KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday said the federal budget 2026–27 does not contain any meaningful measures to reduce industrial production costs for exporters, a key demand of the business community aimed at enhancing Pakistan’s export competitiveness in international markets.
Speaking at a press conference at Federation House following the presentation of the federal budget in the National Assembly on Friday, FPCCI President Atif Ikram Sheikh and Senior Vice President Saqib Fayyaz Magoon presented the business community’s detailed reaction to the federal budget 2026–27, which has a total outlay of Rs18.7 trillion.
They termed the budget a mixed package, acknowledging several positive measures while pointing out key gaps in structural reforms.
They congratulated the government on presenting its third federal budget, describing it as an important milestone reflecting policy continuity and an opportunity for long-term economic reforms.
They also appreciated the efforts of the government, its economic team, and FPCCI leadership for steering the economy towards stability under challenging conditions.
They noted improvements in key macroeconomic indicators, including GDP growth of 3.7 percent, fiscal deficit reduced to 0.7 percent of GDP, a primary surplus of 3.7 percent, and a 33 percent reduction in debt servicing costs.
Foreign exchange reserves are projected to reach USD 18 billion by June 30, while per capita income has risen to USD 1,901 from around USD 1,500.
However, they cautioned that investment remains low at 14.38 percent of GDP, savings at 14.3 percent, industrial recovery remains uneven, and urban unemployment has risen to 17 percent, indicating persistent structural weaknesses.
On the fiscal framework, they noted that the Rs15.2 trillion tax target reflects a required 17 percent increase in revenue efforts, while the Rs1.07 trillion petroleum levy could add inflationary pressure amid already elevated global oil prices.
On FPCCI’s proposals, they said several recommendations were accepted, including abolition of Capital Value Tax (CVT) on overseas assets, reduction in super tax (abolished up to Rs500 million income and reduced from 10 percent to 8 percent for higher slabs), extension of the 0.25 percent final tax regime for IT exports until 2035, reduction in withholding tax for construction-related transactions, relief for the salaried class through removal of surcharge and lower tax rates, abolition of FED on international business class travel, and introduction of a fixed tax scheme for retailers with annual sales up to Rs200 million to improve documentation.
They also welcomed allocations such as Rs71 billion for housing and construction and Rs88 billion for export refinance, along with increased development and higher education spending, and noted continued emphasis on compliance improvement and digitalisation.
However, they said several key demands were not addressed, including reduction in energy costs, corporate tax cuts, turnover tax reduction, restoration of the fixed tax regime for importers, abolition of minimum tax and further tax, reforms in Section 8B of the Sales Tax Act, and a comprehensive digital taxation framework. They also pointed out that no specific incentives were announced for overseas Pakistanis sending remittances.
Retailers, they warned, may face added pressure due to increased withholding tax rates, despite already low compliance in the sector.
FPCCI leadership said the Finance Bill would be reviewed in detail in consultation with stakeholders, after which a comprehensive response would be issued within the next few days.
They concluded that while the budget contains positive elements, it still lacks a clear roadmap for reducing production costs, expanding investment, strengthening industrial growth, boosting exports, and achieving technology-driven long-term economic transformation.
Copyright Business Recorder, 2026
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