Sugar refineries breathe easy over export duty concerns

Says duty not applicable on re-export of raw sugar, pacing way for shipments that were stuck at ports

In a relief to export-focused sugar refineries, the government has clarified that export of imported raw sugar, after refining, will not attract any duty. This paves the way for movement of various shipments that were stuck at ports, due to ambiguity on this.

The government last month slapped an export duty of 20 per cent on locally produced sugar, to ensure adequate domestic availability and curb price increase. The June 16 notification inadvertently impacted export of raw sugar after value addition, imported by domestic refineries for this purpose.

As a result, about 200,000 tonnes of refined sugar were stuck for days, worth around Rs 700 crore and meant for markets in West Asia and Africa.

The clarificatory amendment, announced on Wednesday, said sugar exported in proportion to raw sugar imported against a valid advance authorisation would not attract any duty.

India has four sugar refineries. Renuka Sugars owns two, at Kandla and Haldia; EID Parry has one at Kakinada. Simbhaoli Sugars runs a refinery in Kutch with London-based commodity trade house ED&F Man.

These import raw sugar for conversion to premium white sugar. The imports take place under the Advance Authorisation Scheme and do not attract any duty. However, this sugar cannot be sold in the domestic market and has to be re-exported within six months of import.The quantity of refined sugar exported from domestic refineries has doubled from 700,000 tonnes in the year ended September 30 (when each sugar season comes to a close) of 2013 to about 14,00,000 tonnes so far in the ongoing season (October '15-September '16).

Sugar is considered a 'sensitive' commodity and carries a weight of 1.73 per cent in the wholesale price index. The country’s output in the 2015-16 season is estimated to decline nearly 10 per cent from a year before, to 25.2 million tonnes. Prices are up 45 per cent.