The Rs 850 per tonne countervailing duty on sugar imports equalised the excise duty paid by domestic sugar mills and the five per cent basic customs duty was a tariff protection for the indigenous industry, the sources said.

Commerce minister Ramakrishna Hegde has also ruled out any increase in import duty for sugar.

Asked about reports of commerce ministry's move to get the import duty hiked, he told PTI "as far as I know, there is no such proposal."

Concerned over increasing imports into India, especially from Pakistan, the industry has demanded that basic customs duty on the commodity's imports be hiked to 20 per cent.

Indian Sugar Mills' Association (Isma) feels that a domestic production of 125 lakh tonnes for the season (October 1997-September 1998) coupled withimports would result in current season's stocks lasting upto first quarter of next season.

Official sources said government was in favour of allowing a "trickle of imports" without any restriction to keep domestic prices on leash.

It was with this view in mind that government was not concerned very much about Pakistan's move to double export incentives for sugar.

Pakistan's move to hike the incentive in fact, subsidised sugar to the extent of Rs 4 a kg for the Indian consumer and there was no need to be worried about it, they said.

Pakistan's hike in export incentives, a move to rejuvenate depleting foreign exchange, has resulted in increased sugar shipments into India. Of the 2.56 lakh tonnes exported by Islamabad till now, 2.53 lakh tonnes have been to India.

Another 80,000 tonnes has been contracted for export to New Delhi, according to Pakistan sugar mills association.

Isma fears that this would lead to a glut in the domestic sugar market and affect Financial strength of the industry.

Sofar, over seven lakh tonnes have been imported to India with other significant import being from Brazil.

The BB Mahajan Committee report on sugar industry had recommended a 40 per cent duty subject to a maximum of import. Recent levy on sugar imports followed submission of report to food minister Surjit Singh Barnala.