Sugar ban sours Wagah trade

The opening up of the Wagah border for trade has meant little for the Indian sugar industry. This is because Pakistan has decided to ban sugar imports from India.

As the demand for sugar in Pakistan rises ahead of the holy month of Ramadan, the country has allowed its private sector to import without any limit, except from India and Israel.

In a notification, the State Bank of Pakistan clarified that "the import of raw sugar by the private sector is allowed without limit and time bar, from worldwide sources except India and Israel".

Pakistan had removed sugar from its positive list of trade with India in 2001 when its domestic market faced a glut and led to prices dropping significantly.

When contacted, a commerce ministry official declined to comment.

He only said, "The matter will be taken up during the bilateral meeting early next month, along with other issues."

The industry is hopeful that Pakistan may be forced to review its decision in the wake of spiralling sugar prices in that country. The prevailing sugar price in Pakistan is around 30 Pakistani rupees a kilogram while that in India is around Rs 18 per kilo. Pakistan is currently facing a sugar shortage of around 200,000-300,000 tonnes.

An Indian official said, "Pakistan will be forced to open its market to India. The move will only favour Pakistan. Only India is in a position to make quick supplies of sugar and at the cheapest rates."' He added that his sources informed him that talks were on again in Pakistan and that the sugar sector may be opened up finally.

Business Standard had reported earlier this month that many private companies and traders had expressed the hope of Pakistan allowing imports of sugar from India. The industry pegs imports at over cost, insurance and freight price of $350-380 a tonne.

"Once Pakistan allows sugar exports from India, we will start finalising the procedures," Sanjay Tapriya, director-finance with Simbhaoli Sugar Mills, had said earlier.

According to the industry, Pakistan's sugar output declined in sugar year 2004-05 (October-September) to 3.3-3.4 million tonnes from 4.0 million tonnes last year. The country consumes 3.6 million tonnes of sugar a year.

India, on the other hand, is in a comfortable position for the remaining three months of the sugar year. Sugar prices are around 17 rupees a kilo.

Though India's sugar output this year is around 13.5 million tonnes, it is likely to rebound to a comfortable 17.5 million tonnes next year, thereby allowing the country to export.

Earlier this month, Pakistan allowed duty-free unlimited import of raw and refined sugar apart from other commodities like wheat and flour, and urea, to augment supplies.

The decision was taken by the Economic Coordination Committee of the Pakistani Cabinet, headed by Prime Minister Shaukat Aziz. Refined sugar imports will take place through the Trading Corporation of Pakistan.