"We will watch the import situation for somemore time. Such cycles are bound to occur and there is nothing to panic about rising imports," said Ravi Prakash Sinha, secretary in the sugar and edible oil department in the Food Ministry.

Sinha was responding to a question if government would consider increasing import duty on sugar in view of increasing imports and dumping, especially from Pakistan. "We will have to see if it continues. Then only we can decide on what to do," he said.

At least 12 lakh tonnes of sugar has been registered for import with the Agricultural and Processed Food Export Development Agency (APEDA) till August 31 from September 1997. Of this six lakh tonnes had been registered from Pakistan with half of the quantity being contracted in the last one and a half months.

Importsfrom Pakistan have risen mainly on its decision to cut prices to $ 270-280 a tonne from $ 300. Shipments have also been encouraged by the Nawaz Sharif government's decision to double export subsidies in view of Pakistan's precarious trade balance.

Sinha said imports were rising in view of low global prices and Indian sugar prices were stable with marginal decline during the last couple of weeks. "It is good for consumers. We have to take a balanced view taking into consideration the consumer, growers and industry's plight," he said.

According to food ministry sources, Pakistan's decision to hike export subsidies in fact subsidised Indian consumers to upto Rs four a kg. The sugar industry has expressed concern over the rising imports and dumping and demanded a level-playing field.

In particular, both the cooperative and private sector in the industry have been demanding further hike in import duty for sugar. The Indian Sugar Mills Association (ISMA) has demanded that import duty for sugar be hiked by atleast another 20 per cent.

The industry has also pointed out at the 36 per cent duty being imposed for sugar imports by Pakistan. Bowing to pressure from industry, government had imposed a five per cent basic customs duty and Rs 850 per tonne countervailing duty on import of the commodity in July. Till then, sugar imports were duty free.

Sugar imports have risen of late due to government's decision to allow shipments into the country under open general license (OGL). Unger OGL, quantity of imports are unrestricted, though it would require a license for it. Sinha said government was in no way responsible for the rising imports.

"It is the trade which is importing sugar and not government," he said. Industry sources said import was being mainly done by traders in Amritsar. The traders, besided getting rebate, were also extended credit by Pakistani sugar exporters.

The forthcoming festival period and lean crushing period had also led to rise in imports. Industry sources say imported sugar costs Rs two akg less than the commodity produced in the country, thus making import more lucrative. They also say it could hurt the good prospects of sugar production next season (October 1998-September 1999). Industry experts estimate sugar production to be 140-150 lakh tonnes. This season sugar production is projected to be 127 lakh tonnes.