India to turn a major sugar importer

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New Delhi, Aug 8 : India, a large exporter of sugar this year, will turn a big importer of the sweetner after October 2009 as the crop shrinks and demand rises, a leading producer said on Friday.

The country may import up to 4 million tonne of sugar in the crop year from October 2009, Sanjay Taparia, finance director at Simbhaoli Sugars Ltd said in an interview.

He said India's imports would have been even higher but the country's choked ports will not be able to handle such a surge.

Sugar output in India, the world's second largest producer after Brazil, is likely to be 26.5 million tonne this year, down from a record 28.4 million tonne last year. Exports in the current year are likely to be a record 4 million tonne.

Some expect production to fall further to 18-19 million tonne in 2009-10 as deficient rainfall this summer has affected planting in some parts of the country. Taparia said demand in the year that begins in October 2008 will be met from the new crop and stocks of 11 million tonne.

“But in 2009-10, we will have to import for sure,” Taparia said, adding that India will become a larger importer in years ahead as farmers turn to less risky and more lucrative crops. Domestic demand for sugar is steadily growing by 1-1.5 million tonne annually in India, the world's leading consumer of sugar, and could touch 24 million tonne in 2009-10.

Traders say sugar prices have risen to Rs 16.50 per kilogram on forecasts of lower output in the next two years. The previous year's all-time high production had hammered down prices to Rs 14.50 per kg.

Taparia said domestic prices will hover around Rs 17 and prices will not come down even with imports as the world market was tight and international prices remained high.

World market prices always go up the moment they sense India is buying because India never buys small quantities, he said.