In a major policy reversal, the government, working alongside farmers and representatives of the sugar industry, has agreed to fully deregulate the sugar sector by the end of June 2026, taking a significant step toward implementing structural reforms recommended by the International Monetary Fund (IMF), according to the media reports.
As per the news report by, Business Recorder, according to a detailed reform plan, the move will place the sugar industry entirely in the hands of market forces, bringing an end to decades of state control. The decision follows the earlier deregulation of the wheat sector, with sugar now becoming the next major commodity to be liberalised.
The plan sets out a broad package of reforms aimed at withdrawing government oversight from the sector. Under the new framework, farmers will be free to grow sugarcane without restrictions on crop varieties or designated cultivation zones.
They will also be allowed to sell their produce to any sugar mill of their choice or divert it toward jaggery production, without official interference.
A key element of the policy is the removal of government control over sugarcane pricing. The existing minimum support price system will be scrapped, and prices will instead be determined by market demand and supply—signalling a decisive shift toward market-based agricultural pricing.
The government has also committed to ending subsidies on sugar exports and abolishing export quotas currently imposed on sugar mills.
In another major liberalisation step, the long-standing ban on sugar imports and exports will be lifted, allowing unrestricted trade in the commodity. The plan further calls for removing restrictions on the establishment of new sugar mills nationwide.
Sugar mills that have remained closed for up to eight months will be permitted to import raw materials, while all mills will gain the flexibility to process both domestically produced sugarcane and imported raw sugar.
To enhance capacity utilisation, mills will be allowed to import raw sugar, refine it locally, and export the finished product. Authorities expect this measure to boost refined sugar exports and improve overall efficiency in the sector.
Although the reforms significantly reduce government involvement, certain safeguards for farmers have been included. Before each sowing season, authorities will issue a list of prohibited sugarcane varieties to discourage cultivation of low-yield or unsuitable crops, a step aimed at protecting farmers from potential losses.
Officials believe this approach will help balance market liberalisation with farmer protection, ensuring growers are not exposed to the risks of completely unregulated cultivation.
The reform package marks a decisive shift toward a market-driven agricultural economy, in line with IMF-backed structural reforms. By withdrawing from the sugar sector, the government hopes to ease its fiscal burden, encourage competition, and fulfil its international reform commitments.
If implemented as outlined, the measures are expected to fundamentally reshape the sugar industry, enhancing its competitiveness both at home and abroad, while significantly affecting farmers, mills, and consumers.
