The food ministry had been toying with the idea of imposing a levy on imports for quite some time.

It had also appointed legal expert SS Nariman to give his opinion on the issue who subsequently said that imposition of a levy on imported sugar would be totally legal.

Domestic industry now wants the government to just go ahead and impose the levy so that they can have a level playing field.

Sugar manufacturers in the country have to sell 40 per cent of their produce to the government at procurement prices which is generally 20 per cent below the cost of production. This year government procurementwould be around 48 lakh tonne as the total domestic sugar production is expected to be 150 lakh tonne.

Adding 3.7 lakh tonne of carry-over stock from October and two lakh tonne given as loan to the government by the industry, the total stock with the government for the year would be 53.7 lakh tonne.

The domestic sugar demand for distribution through the public distribution system is 46.5 lakh tonne. After taking care of domestic distribution, the government would be left with a stock of only 7.2 lakh tonne which would not be enough for meeting the obligation of keeping at the end of the year a carryover stock worth three months requirement of levy sugar.

The monthly requirement for levy sugar is 3.7 lakh tonne. To take care of three months requirement, a stock of 11.2 lakh tonne is called for. However, with only 7.2 lakh tonne at the disposal of the government and the obligation of returning the 2 lakh tonne borrowed from the industry, the government would fall short of the total requirement for levysugar by 6 lakh tonne.The balance amount has to be purchased by the government from the industry at market prices. However, if the government imposes levy on imports, it would not have to burden the exchequer by making open market purchases, say sources. The country's imports is expected to be around 14 lakh tonne and imposing 40 per cent levy would increase government's procurement by 5.5 lakh tonne.