ISLAMABAD, Aug 5: The Economic Coordination Committee of the Cabinet (ECC) here on Monday imposed Rs5 per kg central excise duty on the import of raw sugar in order to protect the local industry.

The ECC meeting which was presided over by Minister for Finance Shaukat Aziz noted decline in the international market price of raw and refined sugar.

It was informed that the current FOB price of white sugar in London has reduced from $239 per ton last year to the current price of $227 per ton this year.

The meeting, therefore, decided to protect the interests of the farmers and the local industry by imposing central excise duty at the rate of Rs5 per kg on raw sugar and excluded it from DTRE regime to prevent any misuse of this facility. These measures, the ECC noted, will have no impact on domestic prices of sugar.

The finance minister later told Dawn that had there been no levy of Rs5 per kg CED on the import of raw sugar, farmers and local sugar industry would have faced lot of problems.

He said since sugar was in surplus there was no need for any import. Aziz also said that there will be roughly 10 per cent higher sugar production next year.

He said that sugar was currently being sold at Rs22 per kg as compared to Rs26 of last year and that its prices has stabilized due to government’s intervention.

The commerce ministry had proposed three different types of taxes — regulatory duty, central excise duty or increase the rate of sales tax from the current 15 per cent to 20 per cent at import stage to help the sugar industry to cope with the international fluctuating prices.

The maximum customs duty on import of both raw and refined sugar at import stage was reduced from 30 per cent to 25 per cent in the budget 2002-03.

According to Pakistan Sugar Mills Association (PSMA), the international prices of sugar came down causing injury to the local industry. The local prices of sugar in the market vary from Rs20 to Rs22 per kg. It said that due to the bumper sugar crop in South America, the sugar prices would certainly go down and Pakistani importers would go for high imports in view of the higher prices of sugar in the local market.

The government has already announced an export subsidy of 25 per cent for products whose annual exports has not been more than $5 million in any one of the last three years. Since the sugar exports was much below the target so that the sugar industry could avail the facility besides sales tax refund of Rs3 per kg on export of sugar.