Pawar writes to FM to hike import duty on sugar

Sugarcane arrears of mills top Rs 12,000 crore on falling domestic, international prices; abundant supplies

Worried over the mounting sugarcane arrears of mills, Agriculture Minister Sharad Pawar has written to Finance Minister P Chidambaram to immediately increase the import duty on sugar from 10 per cent.

Officials said, Pawar in his communiqué notes the accumulated arrears of sugar mills  has topped Rs 12,000 crore.

The minister said that despite drought in Maharashtra, India’s sugar production in the 2012-13 crop marketing year that will end on September 31 is expected to be around 25 million tonnes. When these are added to the season's opening balance of six million tonnes, it will leave the country with around eight million tonnes in stocks when the current  season ends.

“Therefore, availability of sugar will be much more than domestic consumption , despite the drought in Maharashtra. Hence, we do not need imports at this stage,” Pawar is believed to have written. According to industry officials, usually, the country’s opening balance of sugar is around 4.5 million tonnes.

Giving another reason for increasing the import, officials said the minister let as international prices of sugar have been falling in the last few months, the Indian market has also dropped.

The domestic price has seen a steady fall since October 2012, which has led to the accumulated cane arrears and hence, the import duty should be hiked, Pawar wrote.

India’s sugar production has stabilised at  23-25 million tonnes because of a declining recovery ratio.

Recently, the government partially removed some of the decades-old curbs on the  Rs 80,000 crore sector, which is expected to boost its efficiency in the coming years.

It abolished the levy sugar mechanism, under which millers had to sell a fixed portion of their annual produce to the government for distribution through ration shops at cheap rates.

It also gave the mills freedom to sell any quantity of sugar at any point of time.