Industries Hit Back at Decision to Extend Over Rs15bn to Rice Exporters

Pakistan’s industrial and manufacturing sectors have voiced strong opposition to the government’s decision to extend over Rs15 billion in incentives to rice exporters, arguing that the move unfairly favors a single export segment while other industries struggle with rising costs, energy shortages, and shrinking margins. The backlash highlights growing tensions within the business community over how limited fiscal resources are allocated at a time of economic stress.

Rice remains one of Pakistan’s largest agricultural exports, contributing significantly to foreign exchange earnings. Supporters of the incentive package argue that global competition, freight costs, and compliance requirements justify continued government backing. However, critics from manufacturing, textiles, engineering, and small and medium enterprises (SMEs) say the extension reflects an imbalanced policy approach that sidelines value-added industries.

Industry Concerns Over Unequal Treatment

Industry representatives contend that the decision to channel more than Rs15bn toward rice exporters comes at a time when industrial units face record-high electricity and gas tariffs, escalating taxes, and reduced access to credit. Many factories are operating below capacity, while some have shut down entirely due to cost pressures.

Business groups argue that providing large-scale incentives to one sector creates distortions in the economy. They question why export-oriented manufacturing sectors, which generate higher employment and value addition, are not receiving comparable support. According to industry bodies, such selective incentives risk deepening structural imbalances rather than promoting broad-based growth.

Questions About Effectiveness of the Scheme

Beyond equity concerns, critics have also challenged the effectiveness of the rice export incentive scheme itself. They argue that despite years of support, rice exports have not consistently moved up the value chain, with most shipments remaining in the form of raw or semi-processed products.

Industrialists claim that incentives have often failed to translate into sustained productivity gains or market diversification. Instead, they say, the benefits are captured by a limited number of exporters, raising questions about whether public funds are being used efficiently.

Calls are growing for a comprehensive review of the scheme, including transparent disclosure of beneficiaries and measurable performance indicators tied to export growth, quality improvement, and foreign exchange realization.

Government’s Rationale for Extension

The government, however, defends the extension of over Rs15bn in support, citing the strategic importance of rice in Pakistan’s export basket. Officials argue that agriculture-based exports provide a crucial buffer against external shocks and help stabilize rural incomes.

According to policymakers, the incentive package is designed to offset high logistics costs and ensure competitiveness in international markets, particularly as rival exporters benefit from subsidies and state support. The government maintains that withdrawing support abruptly could hurt farmers, reduce export volumes, and strain foreign exchange reserves.

Manufacturing Sector Pushback

Manufacturing associations have responded by urging the government to adopt a more balanced and integrated export policy. They stress that industrial exports—such as engineering goods, chemicals, pharmaceuticals, and value-added textiles—offer greater potential for employment, technology transfer, and long-term economic resilience.

Industry leaders argue that instead of extending large cash-based incentives to rice exporters, resources should be invested in lowering energy costs, improving infrastructure, and simplifying taxation across all sectors. Such measures, they say, would enhance competitiveness more sustainably than selective subsidies.

Fiscal Pressures and Policy Trade-Offs

The controversy also reflects broader fiscal pressures facing the government. With limited budgetary space and commitments to reduce subsidies, every major incentive decision carries opportunity costs. Critics warn that continued reliance on sector-specific support risks undermining fiscal discipline and complicating reform efforts.

Economists note that while targeted incentives can be useful in the short term, they must be aligned with a clear exit strategy. Without reforms to productivity, logistics, and governance, subsidies can become entrenched, making them politically difficult to withdraw.

Toward a More Inclusive Export Strategy

The pushback from industries underscores the need for a more inclusive export strategy that balances support between agriculture and manufacturing. Analysts suggest that a unified framework—linking incentives to performance, value addition, and employment—could help ease tensions and improve outcomes.

There are also calls for greater stakeholder consultation before extending large incentive packages. Industry groups argue that transparent dialogue would help build consensus and ensure that policy decisions reflect the broader economic landscape.

A Debate with Wider Implications

The decision to extend over Rs15bn to rice exporters has sparked a debate that goes beyond a single sector. It raises fundamental questions about how Pakistan prioritizes exports, manages scarce fiscal resources, and balances short-term support with long-term development goals.

As industries push back, the government faces the challenge of reconciling competing demands while safeguarding economic stability. Whether the controversy leads to policy recalibration or entrenches existing divides will likely shape the future direction of Pakistan’s trade and industrial policy.