ECC rejects sugar import subsidy; pushes for price deregulation

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has reaffirmed its stance on deregulation of sugar price, reiterating that no subsidy or tax exemptions will be available for sugar imports in FY 2025-26, Newzshewz had learnt reliably.
On June 27, 2025, Ministry of National Food Security and Research sought the permission of Chairman ECC/ Finance Minister, Senator Muhammad Aurangzeb to table the summary due to exigency which was granted.
The M/o NFS&R briefed the ECC that a meeting of the committee constituted by the Prime Minister on March 16, 2025, under the Deputy Prime Minister, was held on June 19, 2025 wherein it was observed that current trends in prices of sugar are higher, while the stocks of sugar are not sufficient enough to bring stability in the prices in the market.
It was deliberated that the current situation is resulting in demand-pull inflation, which can only be overcome by supplying sufficient stocks in the market. While the sugar industry, despite repeated requests from the Committee, is un-willing to bring-down the Ex-mill price to agreed range of Rs.154 to 159/kg, hence it was recommended by the Committee to import up to 0.500 MMT of white sugar.
Subsequently, a meeting of the Sugar Advisory Board (SAB) was held on June 23, 2025, wherein the stock position of sugar, as reported by provinces at 2.575 MMT, and the average Ex-mill prices were discussed and reviewed. It was also deliberated that the monthly average consumption, net of exports, since start of crushing season i.e. November 21, 2024, is estimated at 0.541 MMT, which if presumed continuing may hardly meet the domestic demand by start of next crushing season, let alone a reasonable carry-forward stock for 2025-26.
Ministry of National Food Security and Research has carried out consultative discussions with the sugar dealers and concerned Federal and Provincial Government departments regarding the likely price trends in the next 4 to 5 months, till start of next crushing season.
According to the feedback, particularly from the Sugar Dealers, the stocks are neck-to-neck with the demand which has created room for hoarding and profiteering, hence. the price may escalate further to Rs 190/kg Ex-mill and Rs. 200/kg retail price by November 2025.
In order to control the current unrelieved escalation of prices of white sugar, it is proposed that the government may consider importing white sugar, granting relief in all duties and taxes by the federal government till September 30, 2025.
M/o NFS&R in consultation with Provincial Governments will devise modalities and distribution mechanism and determine the prices (wholesale and retail) of sugar, based on estimated landed cost plus transportation of imported sugar to destination plus dealer’s margin, recipient agency, payment mechanism to TCP, etc. For the said purpose, a Steering Committee with following composition was proposed: (i) Federal Minister for MNFSR (Chairman), Federal Minister for Commerce, SAPM to Ministry of Foreign Affairs, (Tariq Baiwa) Secretary, Finance Division Secretary, Industries and Production Division Secretary, Commerce Division Secretary, MNFSR, Chairman, FBR, Chief Secretary, Punjab / Sindh / KPK /Balochistan and Chairman, TCP.
The Committee will decide the quantity of sugar to be imported, and will also determine the mode of procurement’ including G2G procurement, through private dealers, through Trading Corporation of Pakistan, or using a mix of all modes.
The TCP has provided its detailed working of estimated landed cost inclusive of all taxes as well as excluding the duties and taxes on the basis of import of 100,000 (+/-S MT of white sugar.
After explaining the issue in detail, MNFSR requested the approval of the ECC to import up to 0.500 MMT of the white sugar through the proposed mechanism.
During the ensuing discussion, the Finance Division apprised the forum that no subsidy has been budgeted in the budget for FY 2025-26 for the import of sugar and therefore the MNFSR needs to ascertain how the import of sugar will be financed. It was also pointed out that as pet IMF program no waiver of duties and taxes could be allowed.
The ECC observed that there is a need to implement the previous directions of the ECC with regard to the deregulation of sugar prices.
It was also observed that proposal of import should have accompanied the attendant financial implications which should be submitted under the recommendations of the Committee to be approved by ECC.
After detailed discussion, the ECC approved proposal of Steering Committee which will present its recommendation to the ECC with detailed financial implications for further decision. Ends