Islamabad, April 10: The Economic Coordination Committee (ECC) of the Cabinet is seriously weighing the option of fully deregulating Pakistan’s sugar sector to prevent recurring price controversies and unjustified hikes.
The topic came under discussion during the ECC’s meeting on April 7, 2025, which was chaired by Finance Minister Senator Muhammad Aurangzeb. The issue was addressed under the category of miscellaneous items.
Insiders revealed that the ECC’s deliberations covered several key elements of the sugar industry, including sugarcane production, zoning of crops, storage infrastructure, as well as the import and export dynamics of the commodity.
Participants emphasized that a holistic approach—rather than incremental or fragmented measures—would be more effective in addressing the root causes of market volatility.
In that context, the idea of completely deregulating the sector was brought to the table for consideration.
Push for Sector-Wide Reform
The ECC further recommended that the Ministry of National Food Security and Research conduct a thorough evaluation of the potential impact deregulation would have on sugar supply, demand, and storage at the national level.
It was noted that a structured and comprehensive review should mirror the analytical model previously applied to wheat sector reforms.
As a result of the discussion, the ECC formally tasked the Ministry of National Food Security and Research with preparing a detailed analysis of the entire sugar industry’s value chain.
This report is to include all critical variables and offer insights into the feasibility and implications of possible deregulation.
FBR Revises Ex-Mill Price for Sales Tax Assessment
In a parallel move, the Federal Board of Revenue (FBR) has introduced new regulations regarding the valuation of white crystalline sugar for sales tax purposes.
Through SRO 577(I)/2025, effective from April 1, the FBR has fixed a new minimum ex-mill price of white crystalline sugar at approximately Rs153 per kilogram.
This latest directive supersedes the earlier SRO 1027(I)/2021, dated August 16, 2021, which had previously set the ex-mill value of sugar for sales tax calculation at Rs72.22 per kg.
Under the updated SRO 577(I)/2025, the assessed value of domestically produced white crystalline sugar—including sales tax—is now linked to the average retail market price published by the Pakistan Bureau of Statistics (PBS).
The price used for tax assessment is derived from PBS’s Sensitive Price Indicator (SPI), which is released twice monthly, before the 1st and 16th of each month.
From the national average retail price reported, Rs16 is subtracted to arrive at the official ex-mill valuation for each fortnight.
Policy Synchronization Ahead
The changes come at a critical time, as the government seeks to streamline regulatory mechanisms across key agricultural sectors.
The dual approach—potential deregulation coupled with tax valuation adjustments—reflects a broader strategy to enhance transparency and stabilize pricing mechanisms.
As policymakers work to untangle the long-standing inefficiencies in the sugar market, the ECC’s recent directive signals an intent to address the structural flaws that have allowed market manipulation and erratic price shifts to persist.
The outcome of the Ministry’s forthcoming report could be pivotal in shaping future sugar policy—one that may, for the first time, lean toward deregulating the sector entirely in a bid to create long-term equilibrium between supply and demand.
