ISLAMABAD, June 24: The government has decided in principle to increase the regulatory duty on sugar import from 20 per cent to 30 per cent, informed sources told Dawn here on Monday.

It has also been agreed to that the government would help arrange a bridge financing of Rs1.2 billion for the sugar industry for a period of three months to clear export surplus of around 200,000 tons.

These decisions were reached at here on Monday at a meeting presided over by Commerce Minister Abdul Razak Dawood and attended by representatives of Pakistan Sugar Mills Association (PSMA) and officials of industries and commerce ministries.

The sources said that the two sides appreciated that regulatory duty on the import of sugar was to the tune of 60 per cent in India and 65 per cent in the Philippines that was meant for protecting the local industry.

Therefore, the two sides agreed to increase the regulatory duty by 10 per cent to 30 per cent.

The officials of Central Board of Revenue, Ministry of Industries and Commerce would jointly prepare a summary to this effect for approval by President Pervez Musharraf in view of the urgency of the issue since the Economic Coordination Committee (ECC) of the cabinet would be meeting after a fortnight.

In view of competition from sugar exporters of some other countries, the PSMA demanded during the meeting that the government should provide at least Rs7 per kg subsidy for the export of sugar, but the minister turned down the request straight away, a participant of the meeting said.

The minister, however, agreed to another proposal to arrange a bridge financing of Rs1.2 billion through the local banks. The meeting was also informed that sugar export to Afghanistan was taking place through informal channels which needed to be curbed.

The meeting also took stock of Pakistan expectations to export upto 150,000 tons of sugar to Afghanistan but wanted to reconfirm through diplomatic channels whether Afghanistan was still interested in the deal.

The Afghan trade delegation that visited Pakistan last month had expressed its desire to import around 100,000 tons of sugar from Pakistan. Islamabad had briefed the delegation that it had enough surplus sugar to meet Afghan requirements.

Pakistan Sugar Mills Association (PSMA) and other exporters had told the government that given the existing duties and taxes, Pakistani sugar could not compete international market.

They had proposed that the government should provide duty draw back facility to the exporters as an incentive to clear surplus stock well in time to avoid glut in the local market later.

These sources said that Afghan delegation had promised to firm up its final estimates of sugar requirement and then dispatch a relevant delegation for quotations and negotiations on sugar contracts.

The process was delayed due to loya jirga engagements in Kabul but there was no fresh communication on the subject.