KARACHI, March 20: Indian sugar coming through Afghan Transit Trade (ATT) is finding its way into local market in a big way thereby depressing prices and causing severe damage to the domestic industry and sugarcane growers, industry sources told Dawn on Thursday.

As a result the sugar industry has run into deep financial crisis and presently it owes around Rs35 to Rs40 billion to the growers.

The other major issue, which has upset the viability of sugar industry, is the arbitrary fixation of cane prices by provincial governments and federal government’s control over retail price of sugar, the sources said.

In anticipation of a bumper cane crop, the industry had been demanding of the government to allow 50 per cent of the one million tons excessive sugar for export and the balance be lifted by the Trading Corporation of Pakistan (TCP) to develop buffer stocks.

The industry claims that most of the Indian sugar destined for

Afghanistan is unloaded in the domestic market resulting in a massive crash in sugar prices.

Talking to Dawn from Peshawar Pakistan Sugar Mills Association’s zonal chairman Iskander M Khan said that the Indian sugar industry had prospered at the cost of Pakistani sugar industry. He further said that the Indian government had given transport subsidy of Rs1,350 to Rs1,450 per ton to facilitate sugar exports to Afghanistan.

Contrary to this in Pakistan the sugar industry has to pay 15 per cent regulatory duty on exports to Afghanistan and then it is left to compete with Indian sugar, which was not only exempted from customs duty and sales tax but also being subsidised by its government.

Mr Iskander said that the domestic retail price of Rs24 per kg did not even cover the cost of sugarcane, resulting in massive losses to the industry in addition to sharp decline in sales tax collections during the current fiscal year.

He said that the sugar demand in Afghanistan did not exceed 150,000 tons whereas India had exported over 450,000 tons to that country. Therefore, the huge balance of 300,000 tons en route to Kabul had made its way into domestic market, which wrecked the industry.

The zonal PSMA chief said that even the calculation of sugarcane price by Minfal for the 2007-08 season warranted ex-factory sugar price to be at Rs29.50 per kg including Rs3.84 sales tax.

He also alleged that the TCP was favouring a few mills and instead of procuring the commodity on equal basis from the entire industry, it has procured bulk sugar from a few mills.