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Pakistan sugar body opposes import of Indian sugar

Muhammad Najeeb in Islamabad

The Pakistan Sugar Mills Association has objected to the government's decision to allow the import of 50,000 tons of sugar from India through the land border at Wagah.

A PSMA spokesman said: "The government seems to be bent upon destroying the local market." He said since Indian sugar is cheaper, its availability in the country has crashed the local market.

Sugar prices in Pakistan crashed Friday as prices crossed the barrier of Pakistani Rs 24,000 per ton, the lowest in the new season. Prices of white refined sugar in the wholesale market started at Rs 23,900 per ton, Rs 500 less than earlier in the week.

Earlier this year, the government had banned Indian sugar but later allowed the import of 50,000 tons for which agreements had been reached and Letters of Credit were already issued.

"The LCs for the import of 109,000 tons sugar have expired, but LCs worth 50,000 tons are still valid. We have opened the Wagah border to allow this quantity to come in," said an official of the ministry of industries and production.

The decision came following verification by the Economic Coordination Committee of the cabinet of a report submitted by the State Bank governor that no backdated or revised LC was issued to any sugar importer.

The PSMA had earlier alleged that at least three federal ministers were involved in allowing the import of sugar through backdated LCs despite an official ban.

Asked why the industries ministry allowed the import despite Commerce Minister Razaq Daud terming the sugar as inferior when he banned it, the official said it was inferior only in the sucrose content.

He said Pakistani sugarcane had at least 16 percent higher sucrose content compared with that of India that resulted in higher consumption, but added that the import was necessary for price stabilization.

"Everyday, several racks loaded with Indian sugar are unloaded in Lahore. Lack of demand and over supply has turned the market into sellers' market," the PSMA spokesman said.

He blamed expired letters of credit of about 200,000 tons of sugar that have been revalidated with back dates. "There is no further requirement of import as the country has already enough stocks to meet its requirement," he said.

The PSMA is predicting further slump in the sugar prices. "The indigenous industry cannot compete with India as the raw material -- sugarcane - is available to Indians at the rate of Rs 17-18 for 40 kg as compared to prices in the country at Rs 55-60 for the same amount.

"Furthermore, the Indian government is providing heavy subsidy on the exports of sugar to Pakistan at dumping prices."

According to PSMA, Indians still have a surplus stock of 1.2 million tonnes of sugar available for export.

Indo-Asian News Service

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