Centre might impose 25% duty on sugar export

The central government could impose a customs duty of 25 per cent on export of sugar. At present, there is presently no duty.

“There is an increasing trend in the price of sugar in the international market. Traders might increase the export to make profit. To keep this in control, it is proposed to levy 25 per cent duty. It will keep sufficient availability and the price will be under control,” Food Minister Ram Vilas Paswan tweeted late on Thursday.   

Global prices have risen 53 per cent in the past six months, to around 20 cents a pound, due to delayed harvest of the Brazilian crop. Brazil is the world’s largest producer and competes with India in the international market (this country is the largest consumer and the second largest producer).  

The surge in global prices had made exports of Indian sugar viable despite the withdrawal of incentive by the central government some months earlier. Prices in the domestic retail markets have risen by Rs 4-7 a kg since April, in anticipation of a shortfall in production due to drought in some parts. Output in the 2015-16 season (October to September) is estimated at 25.2 million tonnes, a little over three mt less than the previous year -- there is drought in the main growing regions of Maharashtra and Karnataka.

Also, new crop planting in Maharashtra has been impacted by the water shortage.  Industry players said the 2016-17 crop year might see output of 24 mt.

The Centre first withdraw an incentive it had earlier given to sugar manufacturers to export. Then, it imposed a stock holding limit, to prevent hoarding. It fixed a limit of 1,000 tonnes for traders in Kolkata and neighbouring areas and 500 tonnes for those in other parts. It is also contemplating lowering the import duty, of almost 40 per cent on raw sugar import (raised from 25 per cent in April 2015), to boost supply. NOT SO SWEET?

• Food Min Proposed Perhaps for the first time an export duty of 25 per cent on sugar
• The move is aimed at keeping domestic prices under check
• The step was taken as some exporters were planning to ship sugar abroad despite withdrawal of incentive
• The exports had become viable as international sugar markets had firmed up because of delayed harvest in Brazil
• International sugar prices had risen by over 53 per cent in the last six months due to supply crunch.