Govt plans to raise sugar import duty to 15%

The government plans to increase import duty on sugar to 15 per cent from the current 10 per cent to curb shipments and clear sugarcane arrears to farmers estimated at Rs 9,000 crore. The imports are putting pressure on domestic prices, preventing millers from clearing arrears to farmers. Millers are selling sugar to wholesalers/traders at rates lower than the cost of production.

“We had a meeting on this issue on Thursday. The finance and agricuture ministers were present. We have agreed to raise import duty on raw and refined sugar to 15 per cent,” Food Minister K V Thomas said. “We have taken cautious steps and agreed for a marginal increase of five per cent fearing price rise at a time when state governments have started procuring sugar from open market for public distribution system.”     

This will help mills to clear cane arrears, which have risen to Rs 9,000 crore from Rs 5,000 crore in the last one year, he added.     After the meeting, Food Ministry has moved a proposal to this effect to the Finance Ministry for formal approval.     

According to the Indian Sugar Mills Association (ISMA), the country has imported nearly 6,00,000 tonnes of raw sugar and another 1,00,000 tonnes of refined sugar from Pakistan so far this marketing year.

Commenting on the government's plan, ISMA Director General Abinash Verma said, "The industry has demanded increase in import duty to 40%. The import duty of 15% may not be sufficient to stop imports completely."

He said that market sentiments are dampened because of imports, leading to a fall in prices and preventing traders from stocking the sweetener.

Currently, ex-factory price of sugar in Uttar Pradesh and Maharastra is ruling at Rs 31 and 28.50 per kg, respectively, as against the production cost of Rs 35 and Rs 31 per kg, respectively.

The country has sufficient stocks to meet the domestic demand. Production is estimated to be at 24.5 million tonnes in 2012-13 marketing year (October-September), against the annual demand of 22-23 million tonnes.