Not so sweet: Here is why government may hike import duty on sugar to 75 pct

New Delhi | Published: January 5, 2018 3:13:41 AM

The country’s sugar output increased by 26% to 10.33 MT in the October-December period of current season.

 sugar, import duty on sugar, sugar price, sugar production, domestic production, sugarcaneThe country’s sugar output increased by 26% to 10.33 MT in the October-December period of current season.

By Prabhudatta Mishra

The government may hike import duty on sugar as it wants to ensure that a rise in domestic production of the sweetener in the current season won’t depress prices further. The food ministry will take feedback on a proposal to raise the import duty on both raw and refined sugar from the current 50% to 75-80%, officials said. There is also a plan to allow export of raw sugar under Duty Free Import Authorization (DFIA) scheme, which was withdrawn in May 2015. “As India is set to produce bumper sugar this season, there is a need to boost export and stop import,” a source said. Though there is no import happening at the current duty level, the government is aware of Pakistan’s plan to subsidise exports, he said, adding that if the duty is increased to about 80%, there will not be any sugar import from Pakistan. The government has pegged total sugar output at 24.9 million tonne in the entire 2017-18 season, as against 20.2 million tonne last year. Consumption is estimated to be about 25 million tonne this year.

The country’s sugar output increased by 26% to 10.33 million tonne in the October-December period of current season compared with 8.19 million tonne in the year-ago period during 2016-17 season (October-September), according to data released by the Indian Sugar Mills Association (ISMA). Sugar output in Uttar Pradesh, India’s largest producing state, has increased to 3.9 million tonne in the first three months of this season from 2.68 million tonne in the year-ago period. The average recovery rate of the sweetener remained higher in the state at 10.15%. In Maharashtra also, 3.82 million tonne of sugar has been produced during the first quarter, up from 2.53 million tonne in the corresponding period of the 2016-17 season.

Mills in UP expect sugar prices may drop as crushing season further advances. The ex-mill sugar price was about Rs 37 a kg before the season started from October 1, 2017 and slumped to about Rs 34.50 a kg in mid-November. Currently, the ex-mill price in UP is between Rs 32 and Rs 33 per kg. In Maharashtra, the ex-mill price of sugar is about Rs 30 a kg. Even with falling sugar prices, the total cane arrears were about Rs 2,000 crore across the country in the first three months, data show. Any export made under the DFIA scheme allows traders to import similar quantity of the commodity at zero duty within a time period. This is an export promotion scheme during surplus year. Before DFIA for raw sugar discontinued, traders were needed to get the import completed within 18 months of export.

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