Sugar industry wants rollback of duty-free import extension

Private and cooperative sugar mills have appealed to the Centre to reconsider its decision on extending duty-free import of raw sugar for bulk consumers till April 30, 2011. These mills have warned that it would adversely impact finances of the industry, especially when they are striving to cope with falling prices.

The sugar industry has argued that the extension is unwarranted, especially when the production in India is likely to rise 22 per cent to touch 18 million tonnes in 2009-10 season ending September. Besides, sugar prices have already fallen sharply at Rs 2,600 per quintal. Cooperative mills already raised this issue during their meeting with the Minister of Food, Consumer Affairs and Distribution Sharad Pawar.

Industry sources told Business Standard: “The government will have to immediately withdraw its order. Sugar prices have already come down and it’s difficult for mills to cope with the situation. Apart from likely production of 18 million tonnes, there is a carry forward stock of 4.1 million tonnes in the country. The government decision is detrimental to the industry as a whole and, thus, should be withdrawn.”

Office bearers of the Indian Sugar Mills Association and National Federation of Cooperative Sugar Factories preferred not to be quoted on the issue.

The Maharashtra sugar brokers and merchants association wanted to know whether the government decision was to protect Brazilian cane growers or to safeguard the interest of the Indian sugar industry as a whole. Association President Yogesh Pande said: “The domestic sugar industry is paying Rs 2,100-2,700 per tonne to the cane growers. If raw and white sugar is not taxed immediately, it will lead to a serious crisis for the domestic industry which has been the backbone of rural development in Maharashtra and Karnataka. Traders foresee a fall in sugar prices till they match international market rates, if the current policy is not amended.”

He added that traders were reluctant to make fresh trade seeing the uncertain government policy. Further fall in global sugar prices has added to the woes. At the current 15-16 cents, landing cost of raw sugar works out to Rs 18 per kg. Processing cost of Rs 5 makes white sugar cost Rs 23 per kg.