Input costs in Pakistan's manufacturing sector and particularly the export sector are high. For one, utility rates are higher than in competing countries. Purchase agreements are forged with fuel exporting countries or with domestic private sector terminal operators at higher rates than are available to other countries as well as due to poor performance within the energy sub-sectors.

In the first week of June, a 17 per cent sales tax was imposed with the intention of plugging the loopholes that account for lower revenue collections than the sales tax refund applications. However, 70 per cent of semi-finished products emanate from indirect exporters and is supplied to direct exporters. This has raised the cost of inputs, making the country’s exports uncompetitive in the international market.

The textile sector in Pakistan employs 40 per cent of the industrial labor force, accounts for 59 per cent of total exports on an average, and is therefore regarded as the most important manufacturing sector of the country with the longest production chain and the potential for value addition at each processing stage. However concessions announced for the textile sector, which has the highest export earning capacity in the country, have not yet been implemented.