The White Elephant of Planning: How Pakistan Lost Its Manufacturing Future

Dr. Ikramul Haq & Engineer Arshad H Abbasi

This article is based on a critical comparison of two Economic Surveys published by the Ministry of Finance of Pakistan: the Economic Survey of 1996–97 and the Highlights of the Economic Survey 2024–25. The purpose of this comparison is to make a fair and evidence-based assessment of Pakistan’s manufacturing sector over the past twenty-eight years.

By placing the two surveys side by side, it becomes possible to separate official claims from actual ground realities and to understand whether the promises of industrial growth, particularly those attached to initiatives like the China-Pakistan Economic Corridor (CPEC), were realized or whether the country has in fact experienced a structural decline in manufacturing.

In 1996–97, Pakistan’s industrial base was narrow but held out hope of expansion. By 2024–25, production numbers in many subsectors had multiplied many times over, yet the structure of manufacturing had not transformed in any meaningful sense. This article argues that while the numbers appear impressive in isolation, the comparative evidence shows that Pakistan’s manufacturing sector has declined in terms of competitiveness, technological advancement, and sustainability, and that tall policy claims have consistently outpaced actual progress on the ground.

The story of Pakistan’s manufacturing sector over the last 28 years is one of promises made and opportunities lost. In 1996–97, when the government presented its Economic Survey, the country’s industrial base was small but functional. The survey recorded that cotton yarn production had reached 1.5 billion kilograms, television sets were being manufactured domestically to the tune of 370,000 units, bicycles were produced at about 400,000 units annually, and basic household appliances such as fans (3.5 million units), refrigerators (400,000 units), and washing machines (200,000 units) had taken root.

Cement production stood at 7.5 million tonnes, sugar at 2.9 million tonnes, fertilizer output at 3.2 million tonnes, and the auto sector was still in its infancy, producing about 33,000 cars and 100,000 motorcycles a year. Tractor production was limited to around 40,000 units, but it symbolized the start of mechanization in agriculture. Though output levels were modest, there was cautious optimism. The claim then was that Pakistan had laid the foundation for industrial self-sufficiency and that with better policies, the country could climb the ladder of global competitiveness.

By contrast, the Highlights of the Economic Survey 2024–25 show that while the numbers expanded dramatically in absolute terms, the structural health of manufacturing deteriorated. Cars increased from 33,000 units to 1.3 million units, motorcycles from 100,000 to 2.3 million, fans from 3.5 million to 12 million, refrigerators from 400,000 to 2.8 million, and washing machines from 200,000 to 1.3 million. Cement output soared from 7.5 million tonnes to 49 million, sugar from 2.9 million to 7.5 million, fertilizer from 3.2 million to 6.8 million, and cotton yarn from 1.5 billion kilograms to 3.6 billion. On paper, this looks like a manufacturing miracle.

The government of 2024 speaks of “industrial modernization”, “export-led growth,” and even celebrates the China-Pakistan Economic Corridor (CPEC) as a transformative initiative that would make Pakistan a hub of regional manufacturing. Yet a closer look reveals a very different reality: the country has expanded in size but declined in depth.

Entire industries that existed in 1997 have vanished. Television production is the most glaring example. Where Pakistan once produced 370,000 CRT units annually, by 2024 local manufacturing had disappeared. The global shift to LED and LCD screens came, but Pakistan did not invest in research, panel technology, or innovation. Instead, the country regressed from manufacturing to assembling imported panels, mainly from China.

The television industry, once a symbol of local capacity, is now a case study in deindustrialization. Bicycles followed a similar trajectory. From 400,000 units a year in 1997, production dwindled as companies like Sohrab lost out to Chinese imports. By 2024, most bicycles in the country were imported, showing that even simple mechanical industries could not survive in Pakistan’s environment.

Even in those sectors where expansion is undeniable, the growth is shallow. Cars may number 1.3 million units a year, but the industry remains an assembly operation. Engines, electronics, and key components are imported. Localization remains weak despite decades of government promises and repeated tariff protection. In fact, protectionism created an industry that thrived on rent-seeking rather than innovation.

Successive governments claimed the automobile sector would achieve 70 to 80 percent localization; the ground reality in 2024 is that the industry cannot export competitively because its cost structure and technological base are weak. The same holds for appliances. While fans, refrigerators, and washing machines multiplied many times over, much of the sector depends on imported parts and energy-intensive production processes that erode competitiveness.

The textile sector is still described in official surveys as the backbone of Pakistan’s exports. Output of cotton yarn more than doubled, from 1.5 billion kilograms in 1997 to 3.6 billion in 2024. Yet the comparison with Bangladesh is sobering. While Pakistan continued to churn out yarn and cloth, Bangladesh invested in value addition, building a garments industry that dominates global markets. Pakistan’s textile exports remain stuck in low-value segments. The claim has always been that Pakistan will diversify into apparel and branded textiles; the reality is that after nearly three decades, the structure of exports is nearly unchanged.

