By Ahmed Malik
Small industrial units in Sindh are faced with tough problems of high cost of loans, extreme lending rates and poor government encouragement factor.
Industrialists cautioned that in the absence of immediate policy intervention, hundreds of small and medium enterprises (SMEs) are likely to close in the next few months.
Although an important source of employment and regional economic development, SMEs in Sindh are still confronted with restricted access to credit and a difficult working environment for lending.
Manufacturing Distribution Across Sindh
Karachi Division contains approximately 67 percent of the province’s manufacturing units; the remaining 33 percent are located in underdeveloped districts including Hyderabad, Sukkur, and Larkana which suffer from lack of infrastructure and utilities.
Business owners throughout these districts have expressed major issues with the banking climate.
Disappointment Over Federal Budget 2025-26
Ahmed Ali Memon, President Sindh Small Industries Association has expressed disappointment over the announcement of 2025-26 federal budget saying that it did not give any sort of relief.
“We hoped there would be incentives, tax relief and a low-mark-up financing package for depressed industrial zones. Instead, what we find is a budget which favours big business and large-scale industry,” he said.
He railed against the cost of doing business. We pay high power fees and still have daily blackouts. Now our operation costs keep doubling every year, how are we supposed to compete?’ he asked.
Issues With Bank Loans and Interest Rates
Speaking on the occasion, Shan Elahi Sehgal, Vice President said that loan schemes of State Bank of Pakistan (SBP) announced recently are praiseworthy.
But the majority of the small shopkeepers are unaware about these loans and even if some have listened to them then they would have failed to meet stringent conditions imposed by banks.
“Without a rational mark-up rate and simplified procedures, the desired benefits will simply not reach the ground,” he cautioned.
The current policy rate, he says, is stifling investment. “We need single-digit interest rates if we want industries to expand,” he emphasized.
Need for Infrastructure and Policy Reforms
Industry associations, too, took the Sindh government to task over it as it fails to earmark funds for small industries.
The budget for 2025-26 set aside Rs500m for helping the SMEs — which the industry leaders termed as “too meager to make any difference.”
Currently, the Sindh Small Industries Corporation (SSIC) is managing 19 Small Industrial Estates (SIEs) and three Industrial Parks all over the province.
But many are underdeveloped, with inadequate infrastructure, erratic utilities and slow financing for operating units.
The industry is demanding that policy measures to protect the sector be implemented immediately.
They suggest low-interest loans, risk-shared arrangements for banks to increase their lending, and programs at the district level to boost industrial growth in rural and semi-urban regions.
Shan Elahi Sehgal also called on the government to enhance energy supplies, modernize infrastructure as well as to create a one-window regulatory process for eliminating bureaucratic wrangling and thus easier financing.
“The role of the small industrial sector is to absorb labor and it’s very important for job creation,” Shan said. “Sindh economy cannot be optimally exploited without low-cost credit and infrastructure improvement.
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