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KARACHI June 12 ,2026: The SITE Association of Industry (SAI) has expressed mixed views on the Federal Budget 2026-27. While it welcomed some measures, it said the budget falls well short of addressing the urgent needs of Pakistan’s manufacturing sector.
SAI President Abdul Rehman Fudda said the government showed positive intent but failed to deliver meaningful reforms. He argued that tariff reforms spread over five years, a modest reduction in the Super Tax without a clear sunset clause, and the absence of industrial energy pricing reforms will not revive factories currently operating below capacity.
Furthermore, the association said export-oriented industries, including textiles, light engineering, chemicals, and processed goods, remain dissatisfied. Although the government reduced the export withholding tax from 2% to 1.25%, SAI described the relief as limited. It also criticized the government for not restoring the Final Tax Regime, a long-standing demand of exporters.
Moreover, the association raised concerns over delayed tax refunds. It noted that the Finance Bill does not include any mechanism to release billions of rupees in outstanding GST and income tax refunds. As a result, exporters continue to face liquidity shortages while trying to finance production and compete in international markets.
In addition, SAI identified three major unresolved issues. First, it said high industrial electricity tariffs continue to undermine the competitiveness of Pakistani manufacturers. Second, it criticized the expansion of the Third Schedule of Sales Tax, arguing that it forces businesses to pay sales tax in advance at consumer prices and increases working capital requirements. Third, it opposed the stricter penalty regime, saying it places a heavier burden on compliant businesses while leaving much of the informal economy untouched.
Fudda added that the formal industrial sector continues to shoulder higher taxes, expensive energy, delayed refunds, and stricter penalties while competing in global markets. According to him, these challenges represent the real crisis facing the manufacturing sector, and the budget does little to resolve them.
Finally, the SITE Association urged the government to amend the Finance Bill before the National Assembly approves it. It called for immediate measures to address these concerns before the start of the new fiscal year.
