Govt Ends Cross-Subsidy on Industrial Power Tariff to Boost Exports

ISLAMABAD: The federal government has finalized key measures under the upcoming industrial policy aimed at boosting exports, attracting investment, and easing the cost of doing business, GTV News reported on Wednesday.

The Power Division confirmed that cross-subsidy from industrial power tariffs will be removed and peak-hour rates abolished to reduce production costs. Similarly, the Petroleum Division will withdraw cross-subsidy from industrial gas prices.

At the prime ministerial level, it has been agreed that industrialists will be protected from direct intervention by the National Accountability Bureau (NAB), Federal Investigation Agency (FIA), and Federal Board of Revenue (FBR).

Amendments to Section 41B and Section 42A of the SECP Act 1947 are being prepared, making it mandatory for law enforcement agencies to obtain approval from the Securities and Exchange Commission of Pakistan (SECP) before initiating any inquiry or investigation against regulated entities, including stock exchanges, NBFCs, insurance companies, brokers, and clearing houses.

The changes also extend protection to foreign investors, including NICOP holders, ensuring legal certainty and safeguards from arbitrary actions.

To ease exporters’ liquidity crunch, the FBR has been directed to clear pending refunds, including sales tax, customs rebates, income tax, and provincial taxes. A system will be introduced to ensure timely repayments, with gradual reduction in refund processing time.

The draft industrial policy also proposes:

• Drawback of Local Taxes and Levies (DLTL) scheme for exporters with cabinet approval.

• Simplified regulatory procedures and FBR audits of exporters only once every three years.

• Possible changes in minimum tax structure after the current IMF programme ends.

The government will revise the Corporate Rehabilitation Act, 2018 and Corporate Restructuring Companies Act, 2016 to create a unified insolvency law. The updated framework will broaden the scope of eligible debtors, protect struggling companies, and make restructuring easier and less costly.

Officials say the reforms are designed to reduce the cost of industrial production, resolve long-standing tax refund issues, and protect both local and foreign investors. The industrial policy draft is expected to be unveiled soon after federal cabinet approval.