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  1. Centre raises sugar import duty to 100%

Centre raises sugar import duty to 100%

Although imports from Pakistan haven't really taken place so far, the government wants to raise the duty to a prohibitive level for fears that cheaper dumping will only dampen the margins of mills at a time when local prices are, in any case, ruling below costs, and add to cane arrears.

By: | New Delhi | Published: February 7, 2018 6:32 AM
The government on Tuesday doubled the import duty on raw and refined sugar to 100%, a move aimed at preventing dumping of heavily-subsidised sweetener from Pakistan at a time Indian production is expected to exceed consumption. (IE)

The government on Tuesday doubled the import duty on raw and refined sugar to 100%, a move aimed at preventing dumping of heavily-subsidised sweetener from Pakistan at a time Indian production is expected to exceed consumption. It also raised the import duty on chick-pea to 40% from 30% earlier, as a good local harvest has dragged down local prices to below benchmark prices in many areas. Saddled with surplus stocks in 2017-18, Pakistan recently hiked the quantity of sugar eligible for an export subsidy to 2 million tonnes from 0.5 million tonnes earlier.

This reinforced fears that a 50% import duty may not be adequate to rein in completely potential supplies from the neighbour. Although imports from Pakistan haven’t really taken place so far, the government wants to raise the duty to a prohibitive level for fears that cheaper dumping will only dampen the margins of mills at a time when local prices are, in any case, ruling below costs, and add to cane arrears.

Industry sources said the landed cost of Pakistani sugar would be around $315 per tonne (after subsidy) in Mumbai if no import duty is imposed on it. This is much higher than sugar prices in Mumbai (Rs 28,500 or around $445 per tonne), even though the rates in the local markets have dropped 15-20% since the third week of October to below cost. India’s sugar production rebounded in the current marketing year starting October 2017 on plentiful showers and planting of a better cane variety. Output could touch 26.1 million tonnes in 2017-18, up around 29% from a year earlier, according to an estimate by the Indian Sugar Mills Association. Consumption may remain between 24 million and 25 million tonnes. Last year, India allowed sugar imports of limited quantities at concessional/zero duties to tide over a domestic shortfall.

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