Islamabad: The Sindh government has opposed key provisions of Pakistan’s proposed national sugar policy, raising concerns over the federal government’s ability to meet its commitment to the International Monetary Fund (IMF) to approve the policy by the end of June 2026.

The provincial cabinet has rejected the immediate deregulation of the sugar sector and opposed plans to abolish sugarcane crop zoning and lift restrictions on the establishment of new sugar mills. The objections have been formally shared with the federal government ahead of the IMF deadline, The Express Tribune reported.

❮
❯

The draft policy, prepared by the federal government in consultation with provinces and industry stakeholders, seeks to reform Pakistan’s highly regulated sugar industry by easing controls on pricing, licensing, production and trade.

However, the Sindh government argues that regulation of the sugar sector falls within provincial jurisdiction and that any national policy must respect provincial authority over sugarcane pricing, licensing, zoning and industry oversight.

In its response, the provincial cabinet strongly opposed the establishment of new sugar mills, stating that existing mills are already operating significantly below their approved capacities.

Sindh officials said the province is not against reform but favours a gradual transition. Provincial government spokesperson on irrigation and agriculture, Buland Khan Junejo, said deregulation should be implemented over a period of five to ten years rather than immediately. According to him, abrupt deregulation could leave farmers vulnerable, particularly during periods of high sugarcane production when prices tend to decline.

The federal government’s draft policy proposes removing restrictions on processing activities, eliminating crop zoning requirements and ending approvals related to new mills and capacity expansion, subject to agreement among provinces. Sindh, however, wants to retain strong provincial control over these areas.

Farmer groups have also raised concerns about parts of the proposed policy. Tahir Razaq Gujjar, Chairman of the Pakistan Kissan Council, said the government had not adequately consulted farmer organisations before finalising the draft. While he supported the establishment of new sugar mills as a way to increase competition for farmers’ produce, he cautioned that eliminating crop zoning could create challenges for food security and farm profitability.

Pakistan’s sugar industry is valued at approximately Rs1.1 trillion and produces an average of 6.13 million tonnes of refined sugar annually, making the country the world’s seventh-largest producer. The sector includes 79 sugar mills operating across the country.

The IMF has called for broad reforms in the industry. In its recent staff-level report, the Fund recommended the removal of zoning and licensing restrictions, an end to government-administered sugarcane and sugar prices, and the liberalisation of sugar imports and exports through a phased implementation plan.

Finance Minister Muhammad Aurangzeb has assured the IMF that the government is working towards full liberalisation and plans to secure agreement from both federal and provincial governments before submitting the policy to the federal cabinet by the end of June.

Despite its objections, Sindh has indicated support for some aspects of reform. The province said sugar export liberalisation could be considered if adequate buffer stocks and consumer protection measures are maintained. It also proposed allowing duty-free imports of raw sugar for processing and re-export as refined sugar.

The provincial cabinet recommended that the federal government bear the cost of maintaining strategic sugar stocks. It further argued that decisions regarding sugar exports should remain with provincial governments, while sugar imports during shortages should be coordinated jointly by the federal government and major producing provinces, including Sindh and Punjab.

Sindh also called for retaining and strengthening the Sugar Factories Control Act rather than abolishing it. The province advocated greater transparency, stronger enforcement mechanisms and increased stakeholder participation in industry regulation.

In addition, the cabinet urged the federal government to maintain import duties and tariffs to protect domestic growers from the impact of subsidised foreign sugar. It also proposed strengthening the role of provincial cane commissioners, sharing the cost of research and environmental compliance programmes, and ensuring provincial representation within the Competition Commission of Pakistan.

The debate highlights the challenges facing Pakistan’s efforts to reform a politically sensitive industry, with provincial governments, farmers and the federal administration holding differing views on how quickly the sector should be liberalised.