Some time at the end of February and on March 1, two shiploads of molasses from Pakistan arrived at Haldia and Budge Budge in the Calcutta dock system with about 11500 tonnes of molasses. The first consignment of 5500 tonnes was imported by IFB Agro Ltd, which manufactures alcohol. The second one was for a Chennai-based molasses trading organisation IMC Ltd (formerly Indian Molasses Co Ltd). Both the companies used to procure their required molasses from domestic sources but, for several reasons, have switched over to the Pakistan variety this year. Molasses is the thick liquid left after the removal of sucrose from the mother liquor in sugar manufacture. It is used primarily for manufacturing ethyl alcohol and fodder.

Last year, Pakistan had shaken the Indian sugar industry by exporting lakhs of tonnes of sugar to theeastern parts of India at prices much lower than domestic rates. The Indian sugar industry, which had a monopoly in the domestic sugar markets, especially for the largest selling medium-course variety, lobbied hard with the Union Government urging it to increase the import duty on the commodity.

Under pressure, the Government increased it first to 20 per cent and then to 25 per cent in the Budget. Moreover, it imposed a 10 per cent surcharge on all imports. Therefore, sugar imports will now attract a total of 27.5 per cent customs duty and a countervailing duty of Rs 850 per tonne. This has forced the Pakistan sugar manufacturers to quit and turn to molasses.

Pakistan's inroads into the Indian molasses market is worrying for the sugar industry here as the production of molasses in India, which is about 75 lakh tonnes per year, is enough to meet the demand. In 1994-95 some quantities of sugar and molasses were indeed imported when production in the country was severely hit by drought. But now, thediscriminatory pricing of molasses by different sugar manufacturing states such as Maharashtra, Uttar Pradesh, Bihar and Andhra Pradesh, along with restrictions on movements of molasses from state to state are the chief reasons for companies in eastern India to switch over to overseas sources, according to an insider in IMC.

Although the molasses being imported from Pakistan were much cheaper than the Indian variety, the price benefit was not the sole reason, he said.The sugar industry too has admitted this. The finance manager of Balrampur Chini Mills Ltd, Kishore Shah, said distribution controls on molasses have compelled the consumers in deficit states such as West Bengal to import the commodity from abroad.

Seeking protection for the domestic producers of molasses, Shah said that the Government should make concerted efforts to allow free movement of molasses in order to avoid unnecessary imports. Molasses is selling at around $15 per tonne on f.o.b. basis abroad, while in India, the prices vary widelyamong different producing states. In Maharashtra and the southern states a quintal is quoted around Rs 40 plus a central excise duty of Rs 50.