New Delhi, July 1: India and Pakistan are moving towards a sweet reunion after a gap of six years.
Six years ago, India had snapped ‘sugar ties’ with Pakistan when a controversy raged over import of the sweetener from the neighbouring nation at the height of the Kargil war.
Pakistan, which is struggling to rein in domestic sugar prices, wants to renew trade with India. Sugar prices are as high as Rs 30 a kilo on the other side of the border.
The Pakistan government plans to take advantage of a thaw in relations between the two neighbours to remove restrictions on import of sugar from India.
India had stopped importing sugar from Pakistan after Parliament was rocked by media reports that some 34,078 tonnes of sugar came into India on railway goods trains through the Attari border in May 1999, even as the Indian army was fighting Pakistani intruders at the Kargil border.
Most of the imports came from sugar mills which were either controlled by or linked to Pakistani premier Nawaz Sharif's family. Now Indian competitors may give these mills a run for their money.
“With a good monsoon, India is set to get a bumper sugar crop of 175-180 lakh tonnes compared with last year’s 128 lakh tonnes ... we will be able to handle Pakistan’s needs,” said S. L. Jain, director general of Indian Sugar Mills Association.
Pakistan’s sugar output this year was about 32-33 lakh tonnes compared with local demand of 40 lakh tonnes. Jain said India could easily export the 3-3.5 lakh tonnes that Pakistan needs.
Indicative prices being quoted by Indian traders for supplies across the Wagah border is about Rs 1,600 a quintal, slightly lower than prices in the domestic market.
Trade routinely resorts to lower quotes in the global market in order to capture a new market and the tentative offer bids to Pakistan seem aimed at just that.
“We need to export some sugar against the imports that we went in for during the last two years ... this market opening could not have been at a more opportune time,” Jain said.
Indian companies had imported 20 lakh tonnes over the last two and a half years when drought reduced yields in Maharashtra and Uttar Pradesh.
Government regulations say this import has to be offset in good sugar years by matching exports.
Jain and other traders see the opening up of the Pakistan market as an opportunity to stick to guidelines while prising open a market that had been shut to their overtures for the last few years.
“The Pakistan market is a natural extension of the north Indian marketplace yet we are able to trade in few commodities to that nation ... they have placed most commodities on their negative list of imports which means we have to route our exports through Dubai,” said . P. Gupta, a leading Delhi-based commodity trader.
Pakistan had permitted the import of live animals, garlic, tomatoes, potatoes and onions from India as a one-time measure to beat down rising prices of these commodities. However, this did not result in much business, traders said.
Pakistani intransigence on trade has resulted in a ludicrous situation where Indian goods worth $2 billion are routed through third countries or are smuggled across the border while official trade stands at a tenth of that value.