Govt allows UP mills to sell imported raw sugar

The Central government has permitted outright sale of raw sugar imported by Uttar Pradesh (UP) mills. The move will facilitate processing and availability of over 650,000 tonnes of sugar in the market, since the UP government has restricted entry of raw sugar into the state. It will benefit Bajaj Hindusthan, among other importing companies.

“While earlier the government had only permitted processing of raw sugar in other states, it has now allowed the sale of imported sugar as well,” informed sources. About 650,000 tonnes of raw sugar, imported by various UP-based mills, is stuck at various ports for about three months. Nearly 500,000 tonnes of this belongs to Bajaj, the country’s largest sugar producer.

The move will not only ensure extra availability of sugar, but will also help companies to make decent margins on sale. Raw sugar had been contracted at a price range of $520-550 a tonne, while at current international prices, the landed cost of raw sugar will be in the range of $680-690 a tonne.

In early November last year, the UP government had banned import of raw sugar into the state, saying that the decision will help farmers get better sugarcane prices. This led to a sharp rise in sugar prices and caused the ex-mill sugar prices in UP to touch a record of Rs 4,300 a quintal (though it has now softened to around Rs 3,800).

A series of request by the Union Food Minister Sharad Pawar to lift the embargo failed to yield results. This forced the Union government to relax excise norms and allow the UP sugar mills to get their raw sugar processed in other states around mid-January. However, the move did not fulfil the purpose, since some UP mills were interested in outright sale, while others preferred to process it on their own after the state lifts the import ban.

The Union government has allowed duty-free imports of raw sugar to tide over the domestic production shortfall. In the 2008-09 season ending September, domestic sugar output fell 42 per cent to 15 million tonnes, causing retail sugar prices to more than double. Currently, sugar is selling at Rs 43-44 a kg. Annual sugar consumption is estimated at 23 million tonnes. Sugar has a high weight of 3.62 per cent in the wholesale price index.