Industrial revival plan with loan haircuts, tax cuts unveiled

ISLAMABAD: In a sweeping effort to revive Pakistan’s stagnant industrial sector, the federal government has finalized a landmark policy that includes up to 60 per cent loan haircuts for distressed manufacturers, a phased corporate tax cut, legal reforms, and a debt resolution framework spearheaded by the State Bank of Pakistan (SBP).

At the heart of the new policy is the SBP’s draft Revival and Debt Resolution of Sick Industrial Units (RDRSIU) framework, which allows financial institutions—including Development Finance Institutions (DFIs) and Government-Owned Financial Institutions (GOFIs)—to restructure non-performing loans (NPLs) through interest reductions, rescheduling up to 10 years, and fresh working capital worth 20pc of the restructured principal. Sick units may also opt for lump-sum or staggered Fair Final Settlements (FFS), as per official documents available with The News. The revival package, approved at a high-level meeting of the Prime Minister’s Committee on Industrial Policy, is aimed at reversing the sector’s long-term decline—its share in GDP has plummeted from 26pc in 1996 to just 18pc in 2025. The meeting was chaired by Haroon Akhtar Khan, Special Assistant to the Prime Minister on Industries and Production, and endorsed by Prime Minister Shehbaz Sharif as a “critical step toward sustainable economic growth.”