Pawar hints at 20-25% duty on white sugar imports

With sugar prices returning to a comfortable level, Food and Agriculture Minister Sharad Pawar today indicated slapping up to 25 per cent duty on refined sugar imports to protect the domestic industry. "The idea is we need to discourage sugar imports," Pawar said.

He said that the certain sections of the industry have suggested 60 per cent duty on white (refined) sugar, while others favour 40 per cent.

"In my view, we need not put 60 per cent to stop imports in a big way. 20-25 per cent is sufficient. Let's see how prices move in the global market before we take any decision," Pawar said.

Retail sugar prices peaked at nearly Rs 50 a kg in January, but prices have since fallen 30 per cent to around Rs 35 per kg. The minister said the landed cost of imported white sugar without duties works out to Rs 26 per kg at the current global prices. The landed cost was about Rs 40 a kg in January.

Also, with higher output in 2009-10 (October-September), the industry has been demanding imposition of import duty on refined sugar to check against a crash in prices. Duty-free imports of both raw and refined sugar have been allowed since February last year.

Prior to that the levy on imports was 60 per cent. The empowered group of ministers, headed by Finance Minister Pranab Mukherjee, is likely to consider the food ministry's proposal for import duty on June 10, sources said.

Earlier this week, Pawar had said the government would take a decision in this regard in a week or so. India is the world's second-largest producer and biggest consumer of sugar.

The production is estimated to rise to 18.5 million tonnes in 2009-10 against 14.7 million tonnes in the previous year. The annual domestic demand is 23 million tonnes, and the gap is being met through imports.

The country imported over six million tonnes of raw and refined sugar since February 2009.

The production outlook for 2010-11 is also encouraging. Both the industry and government expect the production to outstrip demand. There is also a possibility that India would export, though in a limited quantity.