD imports until there is greater policy clarity. Clarity is essential because automobile manufacturing is a long-term business. Investors commit capital for 15 to 20 years.” Mr Jamali, however, has a different take on this. “The 2021-26 auto policy has officially run its course, and what follows is simply a return to the standard sales tax rates for hybrid vehicles.
Those who invested for these concessions were well aware that the policy was for five years. It is a very straightforward transition.
The path forward is equally simple: either the government formally extends the previous incentives, or they introduce a new policy framework explicitly defining the next phase of support for local assembly. Silence is the only thing keeping the market waiting.” The government’s room for manoeuvres is constrained by its commitments under the IMF programme. Nevertheless, a more balanced approach may still be possible. Industry representatives argue that if the previous concessional sales tax rates cannot be restored, hybrid vehicles — particularly plug-in hybrid electric vehicles — should at least be taxed at the standard 18pc rate rather than the higher rate currently applied.
Such an approach would preserve some incentive for hybrid technologies while remaining more consistent with fiscal constraints.
Industry players argue that trade liberalisation, if pursued without complementary industrial policies, can weaken domestic manufacturing capacity rather than strengthen competitiveness.
The broader strategic question is what kind of automotive industry Pakistan wishes to build.
As Mr Hashmi notes, regional competitors continue to deepen their manufacturing base using industrial policy. India, for instance, continues to attract major investments, including Maruti Suzuki’s reported 35,000 crore commitment for a new manufacturing facility in Gujarat. Pakistan, by contrast, risks sending the opposite signals.
Pakistan needs a credible long-term automotive strategy that provides policy certainty, maintains meaningful incentives for localisation and technology upgradation, and supports the transition to cleaner mobility.
"Aurangzeb seeks $10bn support facility from US"
https://www.dawn.com/news/2017402/aurangzeb-seeks-10bn-support-facility-from-us
Finance Minister Muhammad Aurangzeb on Tuesday asked US Treasury Secretary Scott Bessent to provide Pakistan with $10 billion Exchange Stabilisation Support Facility to help strengthen the national economy.
The request, first reported by Reuters, was confirmed by officials at Pakistan’s embassy in Washington. However, they did not provide any details. The US Treasury also declined to comment.
An official readout issued by the embassy noted that Aurangzeb had sought US support for Pakistan’s road-to-market, based on improved access to international capital markets, higher foreign exchange reserves, and enhanced sovereign credit ratings.
However, the statement made no mention of the $10bn request.
According to the news agency, Islamabad is seeking the bilateral stabilisation facility, with a maturity of up to five years.
The proposed facility would be a financial mechanism under which the US government, through the Treasury’s Exchange Stabilisation Fund, would provide loans or other backstop facilities to Pakistan to bolster its foreign exchange reserves, ease debt pressures, and help stabilise the economy.
Such facilities are primarily used to prevent currency instability and, where necessary, support a partner country’s currency through intervention in foreign exchange markets.
Diplomatic sources in Washington told Dawn there were “strong chances” that the $10 billion stabilisation request would be approved.
One source noted that the Trump administration “has a keen interest in remaining engaged” with Pakistan and has “more than once pledged” to help strengthen the country’s economy.
