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Most sugar refineries find quantity allocation unviable to start refineries

Also, most refineries do not see merit in importing raw sugar

Dilip Kumar Jha  |  Mumbai 

Representative image

Most sugar refineries barring a few large ones have shut down their production facilities for the current season, nearly 45 days ahead of time, because cane is not available and the government’s import policy does not justify continuance of operations.

While the government says it has allocated import quotas evenly among through a formula, most refineries find the quantity allocated to them unviable.

A handful of large ones, however, continued their refining operations with a very low operating capacity.

The quantity allocated to most of sugar refineries is sufficient for just 8-12 days of their average monthly installed capacity. Since the resumption of refining in this condition is unviable, most refineries, barring a few, do not see merit in importing  

Alternatively, such mills have to forego their shares in allotment and those might go to large players.

“The quantity allocated to small mills is unviable. Hence, probably they would sell their import quotas to large mills with permission from the Directorate General of Foreign Trade (DGFT), the designate authority to monitor the import of raw sugar, or surrender their quantity to the DGFT,” said Sanjiv Babar, managing director, Maharashtra State Federation of Co-operative Sugar Factories.

For importing 500,000 tonnes (0.5 million tonnes) of raw sugar, which the government of India allowed for the current season, the DGFT received requests for 2.79 million tonnes from more than 40 mills. The DGFT says it has devised a formula for allocating the 0.5 million tonnes. Based on this formula, however, Chennai-based ISP Sugar Refinery Pvt Ltd received an allocation of just 370 tonnes against its installed capacity of 900 tonnes a month.