A sweet war is all set to erupt between India and Pakistan.

No, it has nothing to do with the contentious Line of Control that the neighbouring nations have been fighting all these years.

This war concerns sugar.

India is all set to register a record sugar production with the area under cultivation going up considerably in the country.

But the bumper sugar production in excess of three-million tonnes in India has made Pakistan nervous. Pakistani traders say Indian exporters are trying to dump sugar to the Pakistan markets at considerably cheap prices.

Already, the sugar millers' association in Pakistan has asked the government there to double the existing duty of 15 percent on the import of refined white sugar to block the entry of Indian sugar into Pakistan market.

A leading sugar exporter in India pointed out that many traders in India are looking forward to export sugar to Pakistan, through the Wagha border.

"It is easy to trade sugar with Pakistan, as our cost of operation is considerably less. Pakistan is a lucrative market, and since we expect excess sugar production, we are planning to sell tones of sugar to traders in Karachi and Lahore," he told Commodity Online.

Sugar millers in the Punjab province of Pakistan said Indian traders have already begun giving lucrative offers to their Pakistani counterparts.

Indian sugar would cost about Rs. 28.50 per kg to local importers at Lahore, which is cheaper than the sugar prices currently in Pakistan.

Thus, Pakistan millers have demanded the government to double the existing duty of 15 per cent on the import of refined white sugar.

"We hope the government hikes the import duty on sugar to block Indian sugar to Pakistan," a leading sugar miller was quoted as saying in Pakistan media.

Sugar prices have been on a decline in domestic markets in Pakistan. In fact, recovering the cost of production has proved a challenge for millers.

Now, the threat of import of Indian sugar has spread panic in Pakistan markets as millers there feel that they cannot compete with Indian sugar.

India is the largest producer and consumer of sugar in the world, with Maharashtra contributing over one-third of country's sugar output.

According to current estimates, the sugar output may jump to 27 million tonnes during the season that ends on September 30, 2008 from an estimated 25 million tonnes in 2006-07.

Officials say record output in India may lower the chances of a recovery in prices of the commodity.

India's sugar export availability will cap world sugar prices and be the focus of the world market in the coming years, said Czarnikow Sugar on Monday.

"India's return to the export market is likely to see sugar sold below cost during this growth cycle as stocks are built up," Czarnikow said in its monthly report.

"With the world market the likely backstop for these surpluses India will pressure any possible rise in world market price," it said.

Czarnikow forecasts India's sugar production will rise to a record 24.9 million metric tons is 2006-07 from 12.7 million tons two seasons ago. It estimates that exports will be around 1.5 million tons.

Global production in sugar is also headed for the first surplus in four years after price gains in 2004 and 2005 led growers in Brazil, the largest producer, and Asia to boost plantings.

The International Sugar Organisation last month forecast a surplus of 7.2 million tonne, 24 per cent more than its previous estimate.