The state of Pakistan’s corporate sector

LAHORE: Pakistan’s corporate sector has not achieved the same level of global expansion as India due to economic policies that have led to underinvestment and de-industrialisation, limiting the development of a strong industrial base necessary for global competitiveness.

A key factor in India’s success has been its diaspora, which has played a significant role in economic growth through foreign direct investment, technology transfer and access to international markets. While Pakistan’s diaspora is influential, it has not contributed to corporate global expansion at the same scale.

India’s private sector has evolved into a dynamic and competitive force, driving innovation and international mergers and acquisitions. In contrast, Pakistan’s private sector has struggled to achieve similar growth and global integration.

The combined turnover of Pakistan’s leading multinational companies is significantly lower than that of India’s corporate giants. For instance, Reliance Industries, one of India’s largest conglomerates, reported revenues of approximately $110.86 billion.

In comparison, Pakistan’s largest companies generate relatively modest revenues. Even when combined, the total revenue of Pakistan’s top 10 multinationals remains far below that of a single leading Indian corporation like Reliance Industries, highlighting the vast disparity in corporate scale.

To compete globally, Pakistani companies need better access to capital, increased innovation, governance reforms and infrastructure improvements. Strategic investments in technology, branding and export diversification could help them expand internationally.

Several challenges hinder the growth of Pakistani corporations. High interest rates -- significantly higher than in India -- make business expansion costly. Unlike India’s deep and liquid equity markets, Pakistani firms struggle to raise large-scale funding through stock offerings. The startup and SME ecosystem also lacks substantial funding sources for innovation and growth.

To address these issues, Pakistan must develop robust financial markets, attract foreign direct investment (FDI) and improve banking-sector lending to businesses. Lower average incomes in Pakistan weaken domestic demand for high-value products compared to India’s rapidly expanding consumer base.

Export diversification and investment in productivity-enhancing technologies are crucial for reducing costs and improving global competitiveness. Pakistani companies allocate minimal funds for R&D, whereas Indian firms invest heavily in technology, automation, and product development. While industries such as textiles, cement, and banking dominate in Pakistan, there is little diversification into high-value sectors like IT, pharmaceuticals and electronics. Government incentives, such as R&D tax credits and university-industry partnerships, could help drive private-sector innovation.

Many large Pakistani firms remain family-controlled, limiting professional management and efficient decision-making. Poor corporate governance discourages investor confidence and restricts access to international markets. The government must promote corporate restructuring and independent board oversight to improve transparency and attract foreign investment.

Political instability and inconsistent policies also deter long-term investment. Unreliable electricity, high logistics costs, and weak infrastructure further raise production costs, while burdensome regulatory frameworks discourage business formalization and growth. These issues must be urgently addressed.

Unlike India’s globally recognised brands -- such as Tata, Infosys and Mahindra -- Pakistan lacks strong international brands capable of competing on the world stage. Pakistani companies face challenges in building global sales and brand recognition, limiting their ability to establish a strong presence in international markets.