Why Pakistan's battery industry should be viewed as a phased industrial transformation rather than a single investment project

Pakistan faces a decision in the energy transition: embrace battery manufacturing or continue importing technologies. The country is projected to need a substantial increase in domestic battery production, with demand expected to rise from 5-6 Gigawatt-hours today to 40-51 Gigawatt-hours by 2031. However, Pakistan currently relies heavily on imports for battery cells, packs, and critical materials, with no commercial-scale cell manufacturing or national battery testing infrastructure in place.

This reliance on imports could result in an annual battery import bill exceeding $2–3.15 billion by the end of the decade.

Pakistan possesses a coherent roadmap for industrial transformation, including incentives such as reduced sales tax for local manufacturers, accelerated depreciation, protective duties on imported batteries, and a localization strategy targeting 70% domestic value addition in the initial phase. However, more needs to be done to ensure implementation and address critical gaps.

Export competitiveness is a major challenge, as only a few percentage points of cost differences can determine investment decisions in global supply chains. The Export Facilitation Scheme, which allows exporters to import machinery and raw materials duty-free, should be extended to battery manufacturers to create an export-oriented industry.

Technological flexibility is also crucial, as battery technology is rapidly evolving. Pakistan should adopt a technology-neutral policy that encourages innovation while avoiding a lock-in to a single pathway.

The country also has untapped potential in raw materials, with documented lithium deposits and high-purity graphite reserves. However, these resources remain largely unprocessed. Industrial policy should not only focus on assembly operations but also promote value addition across the production chain. Quality assurance is another urgent weakness, as Pakistan currently lacks a comprehensive testing and certification framework for lithium-ion batteries.

Establishing accredited testing facilities, strengthening certification capacity, and introducing digital traceability systems can improve consumer confidence, facilitate warranty management, and create the foundation for a future recycling industry.