By Engr Abdul Hanan Aftab

Every year, Pakistan exports cotton yarn, rice and bed linen while importing far more machinery, refined chemicals and technology. This is a structural trap, not a trade.

Pakistan’s economy is always on the brink of IMF bailouts, foreign exchange reserves are running low, and the country has a persistent trade deficit. It is therefore no longer possible to export the same products in the same manner and expect different outcomes.

The State Bank of Pakistan (SBP) reported that Pakistan’s IT and IT-enabled services (ITeS) exports reached a record $3.8 billion in FY2024–25, up 18 per cent from the previous year. Today, the sector accounts for around 45 per cent of Pakistan’s total services exports, making it the third-largest foreign exchange earner after remittances and textiles. The momentum has remained intact: cumulative IT exports in the first half of FY2025–26 were valued at $2.24 billion, 20 per cent higher than the previous year. In December 2025, the value of IT exports reached $437 million, marking the first time in history that exports exceeded $400 million in a single month.

Freelance and remote work grew by 90 per cent in FY25 to $779 million. This is not the Pakistan of corporations. This is a young talent in Faisalabad coding for a client in Berlin, and a homemaker in Peshawar creating reports or graphics for a company in London. Unlike textiles or other products, digital trade does not need a factory, a shipping container or a port. It only needs talent and connectivity, and Pakistan has plenty of both.

It is not easy to compare Pakistan with India, but it is necessary. NASSCOM’s Technology Sector Strategic Review 2025 estimates that India’s IT exports will reach $224 billion in FY2024–25, nearly 59 times Pakistan’s IT exports. This is not because India has a natural endowment that Pakistan lacks. It is the result of a strong institutional effort over three decades.

Meanwhile, Vietnam, which was exporting rice when Pakistan was exporting textiles, now accounts for 6.11 per cent of the world’s textile exports, while Pakistan accounts for 1.18 per cent. Vietnam has also developed a strong electronics and semiconductor assembly industry.

The growth of the IT sector in Pakistan is real, but it is happening despite policy. There are three significant structural failures. First, digital infrastructure is still fragile and expensive. Pakistan ranks 78th on the Fiber Development Index. Second, internet shutdowns in Pakistan have taken a toll on international business confidence. Third, tax policy is still uncertain. The Pakistan Software Houses Association (P@SHA) has officially pointed out that the industry does not seek subsidies. It demands predictability.

Three immediate measures can make a difference. The government should create a dedicated Digital Infrastructure Fund (DIF) to speed up fibre deployment. Second, the 10-year Final Tax Regime should be extended to 15 years, with a statutory lock-in that is not subject to annual budget changes. Third, the Ministry of Commerce and the Ministry of IT should be merged into a single statutory body with a majority of private-sector members and export-growth KPIs.

The upheaval of 2025 and the recent trade war over goods have created space for digitally oriented economies to secure a place in new global value chains. Pakistan’s textile industry has developed over decades, but the IT sector does not need much time to grow; it needs clarity: stable taxes, reliable internet, and one empowered institution to promote digital exports around the world.

Published Date: July 24, 2026