Wirana Shipping has asked the Government of Pakistan to tax recovered shipbreaking waste equally to imported waste. This request follows local efforts to reform the tax mechanism that encourages steel producers to purchase waste from abroad.
Tax Issues for Local Producers
According to a notification from the Federal Board of Revenue of Pakistan (SRO 1245(I)/2026), local steel producers using domestic waste are required to pay a sales tax of 30 rupees per unit of electricity consumed. In contrast, eligible manufacturers who have used more than 70% of imported waste in the past 12 months pay only 5 rupees per unit of electricity. These payments can be adjusted against output sales tax, but the difference in initial collection can impact factories' cash flow and supplier choices. For shipbuilders, this issue adds difficulty to selling materials in a weak steel market.
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Challenges in the Scrap Market and Impact on Employment
Wirana Shipping has highlighted existing inequalities for local shipbuilders and their negotiations with officials in its recent forecasts. Weak demand has prevented factories from accumulating inventory, and competition with imported materials puts additional pressure on local yards. Shipbuilding provides Pakistan with steel scrap and steel sheets and also supplies recovered non-ferrous metals. This industry also contributes to job creation in the yards and businesses that have served this industry for decades.
The availability of European scrap in the future is also uncertain. EU waste export regulations will come into effect on May 21, 2027, and permitted destinations and waste streams will require permits. The list of proposed countries by the European Commission is still under consultation.
Rakesh Khetan, CEO of Wirana Shipping, said: "Pakistani shipbuilders supply materials that the steel industry needs and create jobs for businesses beyond the yards. However, the current tax arrangements encourage factories to purchase imported waste. We want the government to recognize the value of recovered materials in Pakistan and give them tax equality. With reduced access to foreign waste, Pakistan has good reasons to support the existing recycling industry."
Hitesh Vyas, Vice President of the Middle East and Green Recycling Coordinator at Wirana Shipping, added: "The government has initiated a 12 billion rupee (approximately 43 million dollars) program to upgrade infrastructure in Gadani. However, the tax arrangements have put the targeted industry in a disadvantageous position due to this investment."
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