Cement offers another example. Production jumped from 7.5 million tonnes to 49 million tonnes, and Pakistan became a cement exporter. Governments hailed this as industrial success, linking it to CPEC-related infrastructure. But the reality is that the growth of cement is a reflection of domestic construction demand and infrastructure contracts rather than technological modernization. Cement plants expanded in size, but Pakistan did not leap into producing advanced construction materials or diversifying into higher-value products.

Sugar tells an even more critical story. From 2.9 million tonnes in 1997, output rose to 7.5 million tonnes in 2024. But the sector has been consistently described as “cartelized” and “politicized.” Successive governments subsidized sugar mills owned by politically connected groups, exported sugar in times of local shortage, and imported it again at higher prices. This rent-seeking has persisted despite tall claims of reform. Thus, while production expanded, efficiency and fairness declined.

Fertilizer production nearly doubled from 3.2 million to 6.8 million tonnes, yet Pakistan still imports fertilizers in times of shortage. Gas supply disruptions and pricing distortions frequently undermine the sector. Tractors grew from 40,000 to 70,000 units, but agricultural mechanization remains below potential, with imports still necessary for higher-end machines.

The disconnect between claims and ground realities becomes even sharper when one examines large-scale manufacturing growth rates. In FY1997, the sector struggled with energy bottlenecks and low investment, but growth expectations were still higher. In FY2025, the growth rate of large-scale manufacturing was only 1.3 percent, even after decades of industrial policy experiments and the arrival of CPEC, which was touted as a game-changer. When the corridor was launched in 2015, official claims were that Pakistan would become a manufacturing hub, with special economic zones drawing investment in electronics, engineering, and export-oriented industries.

Nearly a decade later, the reality is different. The Economic Survey of 2024–25 admits that key subsectors such as chemicals, iron and steel, and electrical equipment have contracted. The mining and quarrying sector shrank by 3.4 percent in FY2025, despite CPEC’s promises of resource development. Heavy engineering never took off. The projects built under CPEC were largely roads and power plants, which increased debt but did not generate sustainable industrial growth.

This contradiction between claim and reality is perhaps the defining feature of Pakistan’s manufacturing trajectory. Successive governments boast of modernization, diversification, and competitiveness. The surveys highlight rising production volumes and project optimism. Yet on the ground, industries collapse, import dependence deepens, export baskets stagnate, and global competitiveness declines.

The television and bicycle industries disappeared, automobiles and appliances became shallow assembly operations, textiles failed to upgrade, sugar became a case study in political capture, and cement, fertilizer, and tractors grew but without true technological depth.

Pakistan’s neighbours provide a sharp contrast. India developed an automotive industry with global exports, diversified into IT hardware, and nurtured heavy industries. Bangladesh built a garments powerhouse. Vietnam rose as an electronics exporter. Pakistan, by comparison, remained stuck. It failed to diversify beyond textiles, failed to build heavy industry, and failed to upgrade technologically.

Here the failure of the Planning Commission becomes most evident. In 2014, it launched Vision 2025, a document filled with ambitious promises. Among its most striking commitments were:

• “Pakistan will be among the top 25 economies of the world by 2025”.
• “Pakistan will emerge as a knowledge economy driven by innovation and entrepreneurship”.
• “High-value manufacturing will be the engine of sustained growth”.
• “CPEC will be the game-changer that integrates Pakistan into regional and global value chains”.

Comparative Table of Key Items

A decade later, these promises look hollow. Pakistan has not entered the world’s top 25 economies, nor is it even close. It has not become a knowledge economy; instead, it faces brain drain and declining investment in research. High-value manufacturing remains a slogan while the reality is low-value textiles, politically captured sugar, and import-dependent automobiles. CPEC has not integrated Pakistan into global value chains; it has merely added power projects and roads, financed by debt, without deep industrial linkages.

In the final analysis, the experience of the last twenty-eight years demonstrates that the grand narrative built around CPEC and Vision 2025 has not materialized in practice. Manufacturing today remains import-dependent, technologically stagnant, and structurally weak, much as it was in 1997, despite repeated claims of modernization and progress.

The Planning Commission failed to lay the foundation of a manufacturing economy, failed to translate Vision 2025 into implementable policy, and failed to capitalize on CPEC as a springboard for industrial transformation.

Vision 2025 now stands as little more than a glossy brochure of slogans, disconnected from the economic data presented in the Economic Survey 2024–25. After decades of irrelevance and repeated failures, it is time to acknowledge the truth: the Planning Commission has become a white elephant that could not even capitalize on the biggest opportunity in Pakistan’s recent history, and should be shelved rather than allowed to continue draining national resources with empty promises.

________________________________________________________________

Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.

Engineer Arshad H. Abbasi, water and climate change expert, is co-founder of Energy Excellence Centres at NUST and UET Peshawar.