The government on Thursday imposed a 20% duty on exports of sugar to curb a rise in prices witnessed in recent months.
“To keep domestic prices of sugar under check, Govt. has decided to impose export duty of 20% on export of raw sugar, white or refined sugar,” the finance ministry said in a tweet. The Central Board of Excise and Customs, too, notified the decision on Thursday.
Last week, food and consumer affairs minister Ram Vilas Paswan had proposed a 25% duty on sugar exports. “There is an increasing trend in the price of sugar in the international market. Traders may increase the export of sugar to make profit. Therefore, to keep the export of sugar in control, it is purposed to levy 25% custom duty on export of sugar,” Paswan had said.
“It will keep sufficient availability of sugar in domestic market and the price will be under control,” he had said in a tweet. There is no change in the import duty on sugar, which stands at 40%.
The move to impose the export duty on sugar followed a meeting of key ministers, chaired by finance minister Arun Jaitley on Wednesday, to review supplies and prices of essential commodities. It was also decided in the meeting that the government would raise its buffer stocks of pulses to 8 lakh tonnes from 1.5 lakh tonnes.
The government has taken a series of measures in recent weeks to curb a rise in sugar prices, including suspending an earlier order for the compulsory sugar exports of 3.2 million tonnes and capping the amount of sugar that dealers and traders can pile up at 500 tonnes across states, except Kolkata, to discourage hoarding.
Before the suspension of mandatory export policy, mills had shipped out roughly 1.5 million tonnes, out of the 3.2 million tonnes of sugar they are mandated to export under a provision whereby the government provides subsidy of Rs 4.5 to farmers for the supply of every quintal of cane for sugar production. The government last year directed sugar mills to export, a move aimed at reducing a glut in the domestic market and arresting a slide in the price of the commodity, which had resulted in massive cane arrears. Mills were required to export the entire quantity of sugar by the end of the current marketing year (September 30).
Domestic sugar prices climbed around 40% since the current marketing year started on October 1, 2015 on fears that sugar output in 2016-17 could drop by as much as 14% from a year before. Already, according to the estimate by the Indian Sugar Mills Association, the country is likely to produce 25 million tonnes of the sweetener in 2015-16, down 11.7% from a year ago.
While earlier decisions came amid apprehensions that a back-to-back drought in key regions of Maharashtra and Karnataka could cut India’s sugar output in the next marketing year starting October, the latest move seems to be aimed at restricting exports even if global prices soar further and make supplies from India attractive. The average global sugar price rose close to 12% in May from the previous month.
The International Sugar Organization had in February predicted global sugar deficit for the current marketing year through September at 5 million tonnes, compared with 3.5 million tonnes announced in November, anticipating lower production in India, Thailand, Brazil and the EU.