Budget 2025-26: Pathways to sustainable export-led growth

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Since 1947, Pakistan has made considerable progress on many fronts. However, the pace of progress has not been in line with promises and abilities. There is a common misconception that there is no faster planning or less planning and more action. The fact is that the quality of the plan is the key commitment to the pace and the desired results. Over time, the nature and role of planning has changed a major change. Today, the process of national planning is more contributing, mutual cooperation, individual and market. Plans succeed when they show the aspirations of a nation, empower citizens and especially the private sector, so that they can play their own role, provide equal opportunities to all, and as a supporter, facilitator, regulator and performance as a better supporter.

Pakistan’s economic challenges need strategic change towards export -led growth to promote foreign exchange reserves, enhance industrial productivity and create sustainable employment opportunities. The Federal Budget for 2025-26 offers an opportunity for policy makers to introduce comprehensive reforms that facilitate expansion of exports.

This article outlines key policies that can be integrated into the budget to promote export -based economic framework. The next budget 2025-26 proposal aims to promote economic growth in Pakistan by giving priority to key sectors, ensuring financial discipline, and promoting investment. Focus on infrastructure, industry, technology and social development while maintaining economic stability.

Advanced tax rations on exports: Export revenue has been targeted simultaneously under section 154 and section 147. Advance tax collected by the bank against export income is considered to be the least tax rather than the final tax. At the same time, an advance tax @1 % has been levied by entering sub -section (6C) in Section 147. However, in terms of IV clause (45A) of the second schedule of the Income Tax Ordinance, local goods are responsible for paying a 1 % advance tax on the local supply of textile equipment in 2001 and for 0.5 % yarn trade business. Treatment with exporters is against discrimination and the principles of equity and natural justice. The current advance tax deduction of 2 % under section 153 and 147 reaches the effective tax rate of 72.1 %, in addition to some level exporters have to bear an additional super tax of up to 10 %. Advance tax on export income should be reduced by 1 % to reduce the financial burden on exporters. The final tax should be restored to the government, and the super tax should be abolished for exporters.

Export Facility Scheme (EFS) Continuation: Under the Export Facility Scheme (EFS), raw material duty -free imports, which is a real -time, digitalized solution from the end to the end, has played an important role in maintaining the development trend. Any overturning of this scheme will severely disrupt the export speed and hinder the industry’s progress. Under the EFS, imposing sales tax on imported raw materials will close enough in the refund system for at least 120 days, which will severely affect exporters’ liquidity and operational capacity. The highest sales tax rate is promoting tax evasion in 18 % textile supply chain as nearly 1.5 million bales of soy are being transacted through gray transactions, which causes significant loss of taxes. Textile supply chain will help restrict sales tax rates to sales tax rates and restrict the sales tax registered manufacturers to eliminate the gray trade only. The EFS scheme should be restored for domestic trade, whose consumption period has been reduced to 1 year and businesses or commercial importers who do not participate in exports should be excluded from the scheme. Both the utility bills, electricity and gas, should be classified under this scheme, as exporters are already rating zero -generating thermal fuel and coal -fired energy.

Sustainable Energy Price: A sustainable energy tariff tariff for Pakistan’s export growth is very important to increase competitiveness, reduce production costs and ensure long -term energy safety. The 5 -year -old sustainable tariff policy and the rational cost of T&D charges for UFG (0.5 %) and dedicated feeders/grid stations will increase the cost of cost. Benchmarking energy consumption in industries will advance the best methods. Charging UFG’s charging on industrial consumers up to 0.5 % actually to 8 % to charge up to 0.5 % instead of more than UFG. Remove T&D losses from B3 and B4 tariffs which have dedicated feeder/grid stations as all units are technically bills at both rates. This is a huge irregularities in the current tariff structure. Cross subsidy in electricity prices through the industrial sector, which is a PKR125 billion, should be eliminated. Cross subsidy in gas prices through the industrial sector, which is a PKR100 billion, should be eliminated. The implementation of Wakog across the country should be preferred, which will deliver the gas tariff to the PKR 2,400/MMBTU as a whole.

