LAHORE: The Pakistan Chemical M a n u f a e t u r e r s Association (PCMA) has written to Prime Minister Shehbaz Sharif to retain the current tariff structure and begin a meaningful consultative process before making any changes.

The PCMA said the proposed tariff reductions in the federal budget would severely impact the chemical industry, threatening its long-term viability and undermining Pakistan`s broader objective of industrial self-reliance.

`Therefore, we urge the government to retain the existing tariff structure for the chemical sector in the fiscal year 2025-26, as tariffs are a global phenomenon. We propose a detailed and inclusive consultation process with stakeholders to revisit and, where appropriate, recalibrate the cascading duty structure in the next budget cycle. A collaborative and phased approach will be critical to support an industry already under significant distress,` the letter reads.

`For the chemical industry, tariffs are not a luxury but a necessity for survival in the face of structuraldisadvantages.

Energy prices have risen nearly fourfold in the pastthree years due to heavy reliance on gas-based energy.

The industry also suffers due tothe absence of a local Naphtha or Ethane cracker, forcing the import of essential feedstocks from distant markets, incurring high freight and storage costs.

The corporate tax rate in Pakistan stands at 37 per cent, much higher than the 20-25 per cent range in peer economies.

As a capital-intensive industry, manufacturers face CAPEX (Capital Expenditure) costs nearly 25 per cent higher than regional benchmarks, due to the need to selffinance basic infrastructure such as water treatment systems, effluent management, and backup power supplies. Despite recent interest rate cuts, high country risk premiums keep the cost of capital elevated, discouraging long-term investment.

The chemical industry contributes 3-4 per cent to national GDP, pays over Rs700 billion annually in taxes and duties, supports more than 300,000 direct and indirect jobs, enables import substitution worth over $7bn, and generates $1.2bn in exports each year.

`We remain available for constructive dialogue with the ministries of commerce and industries and FBR to formulate a policy,` the letter concludes.