Combating Grey Trade: Enforcing SRO 237 for Food Safety and Revenue Protection

The persistent issue of grey channel trade in Pakistan has become a critical concern for local food manufacturers and regulatory bodies. These stakeholders are calling for stringent enforcement of the Statutory Regulatory Order (SRO) 237(1)-2019, issued by the Commerce Ministry in 2019. This regulation aims to curb illegal trade by ensuring that imported food products meet specific standards, but the continued influx of non-compliant and unsafe food products necessitates immediate action.

Grey trade poses a severe threat to Pakistan’s economy and public health. According to a 2022 report by the Lahore Chamber of Commerce & Industry, the country loses approximately $2.63 billion annually due to smuggling, with smuggling-prone food items valued at around $9 billion. This loss is equivalent to about 3% of Pakistan’s Gross Domestic Product (GDP).

SRO 237 mandates several key requirements for imported food products: Imported food products must have at least 66% of their shelf life remaining at the time of import, ensuring that consumers receive products that are still fresh. Ingredients must be listed in both English and Urdu, making product information accessible to all consumers in Pakistan. Products must have halal certification from accredited authorities, including the appropriate logo and labeling in a specified format, to meet religious dietary requirements.

Local food manufacturers, who comply with strict regulatory standards and incur additional costs to meet these requirements, are suffering from declining sales due to the presence of non-compliant products. This decline in legitimate sales leads to a significant reduction in government revenue from indirect taxes. Multinational companies with substantial local manufacturing operations are also impacted, as they face competition from illegally imported goods that evade regulatory scrutiny.

The influx of grey trade products raises significant food safety issues. These products often violate local food regulations outlined in SRO 237, displaying incorrect or unauthenticated nutrition information, dubious halal certification, and labeling anomalies. Furthermore, the freshness and shelf life of these products are questionable, as they lack traceability and local registration.

Consumers face potential health risks due to the lack of clarity and trust in the quality of these products. Issues such as incorrect ingredient information, short shelf life, and exposure to unsuitable temperatures during transportation exacerbate these risks.

Food companies are calling on the Ministry of Commerce, the Federal Board of Revenue, the Customs Directorate, and provincial food authorities to enforce SRO 237 more rigorously.
They demand coordinated efforts at both federal and provincial levels to conduct raids in the retail sector to remove non-compliant products from shelves as well as track the sources of these products to hold retailers accountable.

It is notable that the Chief of Army Staff has also expressed support for tightening borders to prevent smuggling. Trade bodies, industry associations, and leading local and multinational food manufacturers also stress the importance of protecting consumer health, safeguarding government revenue, and promoting a documented sector.

Effective enforcement of SRO 237 requires robust coordination between federal and provincial authorities. Agencies such as the Punjab Food Authority, Sindh Food Authority, Pakistan Standards and Quality Control Authority (PSQCA), and provincial law enforcement must collaborate with the Ministry of Interior to mobilize resources. Border security forces and customs intelligence should conduct raids on borders and warehouses to

intercept smuggled goods. The Federal Investigation Agency (FIA) should rigorously prosecute intellectual property rights violations, while provincial food authorities must deter retailers from stocking illegal items.

The need to clamp down on grey trade and enforce SRO 237 is crucial for protecting local businesses, ensuring consumer safety, and maintaining government revenue. By taking decisive action to eliminate non-compliant products from the market, Pakistan can safeguard public health, support legitimate businesses, and secure vital revenue for the national exchequer. Coordinated enforcement measures are essential to uphold the highest standards of food safety and quality.

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