Pakistan’s rice export sector continues to underperform despite rising production. After the government doubled withholding tax and abolished the Final Tax Regime (FTR), exports began to decline. Last year Pakistan harvested around 10 million tons of rice, up from about 9.3m tons a year earlier, creating a sizeable exportable surplus. Financing costs also eased, and the Drawback of Local Taxes and Levies (DLTL) was allowed from January 23, 2026. Yet both export value and volume fell sharply.
Pakistan’s rice industry illustrates how policy inconsistency can squander a natural competitive advantage. The principal cause is not production but policy failure.
Every harvest season, hoarders invest untaxed money to accumulate paddy and milled rice, artificially pushing up domestic prices. Consumers suffer higher food inflation, retailers blame exports, while exporters attribute declining competitiveness to rising costs and demand subsidies. The real problem — large-scale hoarding and cross-border smuggling — remains largely ignored. Unless this distortion is addressed, the same cycle will continue.
Pakistan’s rice exports fell by nearly 50 per cent during the first half of FY26 as Pakistani Basmati prices rose to almost $200 per ton above India’s. Although Pakistan achieved a record 6m tons of exports worth $3.89bn in FY24, exports dropped to $2.19bn and 4.23m tons in FY26, representing declines of over 31pc in value and 26pc in volume.
