ISLAMABAD (Reuters) - The millers oppose a government decision to allow unlimited imports of raw sugar after massive sugarcane crop losses, an industry official said on Friday, adding the shortfall would be smaller than expected. The government this week waived a 25 percent regulatory duty and allowed millers and traders to import raw sugar at will after estimates the 2010/11 crop would produce about 3 million tonnes of refined sugar against an annual demand of 4.2 million tonnes. Millers estimate output at 3.6 million tonnes and say the government should set a limit in line with total demand. We are telling the government that there should be a limit on the import of raw sugar. It should not be more than 500,000 tonnes, Iskandar Khan, chairman of the Pakistan Sugar Mills Association (PSMA), told Reuters. We are expecting 3.6 million tonnes of sugar output after flood damage and together with raw sugar import and purchases being made by the TCP, the availability will be according to our consumption, he said referring to the TCP. While Khan frames the issue in terms of protecting local farmers and even health issues surrounding unprocessed sugar, unlimited sugar imports would drive down domestic prices and cut into industry profits. Pakistan aims for a sugarcane harvest of 54.8 million tonnes for 2010/11 which could produce roughly 3.8 million tonnes of white sugar before August floods destroyed millions of acres of cropland. Khan said the government should specify a limit and it should be channeled through the Industry Ministry to millers according to their production last year. The govt said the TCP would have no role and importers would decide the quantity and timing of purchases. Khan said raw sugar should reach the country within three months to enable millers to refine it by the end of February, the end of the crushing season, which starts in late November this year. Pakistan produced a little over 3 million tonnes of sugar from the 2009/10 crop and issued a series of tenders this year to import 1.2 million tonnes to make up the shortfall. The TCP said this week it had so far received 478,155 tonnes and more was in the pipeline. PSMAs Khan and a government official said that imported white sugar included shipment from India, Pakistans first purchase from the neighbouring country after a three-year gap. MV Orbit carrying 30,000 tonnes of sugar from India reached Pakistan on Sept. 22, the govt official said, speaking anonymously because he wasnt authorised to speak with the press, adding that another ship, the Unicorn Brave, that was due the same day also carried Indian sugar.