CCP recommends establishment of Steel Ministry, policy overhaul

November 03, 2025 (MLN): The Competition Commission of Pakistan (CCP) has called for the establishment of a dedicated Steel Ministry and the formulation of a national steel policy to address deep-rooted structural and competition-related challenges facing the country’s steel industry.

In its report titled “Competition Assessment Study of the Steel Sector in Pakistan,” released on Monday, the CCP highlighted that the steel industry plays a crucial role in Pakistan’s manufacturing base and overall economic growth but continues to suffer from policy gaps, regulatory inefficiencies, and heavy reliance on imports, said a press release issued.

 The study noted that, unlike global players such as China and India that have dedicated ministries and clear long-term strategies, Pakistan lacks a unified policy framework to guide the sector’s development.

The manufacturing sector remains a key pillar of Pakistan’s economy, contributing 71 % of total exports and employing about 15 % of the workforce.

Within this sector, the steel industry is a major player, with Large Scale Manufacturing (LSM) accounting for over 69 % of total manufacturing and 8.2 % of GDP.

In FY24, local steel production stood at 8.4 million metric tons (MT), including 4.9 million MT of long steel and 3.5m MT of flat steel, while steel scrap imports totaled 2.7m MT, reflecting the country’s dependence on imported raw material.

Despite its importance, Pakistan’s per capita steel consumption remains low at only 47 kilograms, pointing to slow industrial activity and limited infrastructure development. The report identified key demand drivers, including infrastructure projects, urbanization, industrial expansion, and real estate development, with initiatives like the China-Pakistan Economic Corridor (CPEC) providing major stimulus.

 On the supply side, however, the industry faces serious constraints due to energy shortages, high input costs, and limited local raw material availability.

The CCP highlighted the prolonged shutdown of Pakistan Steel Mills (PSM), once a strategic national asset with an annual capacity of 1.1m tons, which has remained non-operational since 2015.

The mill’s financial losses and outdated technology have left liabilities amounting to Rs 400 billion. The report contrasted Pakistan’s situation with countries such as China, India, and Russia, which have advanced their steel sectors through government support, innovation, and strategic investment.

It emphasized the need for Pakistan to develop its local coal and iron ore resources, modernize industrial infrastructure, and adopt energy-efficient and sustainable technologies.

The study further noted that weak regulatory enforcement, frequent policy changes, and tax distortions have created a highly uneven playing field. Substandard steel currently accounts for between 50 and 60 % of domestic production due to poor enforcement of quality standards, putting compliant producers at a disadvantage.

Moreover, tax exemptions in ex-FATA/PATA regions have led to an influx of around 1.5m tons of untaxed steel into settled areas each year, resulting in revenue losses of nearly Rs 40bn.

According to the CCP, the sector also suffers from high entry barriers, market concentration, and limited diversification into high-value-added products. The dominance of undocumented producers and minimal investment in research and development continue to undermine competitiveness.

To revive the sector, the CCP stressed the need for a coherent and comprehensive approach, including the development of a national steel policy, rationalization of taxes, and a stable policy environment.

It called for strengthening institutional coordination by expanding the Ease of Doing Business Committee to include industry and CCP experts, enhancing the capacity of the Ministries of Industries and Commerce, and accelerating processes at the National Tariff Commission.

The report also emphasized the importance of enforcing quality standards, formalizing undocumented producers, and eliminating distortions arising from regional tax exemptions.

It further recommended encouraging Direct Reduced Iron (DRI) technology, promoting local iron ore mining, and incentivizing the adoption of green, energy-efficient technologies to align with global sustainability trends.

The CCP affirmed its commitment to continue working with all stakeholders to develop pro-competition reforms that support innovation, industrial modernization, and long-term sustainability in Pakistan’s steel sector.

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