ISLAMABAD, July 30: The government is considering allowing duty-free import of raw sugar from India to discourage the hoarding of the commodity that creates an artificial price-hike in the local market. Informed sources told Dawn on Saturday that a formal decision to this effect was likely to be taken during the Economic Coordination Committee (ECC) of the cabinet meeting to be headed by Prime Minister Shaukat Aziz on Tuesday.

The sources said that India had a stock of about 18 million tons of sugar. It produces about 17.5 to 18 million tons of sugar a year and consumes about 16 million tons. The sources said that the decision, if taken, might hurt the interest of certain sugar mill owners who had stockpiled their production to create artificial shortage in the market.

According to the sources, the government might also allow the import of raw sugar through land route (Wagha border) from India, which would result in reducing the freight cost of the commodity. The government, through a customs notification SRO567 of 2005, has already allowed duty-free import of raw sugar from all countries to meet the local consumption demand.

According to the sources, the average price of refined sugar in India ranged between Rs20 and Rs24 per kg, while in Pakistan it stood at Rs27.60 per kg. The sources maintained that after processing raw sugar in Pakistani mills, the consumer price of Indian sugar would be around Rs22-24 per kg.

The Indian authorities have already lifted curbs on exports and provided inland transport subsidies to encourage foreign sales. But export orders have so far been scarce, with small lots going to Sri Lanka, Bangladesh, Nepal and Indonesia.

The sources said that India’s sugar exports should be about one million tons in the year to September, down from 1.3-1.5 million tons the previous year. Some 600,000 tons have already been shipped. About 26,250 tons were sold to Iraq in May.

They said that importers had already opened L/Cs for 625,000 tons of raw sugar. Of these, 270,000 tons of raw sugar had been imported till recently. To facilitate the import of raw sugar, the government had also done away with the five conditions necessary for availing of exemption from 25 per cent customs duty. These conditions are: import of sugar in bulk not in bag; imported before April 30, 2005; the raw sugar so imported shall be above 600 ICUMSA — a scale on which colour of sugar is measured and a pre-shipment certificate to this effect shall be necessary; the letter of credit opened shall be registered with the State Bank of Pakistan for the purpose of this notification to reach a cumulative total of 200,000 tons; and letters of credit for import of only 200,000 tons shall be opened only on C&F free out basis.