The government on Monday said it will consider lowering import duty on sugar and banning exports of the sweetener if prices spike further from the current level.
With retail prices crossing Rs 40/kg, the government has taken several steps, including imposition of stock holding limits on sugar traders and withdrawal of sugar output subsidy of Rs 4.50/kg to mills, in the last few weeks to check the price rise.
“We will take all measures to check price rise in sugar. If prices increase from the existing level, we will also look at the option of lowering import duty and banning exports,” Food Minister Ram Vilas Paswan said while briefing media about the outcome of the state food ministers meet.
He said the price rise in sugar was justified to some extent as millers were selling the sweetener at Rs 22-23/kg in the last season as against the production cost of Rs 32-33/kg, leading to huge cane arrear of Rs 21,000 crore.
With the help of government’s various measures and improvement in sugar prices, Paswan said, “The arrears have come down to Rs 800 crore for the last season.”
However, he said, “We want to tell millers that we cannot allow sugar prices to rise abnormally. We will take whatever measures required if prices increase from the current level.”
Asked about the ideal retail price of sugar considering the production cost of Rs 32-33/kg, Paswan said, “We don’t determine the market price. Mills should keep little bit margin.”
Paswan also said that he has written to Maharashtra, Uttar Pradesh, Karnataka and Tamil Nadu to keep a close watch on sugar stocks held by millers to ensure availability in the domestic market.
He also asked the states to implement the stock limits effectively.
Retail sugar prices in past two months have crossed Rs 40 per kg due to 11 per cent fall in domestic sugar output in the ongoing 2015-16 season.
Sugar production in India, the world’s second largest producer, is estimated to be about 25 million tonnes in 2015-16, as against 28.3 million tonnes last year.