"The existing five per cent protective duty and a countervailing duty of Rs 850 per tonne is proving inadequate to provide a level-playing field to the domestic industry against large-scale dumping by countries like Pakistan," Indian Sugar Mills' Association president Shishir Bajaj told newsmen.

The government could raise the import duty on sugar to 150 per cent as has been provided under the World Trade Organisation (WTO) and it should immediately be resorted to, he said.

Demanding complete decontrol of the industry as recommended by the Mahajan Committee by 1999-2000 season (October-September), he said the government should take steps to reduce the mandatory obligation on the part of sugar mills to give 40 per cent of their production for supply to publicdistribution system to 20 per cent for the current season.

The Isma president claimed that the low import tariff had led to an inflow of over 9.75 lakh tonnes of sugar by private traders and a resultant forex outgo of Rs 1200 crores.

"With India set to produce nearly 160 lakh tonnes of sugar this year, the uncontrolled imports could spell doom to the industry as well as farmers," he said.

Sugar imports from Pakistan has so far been 8.40 lakh tonnes against a total of 15 lakh tonnes contracted for import into the country, Bajaj said.

"When a country like United States has imposed an import duty of 140 per cent on sugar, our decision to keep the tariff so low is puzzling," he said.

Bajaj said the Indian sugar industry was caught in a vicious circle of excess capacity, free imports and low sugar prices leading to more than 450 sugar units facing the threat of closure due to cheap imports.

The government's fear of the prices shooting up during the festival season is unfounded as there is a carry overstock of over five million tonnes to meet the demands.

"The government should not be afraid of prices shooting up. In case of any rise in prices they should be ready to put in use the all the regulatory mechanism," he said.

The domestic prices of sugar at Rs 12.5 to Rs 13.5 a kg (ex-factory), according to Bajaj is not helping the industry break even.

"The cost of Rs 14.5 a kg (ex-factory) is not matched by the selling price of the commodity and the cost of sugar levy obligation," he claimed.

The Isma president said the free flow of foreign sugar would have its negative fallout on the sugar output in the long run as the farmers who are denied competitive price are likely to cut down area under sugar cane.