Pakistan's electricity generation mix has rapidly shifted toward renewable energy, driven by a massive distributed solar boom. As of recent 2025–2026 data, grid-connected and behind-the-meter solar accounts for roughly 25-28% of the country's generation. Overall, low-carbon and zero-emission sources now make up over 55% of Pakistan's total generated electricity. [1, 2, 3]
https://ember-energy.org/latest-insights/the-solarisation-of-pakistans-energy-economy/
The breakdown of Pakistan's electricity generation includes the following sources:
Solar & Distributed Renewables: ~25% to 28%
Hydropower: ~24% to 29%
Fossil Fuels (Thermal): ~35% to 40% (comprising a mix of imported coal, domestic coal, natural gas, and furnace oil)
Nuclear Power: ~9% to 11%
Wind: ~3% to 5% [1, 2, 3, 4, 5]
Key Trends:
The Solar Transition: Over the last two years, national electricity demand surged by 21%, with the entirety of this growth met by behind-the-meter residential and commercial solar installations. This explosive growth—totaling an estimated 38 GW of distributed solar capacity—has lowered daytime reliance on the national grid. [1]
Long-Term Goals: Under its clean energy transition plan, Pakistan aims for 58% of its overall electricity generation to stem from renewable sources by 2030. [1]
HBL PMI July 2026: Domestic Demand Lifts Manufacturing - Profit by Pakistan Today
https://profit.pakistantoday.com.pk/2026/08/03/hbl-pmi-domestic-demand-drives-strongest-manufacturing-expansion-in-four-months
The HBL Pakistan Manufacturing PMI rose to 51.7 in July 2026 from 50.8 in June, marking the strongest improvement in manufacturing conditions in four months. The expansion was driven by a recovery in domestic demand alongside continued resilience in export orders. While manufacturing activity strengthened during the month, the pace of growth remained moderate, highlighting a gradual recovery amid elevated risks stemming from the renewed conflict in the Middle East.
New orders picked up after contracting in June, supported by stronger customer sentiment and competitive pricing. The improvement drove the fastest expansion in manufacturing output in five months and prompted firms to increase purchasing activity and employment for the first time since March. Although export orders continued to underpin overall activity, their relative contribution softened as domestic demand emerged as the primary catalyst for the sector's ongoing recovery. Encouragingly, the improvement in demand was accompanied by easing inflationary pressures, as both input cost and output price inflation moderated despite persistent increases in raw material and fuel costs.
Commenting on the latest PMI data, Humaira Qamar, Head of Equities & Research – HBL, noted “The softer cost environment aligns with our expectation of a gradual disinflationary trend through FY27, although elevated geopolitical risks continue to cloud the near-term outlook. Against this backdrop, the State Bank’s decision to keep the policy rate unchanged at 11.5% strikes an appropriate balance between supporting economic recovery and anchoring inflation expectations. Looking ahead, a sustained improvement in manufacturing activity will depend on policy consistency and a stable external environment that supports both domestic demand and export growth.”
Pakistan imported an estimated cumulative total of 7.6 GWh (7,600,000 MWh) of battery storage systems between 2018 and the end of 2025, with imports continuing at a pace exceeding 5 GWh per year and hitting a record single-month volume of 652.2 MWh in April 2026. [1, 2, 3, 4]
Import Timeline & Milestones
2018–2025 Total: Roughly 7,600,000 MWh (7.6 GWh) of cumulative battery storage imports, with about 60% of that total arriving during 2025 alone. [1]
2024–Early 2025: An estimated 1,250,000 MWh (1.25 GWh) imported in 2024, followed by another 400,000 MWh (0.4 GWh) in the first two months of 2025. [1, 2]
April 2026 Peak: A record single-month high of 652.2 MWh of lithium-ion batteries was imported in April 2026 as consumers and industries shifted heavily toward storage. [1]
Current Import Pace: Ongoing imports are tracking at a rate of more than 5,000,000 MWh (5 GWh) per year. [1]
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Batteries Beat the Grid: Pakistanis Skip Net Metering
https://www.techjuice.pk/batteries-beat-the-grid-pakistanis-skip-net-metering/
Pakistani households are increasingly storing solar-generated electricity in batteries rather than selling it back to the national grid, a shift triggered by the implementation of net metering regulations that has created a new challenge for the government.
According to a report on the Pakistan Battery Import Market, the country has imported batteries with a cumulative capacity of 6.004 GW since January 2024.
April 2026 recorded the highest monthly import volume, with battery capacity reaching 652.2 MW. During that month alone, Pakistani citizens invested Rs126 billion in battery purchases.
Pakistan total power generation capacity, excluding solar, stands at 39,000 MW. Transmission and distribution losses account for up to 18 percent of this total generation capacity.
In response to the rising volume of battery imports, the government has begun drafting a National Battery Framework. Officials note that the growth in solar and battery adoption in Pakistan is outpacing the trend seen in other countries across the region.
