Experts hail withdrawal of 0.25% EDS as policy shifts toward export growth

Experts and industry leaders have welcomed the government’s decision to withdraw the 0.25% Export Development Surcharge (EDS), calling it a timely relief for exporters and a crucial boost to Pakistan’s competitiveness amid rising cost pressures.

“The removal of EDS is a relief for exporters at a time when cost pressures are eroding competitiveness,” Waqas Ghani, Head of Research at JS Global, told Business Recorder on Tuesday.

“While the fiscal impact is minimal, the signal is important that policy is finally aligning with export-led growth. The key now is ensuring this move is complemented by broader trade facilitation and structural reforms to ease the cost of doing business,” he added.

Meanwhile, Bilal Ejaz, analyst at Ismail Iqbal Securities, said that the decision comes “amid deteriorating external balances”.

Pakistan’s trade deficit for 4MFY26 surged by 39% to $12.6 billion, driven by a 16% rise in imports and a 4% decline in exports, with food exports plunging 35%.

“While the fiscal impact of scrapping the surcharge is limited, it slightly improves exporters’ cost dynamics. However, the measure alone is unlikely to alter export trends without broader structural support materially,” he said.

The Export Development Surcharge was a 0.25% surcharge on export value, collected when export proceeds were realized and funneled into the Export Development Fund. The fund is a government-backed pool of money, financed by the export development surcharge, which supports export-promotion projects — like training institutes, trade missions, research, marketing, and infrastructure — to boost Pakistan’s export capacity

In a major development, the government announced on Monday that it will withdraw the 0.25% EDS on exports, effective immediately.

The decision was taken at a meeting presided over by Prime Minister Shehbaz Sharif, which was also attended by the experts.

The PM had earlier constituted a dedicated Working Group on EDS, chaired by Musadaq Zulqarnain, to reassess the Export Development Fund (EDF) and propose reforms.

The prime minister also directed the formation of an interim steering committee, led by private-sector representatives, to oversee the utilisation of the Rs52 billion funds currently available in the EDF.

Musadaq Zulqarnain, who chaired the Prime Minister’s Working Group on EDS and serves as the CEO of Interloop Limited, termed the decision “a most needed relief to the export sector”, while thanking the PM for ordering immediate implementation of the recommendation of the Working Group.

Export-sector representatives echoed this sentiment.

Khurram Mukhtar, the Chief Executive of Sadaqat Limited and Chairman of Pakistan Textile Exporters Association (PTEA), termed the decision “a meaningful step forward towards enhancing exporters’ competitiveness”.

“Let’s continue working together to achieve the remaining pending reforms, ensuring our export fraternity becomes more competitive and robust,” he added, in a post on a social media platform.