No subsidy or tax relief on imports: ECC sticks to sugar deregulation

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has reaffirmed its stance on deregulating sugar prices, reiterating that no subsidy or tax exemptions will be available for sugar imports in FY 2025-26.

The Finance Ministry communicated this clearly on financial position and commitments with the International Monetary Fund (IMF).

On June 27, 2025, the Ministry of National Food Security and Research (MNFS&R) sought emergency approval from the ECC Chairman and Finance Minister Senator Muhammad Aurangzeb to present a summary due to urgent market concerns. Approval was granted.

De-regulating the sugar industry: do not drop the ball again

The MNFS&R briefed the ECC that a meeting of the Prime Minister’s Committee, formed on March 16, 2025 under the Deputy Prime Minister, was held on June 19. The committee noted that sugar prices remain high, and current stock levels are inadequate to stabilize the market.

The committee concluded that demand-pull inflation in the sugar market could only be mitigated by increasing supply. Despite multiple appeals, the sugar industry has refused to reduce ex-mill prices to the agreed range of Rs.154–159/kg. As a result, the committee recommended importing up to 500,000 metric tons (0.500 MMT) of white sugar.

A subsequent Sugar Advisory Board (SAB) meeting on June 23 reviewed stock levels, reported at 2.575 MMT, and evaluated consumption trends. The average monthly consumption, net of exports since the start of the crushing season (November 21, 2024), is 0.541 MMT — a level that may only just meet domestic demand through the next season, leaving no surplus stock for FY 2025-26.

Consultations with sugar dealers and federal and provincial agencies reveal tight supply and rising demand, enabling hoarding and profiteering. Projections suggest sugar prices could climb to Rs.190/kg ex-mill and Rs.200/kg at retail by November 2025.

To curb the ongoing price surge, the MNFS&R proposed importing white sugar and requested the federal government provide duty and tax relief on imports until September 30, 2025.

A Steering Committee was proposed to manage import logistics, price setting, and distribution, including Federal Minister for MNFSR (Chairman), Federal Minister for Commerce, Special Assistant to the Prime Minister (Foreign Affairs), Secretaries of Finance, Commerce, MNFSR, and Industries, the FBR Chairman, Chief Secretaries of all provinces and Chairman of the Trading Corporation of Pakistan (TCP).

The committee will determine the import quantity and procurement methods, including government-to-government (G2G) deals, private importers, or via the TCP.

The TCP has provided cost estimates both inclusive and exclusive of duties/taxes for an import volume of 100,000 MT (+/- 5%).

Following the presentation, MNFSR formally requested the ECC’s approval for importing up to 0.500 MMT of white sugar through this mechanism.

However, the Finance Division emphasized that no subsidy is allocated for sugar imports in the FY 2025-26 budget and IMF conditions prevent any waiver of duties or taxes. The ECC reiterated its earlier directive to deregulate sugar prices, noting that any import proposal must include detailed financial implications for ECC approval.

After a thorough discussion, the ECC approved the formation of the Steering Committee, which will submit detailed recommendations and financial evaluations for final decision-making.

Copyright Business Recorder, 2025