FPCCI's Tanveer warns over record trade deficit, seeks urgent export reforms

S M Tanveer, the FPCCI leader and Patron-in-Chief of the United Business Group (UBG), has expressed deep concern over the alarming surge in Pakistan’s trade deficit, which hit a four-year high of US$39.5 billion in the fiscal year 2025-26.

Reacting to the newly released trade data showing a volatile 22% Year-on-Year (YoY) increase in the trade gap, S M Tanveer stated that the numbers serve as a severe wake-up call for policymakers. The massive gap, driven by an 8% expansion in imports alongside a highly concerning 6% decline in exports, exposes deeper structural flaws that continue to suppress Pakistan’s industrial competitiveness on the global stage.

"We cannot achieve true economic sovereignty on borrowed capital or remittances alone," he emphasized. "The economy can only flourish through aggressive export-led growth externally and the robust revival of domestic commerce internally. This current trend is unsustainable for our national reserves and the survival of our industrial base."

Read: Export target missed by $5.2b

To counter this contraction and turn the tide for Pakistani exports in FY27, the Patron-in-Chief of UBG outlined a multi-pronged strategy focusing on cost-of-doing-business reductions and structural incentives:

He said high energy costs have rendered Pakistani products, particularly textiles and light engineering, too expensive compared to regional peers like Bangladesh, India, and Vietnam. The government must immediately implement a dedicated, regionally competitive power tariff for the export sector. Tanveer said access to affordable electricity is an absolute necessity to run factories at maximum capacity and keep pricing attractive in global markets.

Further, he added, exorbitant interest rates have completely stalled private sector credit growth. Industrialists cannot afford to borrow for working capital, let alone long-term expansion or modernization (BMR). Therefore, the State Bank of Pakistan (SBP) must aggressively lower the policy rate to bring markups down to single-digit or low double-digit territory. Cheap capital is essential to fuel industrial production and incentivize local entrepreneurship.

Building on the elimination of the super tax on exporters in the recent budget, he stressed that the government needs to expedite the clearing of pending Sales Tax and DLTL refunds to fix severe liquidity crunches. Furthermore, the duty-free import facility for raw materials that are unavailable locally should be streamlined to reduce production costs.

Also, he said, policy frameworks must pivot toward aggressive investment in local renewable energy (solar, wind, and hydel) and the localized manufacturing of engineering components, chemical raw materials, and pharmaceutical ingredients to permanently shrink the import bill.

S M Tanveer urged Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, and the government's economic team to step beyond short-term stabilization targets.

"While we welcomed the growth-oriented initiatives of the recent federal budget, a $39.5 billion trade deficit demands emergency operational actions. UBG is ready to work hand-in-hand with the government to map out an immediate, practical roadmap that protects domestic industries, scales up high-value export sectors, and saves the national exchequer from a widening trade trap," he added.