Speaking to The Financial Express, S L Jain, director-general, Indian Sugar Mills' Association (ISMA) said that international prices relevant to the Indian market had not increased much. The maximum increase had taken place for spot prices which do not have any relevance to India as the trade in the country takes place on the basis of future prices ie. the value of the next quote.

Spot prices are applicable only for sugar which can be delivered to the buyers within 10 days from the European ports. Jain pointed out that it takes a much longer time for sugar to reach India. "Improvement in spot prices has no bearing on the Indian market."

Though the increase in international prices have mostly taken place in the spot market, Jain said thatthere had been a slight improvement in the futures prices also. The FOB prices that had fallen to a low of $193 per tonne have increased to $203 per tonne.

However, Jain said that this had made absolutely no difference to the domestic industry. Imports flowing into the country had continued to increase in the period of rising international prices as there hadn't been a significant dent in the profits being made by the traders. "Traders selling foreign sugar operate on big margins. Even with higher international prices they are still able to make a profit of around Rs 1000 per tonne," said Jain. With trade continuing to be lucrative, there was no reason for foreign manufacturers to cut down their supply to India, he added.

That India was a lucrative destination for sugar exporting countries could be gauged by the fact that sugar import registrations of almost 25.50 lakh tonne had already been made with the APEDA by various foreign producers, said Jain. "One lakh tonne of imported sugar would come into thecountry by the end of the month."

According to Jain, the increase in international prices of sugar was too insignificant to improve the situation in the domestic market. "An increase in prices amounting to only $10-$12 per tonne does not make any difference to countries exporting to India. Only an increase to the extent of $30 per tonne can lead to certain exporters opting out of the Indian market. But this is an unlikely situation."

One of the main reasons behind the increase in international prices of sugar was the fact that banks which had been given custody of sugar by producers had stopped all movement of the item some time back as international prices had dipped very low, said Jain. This had created a lull which resulted in prices creeping up.

Maintaining that the domestic sugar industry did not stand to gain at all with the marginal rise in prices Jain said that the government should not use the point as an excuse for not addressing the problems of the Indian sugar manufacturers.