ISLAMABAD: The documented steel industry has requested Prime Minister Shehbaz Sharif to declare the domestic steel sector as a strategic industry in view of escalating global and regional conflicts, particularly the recent US-Israel war against Iran.
In a communication to the Prime Minister and Finance Minister on Tuesday, the steel industry referred to the ongoing state of conflicts globally as well as regionally, and the heightened importance of the steel industry for security needs. It strongly proposes that the government of Pakistan immediately declare the domestic steel sector as a strategic industry. In view of escalating global and regional conflicts, particularly the recent US/ Israel-Iran war, it has become evident that a self-reliant and robust steel industry is a critical pillar for national security and survival.
READ ALSO: Steel industry questions economic, tax policies
Over the last decade, the leading players of our industry have made massive investments to increase capacities and introduced state-of-the-art technologies. It is a major source of job creation and provides millions of direct & indirect jobs and stimulates 45 downstream industries.
According to a recent World Bank report, Pakistan’s steel industry has the lowest incidence of emissions compared to the high emissions rate globally, positioning Pakistan as a responsible industrial player.
The steel industry has faced the most severe crisis in recent years due to ‘demand destruction’ in the country. During FY 23, 24, and 2025, scrap imports dropped nearly 50 percent due to low demand for steel as the construction activities came to a grinding halt due to sky-high power costs, record-high cost of borrowing, and massive currency devaluation during these years.
This slump resulted in revenue loss and increased the burden of capacity payments as power consumption fell to nearly half of the industry’s actual potential.
To build upon the government’s current successes and avoid further jeopardy, we propose the following urgent interventions:
(i) The government should declare the domestic steel sector a strategic industry and drastically cut taxes and curb tax evasion to make domestic steel competitive and increase government revenue through higher volumes, as well as through the revival of the industry.
(ii) The government should encourage the State Bank of Pakistan to further cut policy rates and direct banks to offer targeted incentives for the building materials sector.
(iii) The government should expand PSDP allocations and announce incentives to stimulate the construction industry.
(iv) The government should provide globally competitive power rates to allow the steel industry to double its consumption of power from 4 billion units to 8 billion units annually, effectively reducing the capacity payment burden.
Copyright Business Recorder, 2026
Comments