Pakistan business leaders reject power package, lament high taxes, electricity rate

Pakistan’s business leaders said Friday that high electricity prices and excessive taxation have forced about 150 large textile units to shut down over the past two years, warning that the country’s industrial sector is heading toward a standstill.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) rejected the government’s electricity incentive package and said soaring energy tariffs and heavy taxes were triggering factory closures and widespread job losses.

Speaking at a news conference in Islamabad, FPCCI leaders criticized the government and the Power Division for failing to pass on to industrial consumers the benefit of a recent reduction in the base electricity tariff determined by the National Electric Power Regulatory Authority (Nepra).

They said the Power Division had kept the industrial base tariff unchanged, citing the large number of domestic consumers receiving subsidized electricity.

FPCCI President Atif Ikram Sheikh said expensive electricity had crippled industrial activity, particularly in the textile sector. “Around 150 large textile units have shut down over the past two years,” he said.

Sheikh urged the government to abolish cross-subsidies imposed on industry and cut the policy interest rate to single digits to revive industrial growth and investment. He proposed reducing interest rates first to 9% and later to 7%.

The FPCCI appealed to the prime minister to take urgent measures to save the remaining industry, warning that factories that had shut down or relocated abroad were unlikely to restart operations in Pakistan.

Sheikh also called upon the government to immediately declare an industrial emergency in Pakistan, warning that the country’s manufacturing base is "teetering on the brink of a systemic and irreversible collapse".

FPCCI leaders also pointed to surplus electricity in the system, saying capacity charges for unused power were being passed on to consumers. They said industrial electricity tariffs in Pakistan were about 12.5 U.S. cents per unit, compared with roughly 7.5 cents in neighboring India.

S.M. Tanvir, patron-in-chief of the United Business Group, which holds a majority in the FPCCI, rejected the electricity incentive package and said Pakistan’s deteriorating business climate had been highlighted in the World Economic Forum’s 2026 report, increasing the country’s risk rating.

“The report shows business activity and employment opportunities are declining, while the small and medium enterprises sector has been reduced to a junkyard,” Tanvir said.

He criticized tax policies, alleging that non-filers face little scrutiny when depositing money in banks but are heavily taxed when investing elsewhere. “It appears the Federal Board of Revenue is working to please banks,” he said.

FPCCI officials warned that unless the government urgently addressed high electricity costs, the industrial sector could grind to a halt. They called on the prime minister to “remove the industry from the ventilator” and reduce taxes on export-oriented sectors to prevent further economic decline.

In December, industry groups reported that more than 100 spinning mills and over 400 ginning factories had become non-operational due to high power tariffs, unprecedented taxes and a surge in under-invoiced cotton yarn and fabric imports from China and other countries.

United Business Group Secretary General Zafar Bakhtawari, speaking at the end of the news conference, said economic stability could also contribute to political stability, as people engaged in jobs and businesses were less likely to be drawn into crime or political unrest.