Easy access to liquidity: Unnecessary delays in refund payments are the most growth -based and stress in the textile industry. A large portion of exporters’ working capital has been trapped, forcing exporters to carry heavy financial burden due to interest on the residual refund. Delay in refund causes severe financial difficulties, which disrupts export production. Under the Rule 39F of the Sales Tax Act 2006, the sales tax return is to be issued within 72 hours.

However, the current refund cycle has increased by about 200 days. In order to improve the liquidity for exporters, the sales tax rules must take action and supply on sales tax withdrawal within 72 hours as per the rules of 2006.

Duty Dripback degree withdrawal should be distributed in a timely manner without interference and interruption. The monthly RPO generation needs to take action on the delayed sales tax in 60 days electronically. Eliminate manual processing, protect the security measures/KPI in the system to prevent any damage to the national exchequer. For the purpose of transparency, both heads, such as the Delayed Sales and Income Tax/Income Tax/Income Tax Credit, should be tabooled in one place, the heavy residual refund is in manual processing and does not reflect it in this system. The road map should be provided for such a refund and data shared with stakeholders.

Filling annual tax returns needs to take action on the withdrawal of income tax in 30 days. Eliminate manual processing. Allocate PKR 27 billion to approve the pending amount under DDT, TUF, and Markup subsidy. The IOCO processing of the Analysis Certificate should be fully digitized from the end. Exporters’ input tax should be allowed for a one -year period of the issuance of a digital script for trade, as is the same as practicing in India. This will help address exporters’ capital barriers in promoting exports.

Eliminating unnecessary protection for local polyester fiber manufacturers: excessive protection provided to local polyester fiber manufacturers has significantly damaged the value -added export sector and it has to eliminate the competitiveness and eliminate the Pakistani exporters more than the artificial value. According to regional rivals (Vietnam, China, Turkey), reducing duties will increase the ability to compete globally and to attract artificial clothing exports globally.

Encourage the increase in value -added exports: 15 % annual growth target in textile exports should be encouraged by 2030. DLTL @ 6 % should be increased by 15 % to 15 % increase in value -added products to encourage textile value added exports. By 2030, textile exports should be introduced to encourage value -added textile growth to achieve US $ 35 billion. Additional revenue of PKR 30 billion should be imposed on luxury goods, which encouraged pricing exports or financing the Export Development Fund (EDF).

Non -traditional market development: Encourage and allocate funds from the EDF to promote value -added exports to non -traditional markets, including Japan, South Korea, Australia, New Zealand, Canada, and Western, South and Central Africa. Allocating EDF funds to promote exports to Japan, South Korea, Australia, Canada, and Africa will expand market access and reduce dependence on traditional markets.

International Brand Acquisition and Licensing: The government should adopt a 50 % co -operation mechanism for the acquisition of international brand licenses and franchises. This will increase Pakistan’s global mark and promote exports under leading international brands. Introducing policy support for the acquisition of international brands and securing licensing agreements will enable Pakistani exporters to enter premium markets and increase the value of their product lines.

EDF suspension: Export Development Surcharge (EDS) is being deducted at the time of payment receipts. It has been collected in large numbers and remains unused. Charging the current funds by up to 75 % can be suspended.

Exception for exporters from provincial governments to deduction from infrastructure development and stamp duty: Punjab Government, Punjab Infrastructure Development Cess Act 2015, Infrastructure Development Ces @ 0.9 % has been imposed on export of exports on export costs. Similarly, the Sindh government, in terms of the 2017 Sindh Development and Maintenance of Infrastructure Cess Act, 2017, in 2017, the cess is up to 1.80 % of the total value of goods (as has been estimated by customs authorities) or at the sea -out -of -the -art price of 1.85 % from the country. The government is receiving a 0.2 % stamp duty on the “Bill of Exchange” obtained by foreign buyers, in terms of the Stamps Act, Senior No. 13 of the schedule of 1899. Both Levies are an additional cost for exporters that increase the cost of export goods. Our export -based industry competition is already in trouble. Exporters should allow exporters to import infrastructure development CES on exporters on export of raw materials and stamp duty on the exporter bill of exchange.

Federal Budget 2025-26 will have to prioritize export growth policies to attract Pakistan to economic stability and sustainable development. By implementing targeted privileges, improving infrastructure and promoting diversity in the market, Pakistan can increase the presence of its global trade and advance long -term economic prosperity.