PIAF urges Finance Ministry to focus on small industries in budget 2025-26

ISLAMABAD
The Pakistan Industrial and Traders Associations Front (PIAF) has called on the Finance Ministry to give top priority to small and medium enterprises (SMEs) in the upcoming Federal Budget 2025–26, stressing that meaningful reforms and targeted support for small industries are essential to revive economic growth and safeguard the livelihoods of millions of workers.
PIAF Chairman Faheemur Rehman Saigol, along with Senior Vice Chairman Nasrullah Mughal and Vice Chairman Tahir Manzoor Chaudhry, gave these proposals during a joint meeting with representatives of various trade and industrial sectors held here at PIAF office in Lahore to finalize budget recommendations. The leadership urged the government to shift focus from temporary relief to long-term strategies that strengthen the industrial base—particularly the SME sector, which remains the backbone of Pakistan’s economy.
“The government must demonstrate its commitment to industrial growth in the 2025–26 budget through solid actions, not mere announcements,” said Chairman Faheem Saigol. “This includes substantial reductions in fuel prices, a cut in the key policy rate, regionally competitive energy tariffs, and swift tax refunds. The government also needs to ease the burden of duties and taxes, especially for SMEs, if we want to stimulate investment and job creation.”
Saigol noted that Pakistan needs to create millions of new jobs annually, and only a vibrant SME sector can meet this challenge. He urged the Ministry of Finance to offer strong, targeted incentives that can spur domestic investment, expand industrial production, and integrate SMEs into national and global value chains.
The PIAF chief stated that his organization has submitted comprehensive and inclusive budget proposals, developed after thorough consultation with stakeholders across Pakistan’s business spectrum. These proposals prioritize liberal investment policies, infrastructure development, a broadened tax base, and job creation through sustainable industrialization.
Senior Vice Chairman Nasrullah Mughal recommended that tax rates should be rationalized to expand the tax net while also curbing the undocumented economy. He emphasized that lower tax rates would improve compliance and make Pakistani goods more competitive in international markets, helping to narrow the trade deficit.
Vice Chairman Tahir Manzoor Chaudhry added that SMEs remain the worst-hit segment of the economy and continue to face structural challenges. “The government must now provide special relief to these enterprises through easier access to finance, tax exemptions, and capacity-building support,” he said.
Chaudhry highlighted that only 5–7 percent of private sector credit is currently allocated to SMEs, with fewer than 200,000 active SME borrowers. This figure is alarmingly low for a sector that contributes nearly 40 percent to GDP and employs over 80 percent of the non-agricultural labor force. He proposed the introduction of new lending programs that allow SMEs to access affordable credit without collateral, along with dedicated SME desks in banks and simplified approval processes.
Faheem Saigol also reiterated his call for a five-year tax holiday and audit exemption for newly registered SMEs to encourage formalization and business growth. “If we want to build a resilient economy, we must support the sector that represents over 90 percent of Pakistan’s 3.2 million business enterprises,” he stressed.
He further proposed that the government announce special incentive packages for the SME sector in the upcoming budget, including reduced energy tariffs, easier access to export markets, and skill development programs. These measures, he said, will allow small enterprises to scale up operations and contribute more significantly to exports, where SMEs already account for around 25 percent of total earnings.
The PIAF leadership also urged the government to revisit its tax structure to favor production and exports. Among the key recommendations were the reduction of sales tax to a single-digit rate, lowering corporate tax, and shifting the tax system toward direct taxation. They also called for reviving investor confidence through consistent economic policies and support for local industry.