Pakistani sugar importers have reportedly cancelled contracts of more than 600MT of Indian sugar after increase in regulatory duty from 20 per cent to 50 per cent by the Economic Coordination Committee (ECC) of the Cabinet. Well-informed sources in Commerce Ministry told Business Recorder that Pakistan Sugar Mills Association (PSMA) had approached the ministry on April 30, 2015 and May 26, 2015, stating that international prices of sugar had declined from $450 to $360 per ton since the decision of the ECC of December 24, 2015 in which quota of 650,000 MT for export of sugar was allowed for export by May 15, 2014.
Sugar industry argued that with 20 per cent regulatory duty, the import of sugar by industrial sector had become viable. PSMA had requested to fix the Import Trade Price (ITP) of imported sugar at $600 or enhance the customs duty on sugar from 20 to 50pc together with anti dumping duty to save the farmers.
It was pointed out that as per data provided by the Pakistan Bureau of Statistics during the current year 2014-15 (July-April), Pakistan imported 9,811MT of sugar at an average price of $580.4 MT. It was stated that as per weekly Sensitive Price Index published by PBS, the price of sugar in week ending on June 11, 2015 in the domestic market was Rs 61.57 per kg, registering an increase of 17pc as compared to Rs 52.54 per kg in December 2014.
Commerce Ministry argued that the request of the PSMA regarding the fixation of ITP of sugar at $600 per ton was against commitments under the WTO framework which prohibit imposition of minimum import price. However, Pakistan''s bound tariff under WTO for sugar was 150pc. Therefore, an increase in the RD to 50pc was maintainable under the rules.
Another argument was that as the objective of imposition of the RD of 20pc was to discourage imports of sugar into the country and if the objective was not being achieved at the current level of RD, it could be enhanced to 50pc. The sources said that international price of sugar further declined recently owing to which deals with India were finalised by Pakistani importers. Indian sugar started reaching Pakistan even at 20pc regulatory duty.
"It was feared that that if Indian sugar continues to influx into Pakistan at cheaper prices, stocks with local sugar mills will remain unsold. Consequently, payments of growers will not be cleared and the fate of cane growers will not be different from wheat growers," the sources continued. According to sources, Pakistani importers scrapped contracts of more than 600 MT with India after increase in regulatory duty by 150 per cent as Pakistani importers were importing Indian sugar as a test case.
The sources further stated that ECC, headed by Finance Minister Ishaq Dar, also directed Commerce Minister Khurram Dastgir to take up the matter with the PSMA to ensure price stabilization with increased regulatory duty. The PSMA conveyed to sugar mill owners that if prices of commodity should be increased under the garb of current decision, the government will again slash regulatory duty. Insiders claim that the PSMS communicated to its members that price of sugar should not be increased during Ramazan to avoid any action from government. Sugar industry was of the view that when sugarcane''s price was fixed at Rs 180 per 40kg, the price of sugar was around Rs 60-65 per kg.
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