The report examines the relationship between industrial and environmental policies in Pakistan, recommends policy measures that could optimize economic benefits from industrial development with reduced environmental damage. Although data are scarce, it is clear that industrial pollution is increasing rapidly and that the health and productivity impacts are significant and worsening. Pakistani industries are increasingly contributing to air and water pollution. Major industrial contributors to water pollution are the pulp and paper, chemicals, petrochemicals, refining, metalworking, food processing and textile industries; power generation for various industrial purposes and brick kilns are major sources of air pollution.