HYDERABAD: President of Hyderabad Chamber of Small Traders and Small Industries (HCSTSI) Muhammad Saleem Memon, while expressing reaction to the federal budget 2026-27 said that some positive economic and tax reforms have been included in the budget which are welcomed by the business community, however, more concrete and direct steps are needed to solve the problems of small traders, SMEs and small industries.
Memon said that the government’s move to reduce customs duty, additional customs duty and regulatory duty on raw materials and industrial inputs under the National Tariff Policy 2025-30 reflects an industry-friendly policy. This can be expected to reduce production costs and increase the competitiveness of the local industry.
He said that reduction in tax burden on export sector, extension of 0.25 percent concessional tax period for IT exports till 2029, abolition of super tax for businesses with income up to Rs 500 million and reduction in super tax rate from 10 percent to 8 percent for large companies are positive steps. He added that increasing the withholding tax exemption limit for small traders from Rs 100 million to Rs 200 million was a long-standing demand of the business community. Faceless customs assessment, faceless audit, promotion of digital payments, electronic integration and reforms on modern lines of tax system can bring transparency and ease in the business environment.
He said that no clear or specific package has been included by the government in the federal budget for SMEs and especially the cottage industry, which is of utmost concern. A large part of Pakistan’s rural and small economy consists of cottage industry which plays a fundamental role in employment, exports and poverty reduction. We clearly propose that a special “Cottage Industry Development Fund” of at least Rs 200 billion be established from the funds allocated under BISP, so that direct financial assistance can be provided to small craftsmen, cottage industries and micro enterprises.
Memon said that the lack of a comprehensive national package for SMEs and small industries in the budget is a significant shortcoming. A large part of employment, local production and business activities in Pakistan are associated with SMEs, but no effective program has emerged for them in terms of financing at low interest rates, industrial modernization, technology upgradation and export support.
He said that the demand for restoration of the Final Tax Regime (FTR) was being continuously made by the export sector, but this demand was not included in the budget. Although the reduction of withholding tax on exports from 2 percent to 1.25 percent is a positive development, the desired convenience and assured tax system could not be provided to the industry.
He said that small industries in Sindh, especially Hyderabad, Kotri, Nawabshah, Mirpurkhas and other industrial areas, are still facing expensive electricity, limited availability of gas, high production costs and financial difficulties. The lack of a significant reduction in industrial energy tariffs or a special industrial relief package in the budget is a cause for concern. He added that business facilitation should be ensured with new digital compliance systems, production monitoring, electronic integration and surveillance systems. Along with this, the government should introduce timely payment of refunds to export-oriented SMEs, financing at low interest rates, special industrial tariffs and more simplification in the tax system.
Copyright Business Recorder, 2026
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