Imported sugar to get cheaper in south India

With domestic sugar prices in the wholesale market quoted at around Rs 39 a kg, imported sugar continues to remain cost-effective in  southern states even with a 25 per cent duty.

In Tamil Nadu, sugar is priced Rs 1.50-2 a kg more than that in Maharashtra due to supply shortage. The southern state faces huge supply deficit this year due to three-four years of subsequent drought resulting into lower local production. Worryingly, the drought continued this year too, which prompted policy makers to allow raw sugar import of 300,000 tonnes at 25 per cent of import duty against the prevailing duty of 50 per cent. 

“Tamil Nadu is facing shortage. The conditional raw sugar import could have been planned in a better manner,” said P G Periasamy, President, the South India Sugar Mills Association (SISMA).

“The government estimates sugar supply to remain tight in Tamil Nadu during the peak festive demand season of October–end. Therefore, the government has allowed import of 300,000 tonnes of raw sugar afresh,” said an industry source.

Sugar production in Tamil Nadu, according to trade sources, is estimated at 1.1 million tonnes for SS (sugar season) 2016-17 against the consumption of around 1.5 million tonnes. Again in 2017-18, the industry estimates sugar production barely at 0.6 million tonnes resulting into sharp deficit in the state next year.

Meanwhile, Abinash Verma, Director General, Indian Sugar Mills Association (ISMA), said that imported sugar works out to be Rs 3-4 a kg cheaper than locally produced sweetener.

“The permission of importing raw sugar is aimed at increasing the availability of sugar to avoid any disturbance in supplies and any sudden spurt in prices with the festival season soon approaching,” said Madan Sabnavis, Chief Economist, CARE Ratings.

To avoid increasing cost in production due to firing of boiler of refineries, the government has granted three months time for sugar mills to convert raw sugar into refined one.