ISLAMABAD: The Competition Commission of Pakistan (CCP) has unveiled a comprehensive report identifying major structural weaknesses, policy distortions, and tax leakages in Pakistan’s steel industry one of the country’s largest manufacturing sectors urging urgent reforms to enhance transparency, fair competition, and efficiency.
According to the report, the steel sector contributes approximately 1.4% to GDP and provides over half a million direct and indirect jobs, yet remains mired in unfair market practices, regulatory overlaps, and widespread tax evasion.
The CCP report, titled “Assessment of Competition Concerns and Policy Gaps in Pakistan’s Steel Sector,” highlights that the industry is dominated by a few large integrated producers, while a large number of unregistered and tax-exempt units, particularly in the erstwhile FATA/PATA regions, continue to distort the market and undercut legitimate manufacturers.
The Commission found that tax exemptions granted to FATA/PATA units after the 2018 merger created a dual regime that has led to massive revenue losses to the national exchequer. Many of these units, despite their limited capacity, were found selling products across Pakistan in violation of the exemption’s intended purpose.
The CCP also expressed serious concern over cartel-like coordination among major rebar producers in determining price adjustments, often within hours of one another. This, the report noted, may indicate tacit collusion that artificially inflates construction costs nationwide.
In its analysis of market behavior, the CCP observed that rebar prices in Pakistan have surged by more than 200% between 2018 and 2024, far exceeding the increase in global scrap and billet prices. The disparity, according to the Commission, “raises serious questions about cost pass-through justification and pricing coordination.”
The report also draws attention to import protection policies, including high duties on steel billets and hot-rolled coils, which limit competitive pressure on local manufacturers and discourage innovation. The CCP recommended phasing out distortionary tariffs and introducing a level playing field to make domestic steel more competitive regionally.
It further highlighted the Pakistan Standards and Quality Control Authority’s (PSQCA) weak enforcement mechanisms, which have failed to ensure product quality compliance. The CCP recommended mandatory product standard certification for all steel producers and public disclosure of licensed firms to curb the influx of substandard steel in the market.
Additionally, the report revealed that the documentation gap in the steel value chain—particularly among re-rolling and re-melting mills—remains a key source of tax evasion, estimating that the federal and provincial governments lose billions of rupees annually due to underreporting of production volumes and unregistered sales.
The Commission urged the Federal Board of Revenue (FBR) and the Ministry of Industries to adopt technology-based monitoring, such as digital production tracking and mandatory invoice verification, to plug these leakages.
The report also called for the establishment of a sectoral competition compliance program in collaboration with the industry to promote transparency and curb anti-competitive conduct.
In its concluding remarks, the CCP emphasized that reforming Pakistan’s steel industry is “critical not only for fair competition but also for lowering infrastructure costs, boosting exports, and ensuring sustainable industrial growth.”