Globally, energy storage capacity is projected to reach 1.5 million MW by 2030. Industry estimates suggest global investment in battery storage will total $1.2 trillion between 2024 and 2035.
Recent Wall Street Journal coverage highlights that sodium-based batteries—built using abundant materials like table salt and iron—are emerging as cheaper, safer, and China-free alternatives to traditional lithium-ion batteries for grid storage and electric vehicles.Key Advantages of Sodium BatteriesLower Cost: Made with inexpensive, common ingredients like food-grade table salt, reducing reliance on expensive lithium, cobalt, and copper.Enhanced Safety: Far less prone to thermal runaway fires, and capable of being passively air-cooled rather than needing expensive liquid-chilling systems.Cold Weather Performance: Retain significantly more charge capacity in sub-zero freezing temperatures compared to conventional lithium cells.Industry and Market ShiftsU.S. Startups & Giants: American companies like Peak Energy and Inlyte Energy are racing to scale domestic production for stationary power storage, while General Motors designs its own sodium-based cells.Chinese Production: Major global battery makers like CATL are advancing mass production and deploying sodium-ion technology into both grid systems and smaller city electric vehicles.Market Projections: Analysts project that sodium could capture over a third of global battery production within a decade as supply chains diversify away from lithium.
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China-free batteries made from salt are finally here
While grid battery storage is already growing in the U.S. at a furious pace, new sodium-based batteries are potentially cheaper, longer-lasting, safer and more reliable than conventional, lithium-based ones. They could accelerate the rollout of renewables, and be part of less-polluting alternatives to natural-gas turbines and diesel generators.
Most sodium-based batteries are now made in China, and represent less than 1% of all batteries delivered this year. In the U.S., a number of startups have begun producing small numbers of such batteries, and are racing to scale up production. One industrial giant—General Motors —is in the process of designing its own sodium-based batteries to tailor them to different applications before moving to mass production.
https://www.wsj.com/business/energy-oil/china-free-batteries-made-from-salt-are-finally-here-cc1cd766?st=csyh7Z&reflink=article_copyURL_share
Pakistan Building A Digital And Green Future - OpEd - Eurasia Review
https://www.eurasiareview.com/10082026-pakistan-building-a-digital-and-green-future-oped/
By Dr. Hamza Khan
Pakistan’s youth bulge and three concurrent transitions—digital export growth, decentralised solar power, and data-driven agriculture—create an opportunity to link these sectors into a single, higher-productivity development model.
ICT exports and freelancing are already generating multi-billion-dollar inflows and a trade surplus, while rapid solar expansion (now supplying a majority of low-carbon power) can cut costs for firms and farms if storage, grids and pricing keep pace.
Agri-tech focused on water efficiency, satellite intelligence and inclusive digital platforms can raise farm incomes and resilience, but success depends on institutions that turn parallel gains into a connected system rather than isolated privileges.
Pakistan’s development debate is often trapped between crisis management and distant promises. A better reading of the country in 2026 is that three transitions are already underway: services are becoming digitally exportable, electricity is becoming decentralised and low-carbon, and agriculture is acquiring a data layer. The 2023 national census confirms an overwhelmingly young society, with roughly three-fifths of citizens below 25. That youth bulge can become either an employment burden or the workforce of a new production model.
The opportunity is not to celebrate IT, solar power and agri-tech separately, but to connect them. Digital exports can ease Pakistan’s foreign-exchange constraint; distributed energy can reduce costs for firms and farms; and data-driven agriculture can raise productivity while conserving water. According to the Pakistan Economic Survey’s technology chapter, Pakistan had 207.22 million telecom subscriptions and 160.9 million broadband connections by March 2026. The latest technology-export figures show receipts reaching approximately US$4.18 billion during July-May, FY2025-26, about 20 percent higher year on year, with US$373 million earned in May.
