ISLAMABAD: The government has finalised a new industrial policy aimed at reviving the country’s declining manufacturing sector.

The decision was taken during a meeting of the Prime Minister’s Committee on Industrial Policy held on Friday, which underscored the urgency of reforms to halt the sector’s ongoing contraction.

Chaired by Haroon Akhtar Khan, Special Assistant to the Prime Minister (SAPM) on Industries and Production, the committee approved key recommendations from eight specialised sub-committees, setting the stage for policy implementation.

It was noted with concern that the industrial sector’s share in GDP has fallen consistently — from 26pc in 1996 to just 18pc in 2025. The committee stressed the need for immediate measures to boost exports, develop import substitutes, and stabilise the economy.

Among the key proposals was the revival of sick industries. The committee suggested that the State Bank of Pakistan issue guidelines for debt resolution and industrial rehabilitation. Legal amendments were also proposed in the Corporate Rehabilitation Act 2018, the SECP Act, the Anti-Money Laundering Act, and the Income Tax Ordinance to support recovery efforts.

The committee further recommended that banks adopt data forecasting tools to detect early signs of industrial distress.

In terms of fiscal incentives, a phased reduction in the corporate tax rate—from 29pc to 26pc over three years—was proposed to encourage investment in manufacturing.

To ensure swift implementation, the SAPM formed 10 new sub-committees tasked with delivering tangible results within a week. Describing the policy as “comprehensive,” Mr Khan said it has the potential to trigger an “industrial revolution” in Pakistan. The final recommendations have been submitted to Prime Minister Shehbaz Sharif for approval.

Published in Dawn, July 5th, 2025