At a crossroads: navigating trade, industrial policy dilemma

The Express Tribune published an opinion column by an economics academic at IBA arguing that Pakistan is at a crossroads on trade and industrial policy. The column attributes a current account deficit of $98 million as of August 2026, which it calls relatively low, largely to record remittances. The writer nonetheless warns that export growth has stalled and that debt obligations above $21.5 billion in FY26 remain a pressure, although foreign exchange reserves have risen above $21 billion after Eurobond proceeds.

The column focuses on the auto sector, citing a recent draft of the Auto Policy 2026-2031 with goals for exports and localisation, alongside the National Tariff Policy 2025-2030. The column notes that the new auto policy gives electric vehicles notable tax incentives, which the writer says will help reduce the oil bill and environmental harm. The author compares Pakistan's output of about 200,000 units with Morocco's more than 500,000 units in 2025, and cites Vietnam's focus on parts and accessories supply as a model.

The writer argues that high business costs, limited free trade agreements and non-tariff measures are holding back exporters, and that the plan to dismantle the SRO regime should continue. Policies should let local vendors join regional and global value chains, with better financing and easier access to quality certifications for smaller firms. The column concludes that a holistic set of reforms is needed to lift export sales.