Coupled with the existence of imports under the open general licence (OGL), the total sugar availability is likely to be much more, leading to a sharp decline in prices.

Despite the government having stopped sugar imports, due to its free availability, wholesale market prices still remain depressed. In the private sector some imports continue to be effected, but with the current trend further imports may come to a standstill.

The alleged scandal of sugar imports from Pakistan which is put at 56,295 tonnes, is described by trade circles as politically motivated. On the imports, the outgo in regard to the value was Rs 54.03 crore. In other words, the imports took place from Pakistan at a price less than Rs 10 per kg.

The government has levied a import duty ranging from 15 per cent to 20 per cent and reports say that it is beingraised further to discourage imports. The country's total demand of sugar is between 130 and 140 lakh tonnes annually.

Government officials say that imports from Pakistan took place when the international prices were on the lower side and the issue of any scandal having taken place does not arise. Brazil and Thailand are the other countries from where sugar has been imported. But from Pakistan all the imports (of sugar) have now been stopped.

Sources said sugar was even exported during 1995-96 to the tune of four lakh tonnes to Pakistan. This followed the MFN (Most Favoured Nation) status given to Pakistan by the government along with some other countries. The MFN status is aimed at easing the procedures so that trade is not hampered.

Pakistan continues to enjoy the status even though trade relations of late have taken a beating.

Those in the business are of the view that relations with Pakistan could improve if trade is allowed freely.

Despite the delicensing in 1998, only a few sugar factorieshave come up as the investors hold the view that the country's demand for sugar could be easily be met from the present production levels.

Sugar, however, has not been decontrolled despite the demand raised by traders and millers. Levy continues to be 40 per cent. However, no levy is imposed on the imports even though in the sugar control order such a provision exists, informed circles point out.

There are, in all, about 430 sugar mills working in the country with only three operating in Rajasthan which are in the red.

It was in March 1994 that the government allowed sugar imports under OGL with zero duty. There was also no surcharge levied then. The imports were allowed as the stocks were low. However no imports took place until May that year due to the high international prices of $350-$380 per tonne.

Despite OGL, the government imported two million tonnes of sugar through STC and MMTC and the average price paid then was $380 per tonne. The private traders also imported about one million tonnes ofsugar.

The prices in the domestic market however fell to Rs 13 per kg from Rs 14 per kg and on subsidy alone the government spent Rs 700 core. No export of sugar was allowed.

In 1995 also the prices continued to dip and no imports took place between 1995-98, informed sources point out. This was despite the fact that OGL continued to exist.

The prices dipped and the mills were allowed what is known as the ``buffer subsidy'' and a sum of Rs 300 crore went under this head. Under the quota system about 10,000 tonnes of sugar was exported to the UK, the US and European Countries.

The year 1997-98 saw a big international slump with the big importers stopping the imports altogether. This was due to the financial crisis in South East countries and Russia. The sugar prices crashed to $270 per tonne from $400 per tonne in 1996. Sugar, say traders, has no elasticity despite the price fluctuations.

Despite all the hullabaloo, the OGL has not yet been withdrawn and due to the high production this year thetraders are sitting with their fingers crossed with regard to the future market behaviour.