India will soon permit import of 300,000 tonnes of raw sugar at a concessional rate of 25 per cent import duty against normal 40 per cent duty. Import is most likely to be permitted to sugar-starved mills in the southern states, where prices are Rs 2-2.50 higher than in Maharashtra.
Ramvilas Paswan, Union Consumer Affairs, Food and Public Distribution minister tweeted on Monday night that India will soon take a decision on sugar imports. He, however, did not share details of the quantum of imports to be allowed or the duty rates that would be imposed on them.
However, sources close to the development said that the government will allow sugar imports up to a certain limit.
"South Indian mills will get the permission to import 3 lakh tonnes of sugar to be refined and sold by mid-October," said a source. He added that a new crop sugar would enter the market by October-end and import supplies would not be able to help the mills in terms of managing the supply balance.
The government allowed import of raw sugar to mills and refineries three months back and a quota of 500,000 tonnes was fixed, along with a zero import duty to help address the crisis. While the industry is still waiting for a government notification, sources close to the development said the mills are expected to be allocated quota as last time, owing to the region's insufficient refining capacities.
As of now, sugar from Maharashtra is sold in Tamil Nadu as prices are over 5 per cent higher in the former state.
According to some industry experts, the import quota is not so high and smaller mills would be able to fire boilers just for a few days before they come to a halt again as boilers need to be fired three weeks before the usual crushing time in the region that begins from November-end and is over by December. As a result of this, not all mills might opt for the quota.
Another issue that has raised concerns among industry players is that refining raw sugar is less viable for smaller firms because it leads to higher wastage, as compared to making sugar from juice.
Last month, mills in south India had requested the government to permit them to import sugar. However, instead of allowing imports, the government had imposed a stock limit for mills last week. Sugar prices in the region, however, continued to be high, thereby, compelling the government to reconsider its position.
An indenting agent said: "The arrival of raw sugar across ports in southern India may not take much time as sugar imported by Bangladesh may be diverted to Indian ports. Moreover, raw sugar lying in customs bonded warehouses, which are typically outside domestic tariff area, will also enter south Indian mills."