Digital Exports: Moving Beyond Low-Cost Labour
Technology is no longer peripheral. The Economic Survey records 34,420 registered IT and IT-enabled-services companies by March 2026. ICT exports produced a US$2.91 billion trade surplus during July-March, 86 percent of sectoral receipts, while verified technology-related freelancer inflows reached US$856.3 million in nine months and exceeded US$1 billion by May. This transaction-based figure is more defensible than broader US$1.6 billion estimates that may include additional categories.
Pakistan must now move freelancers and software houses from one-off assignments towards recurring contracts in artificial intelligence, cybersecurity, cloud services, gaming, fintech and business-process engineering. DigiSkills has delivered more than 5.51 million trainings, but scale must be matched by recognised certification, communication skills, intellectual-property protection and dependable connectivity. The Digital Nation Pakistan Act 2025provides a framework for digital public infrastructure and data governance. Its value will depend on whether firms can securely verify identities, receive payments, obtain credit and access public services efficiently.
Pakistan Building A Digital And Green Future - OpEd - Eurasia Review
https://www.eurasiareview.com/10082026-pakistan-building-a-digital-and-green-future-oped/
By Dr. Hamza Khan
Solar Power as Industrial Policy
Pakistan’s solar expansion is among the world’s most striking bottom-up energy transitions. A REN21 assessment estimated that net-metered rooftop capacity reached 5.3 GW by April 2025, nearly ten times its level two years earlier. Ember’s latest country dataindicate that low-carbon sources supplied 55 percent of Pakistan’s electricity in 2025. The recommended scenario in the IGCEP 2025-35 projects renewables, including hydropower, producing 69 percent of electricity by 2034-35, with solar and wind supplying 10 percent each.
Solarisation should be treated as industrial policy, not simply climate policy. Affordable daytime electricity can power software campuses, cold chains, food processing, electric mobility and small manufacturing. The danger is a two-tier system in which affluent consumers leave the grid while poorer households inherit fixed capacity costs. Pakistan needs storage, stronger distribution networks, time-of-use pricing and incentives for productive daytime demand. The transition will last only if it lowers economy-wide costs rather than shifting them between consumers. Pakistan’s own generation plan warns that after 2027, thermal plants alone may be unable to manage the ramping pressures created by rising solar integration, strengthening the case for battery storage and grid modernisation.
Agri-Tech: The Critical Convergence Test
The FY2025-26 agriculture survey reports that agriculture contributed 23.44 percent of GDP and grew by 2.89 percent. Yet surface-water availability was 92 million acre-feet, 11.1 percent below average system usage. Agri-tech must therefore focus on resource productivity, not fashionable hardware. Satellite crop intelligence, moisture sensors, weather forecasting, precision fertiliser use, digital marketplaces and solar-powered cold storage can reduce waste and improve margins. Solar irrigation, however, must be paired with groundwater monitoring or cheaper pumping could accelerate aquifer depletion.
The National Agri Stack roadmap offers an architecture based on verified farmer identities, integrated land data, satellite intelligence, digital payments, credit, crop insurance and market links. Three to four pilots were prioritised for the first 12-18 months. Inclusion will be decisive: tenant farmers, women, sharecroppers and farmers without clear land titles must not disappear from a system built around formal records. Success should mean higher incomes, lower post-harvest losses, improved water efficiency and faster finance, not merely more registered users.
From Parallel Successes to One Production System
Pakistan can create a circular development model: digitally skilled workers generate export income; renewable power lowers production costs; and digital platforms help agriculture use energy, water, finance and logistics more efficiently. This convergence can narrow the urban-rural divide because software, payments, advisory services and distributed electricity can reach places where large industrial investment may not. It also offers Pakistan a new export identity, one based not only on goods produced domestically, but on knowledge, digitally enabled services and climate-smart agricultural value chains.
The country is not guaranteed a digital and green future; it must build the institutions that make one possible. That requires stable internet, competitive energy markets, interoperable public data, cybersecurity, technical education, patient capital and transparent regulation. Pakistan’s most promising transformation is not any single sector, but a connected system in which code earns foreign exchange, clean power reduces vulnerability and intelligence applied to farms strengthens food security. The future will be secured when digital capability and green infrastructure become instruments of mass productivity rather than islands of privilege.
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