Govt may allow raw sugar import at nil duty

Written by Commodities Bureau | Agencies | New Delhi, Sep 29 | Updated: Sep 30 2008, 07:35am hrs
In a move to help the sugar industry tide over low-capacity utilisation due to shortfall in cane production, the central government is considering a proposal to allow raw sugar imports at zero duty.

Under the proposal the companies can sell the refined sugar (produced out of the imported raw sugar) in the local market and export equivalent quantities when they have surplus within a stipulated time. We will invite industry bodies National Federation of Cooperative Sugar Factories (NFCSF) and ISMA for discussion and understand their proposals. If it benefits the industry in capacity utilisation and those who will import give guarantees to export after processing, the government is ready to give it a thought, Union agriculture minister Sharad Pawar told reporters on the sidelines of the annual general body meeting of the NFCSF.

Currently, sugar companies can import raw sugar at zero duty, but they have to export an equivalent quantity of processed sugar to avail itysbenefits. They are charged a high rate of duty if the sugar is sold in the local markets after processing. Earlier, Jayantilal Patel, president, NFCSF, said that mills should be allowed to import raw sugar at duty-free rates against a commitment to export the refined commodity as domestic output is expected to fall sharply. The scheme of duty-free raw sugar import with a committment to re-export refined sugar within 36 months was first started in 2004-05, but discontinued as sugar production rose.

Meanwhile, Pawar said that the government has decided to extend the validity period to sell Septembers free-sale sugar quota up to October 15.

Earlier, mills could sell their stocks till September 30, but we have decided to extend the deadline because of complaints that the traders were not lifting sugar, Pawar said. He also said that the food ministry was willing to discuss with the petroleum ministry and oil companies to raise the price of ethanol that they are willing to pay sugar mills.

The price of Rs 21.50 per litre for ethanol was fixed at a time when global oil market was low, now the scenario changed and sugar mills are demanding a higher price for ethanol, which is justified, Pawar said.

On sugar production in the next crop year that starts in October, the minister said that the country is expected to produce around 22 million tonne of sugar, which is less than last year output of 26.5 million tonne.However, there will not any shortage of supplies are local demand is expected to be around 20 million tonne, while we will have a carryover stock of 11 million tonne, Pawar said.