To avert a sugar shortage during the festival months and rein in prices in view of poor cane sowing for the 2009-10 season, the government on Friday allowed private traders to import refined sugar duty-free and extended the scheme of duty-free import of raw sugar by government agencies up to March 2010.

The import window for private traders for white sugar has been opened till November 2009. Till now, only state-run trading firms STC, MMTC and PEC were allowed to import refined sugar.

Experts feel that allowing private traders to import refined sugar will help them tap the new Brazilian sugar that is to hit international markets soon. However, the quantitative restriction of 1 million tonne remains.

Sugar prices in India had started moving up from around August-September 2008 on expectations of a more than 10-million-tonne drop in output in 2008-09 and rising demand. This prompted the government to take a series of measures to augment supplies and cool prices.

According to data from the consumer affairs ministry, retail sugar prices in Delhi is being quoted at around Rs 28 a kg, almost Rs 11 more than last year.

In February 2009, the government permitted mills to import raw sugar tax-free for domestic sale on the condition that an equal quantity of whites should be exported within 36 months.

In April, this clause was relaxed and mills were permitted to import raw sugar at zero duty under the open general licence till July 31, 2009. It also asked state-run State Trading Corp of India Ltd and PEC Ltd to import up to 1 million tonne of whites before July 31 so that sugar can be immediately transported to consumers without any refining.

Earlier, it has re-imposed some curbs on sugar exports under the open general licence, ordered dismantling of the buffer stocks that it helped create in the last two seasons to absorb excess supplies and also raised the quantum of sugar that each mill can sell every quarter.

It also imposed stock and turnover limits on sugar traders to check hoarding of the essential commodity and suspended futures trading in sugar four months to check speculative activity. The quarterly release order mechanism was also made into a monthly one.

?It is expected that with these decisions, domestic availability of sugar could get further augmented and sugar prices in the country would remain at reasonable levels,? agriculture minister Sharad Pawar told Parliament.