Govt may allow refined sugar import at zero duty

The government is considering to allow the State Trading Corporation (STC) to import refined sugar at zero duty and may extend similar concession to all players, if prices of the sweetener in retail markets remain high.

“If the prices remain above Rs 25 a kg in the retail market, the government may allow import of refined sugar at zero duty,” a senior government official said.

However, it is difficult to suggest if traders would be willing to import refined sugar, even if the duty is brought down to the zero level, given the current price situation in the domestic market, he added.

At present, refined sugar import carries 60 per cent tax.

Though the official said duty-free refined sugar import could be granted to all if the situation so warrants, buzz in the industry suggests that the STC may be allowed first.

“The government is considering to allow STC to import refined sugar at zero duty,” an industry official said on condition of anonymity, adding that if the state-owned firm is allowed, good quantity of refined sugar may come to India as domestic prices are ruling above the global level.

The centre is expecting sugar prices to come down after it decided late last month to impose limit on stocks a trader can hold as well as on the duration of keeping such stocks, the government official said.

On its part, the government has already allowed the import of raw sugar at zero duty till September, for sale in the domestic market to contain the price rise following a projected slump in output this year at 16.5 million tonnes, compared with 26.4 million tonnes last year.

The raw sugar imports will be under advance licence scheme and on a ‘tonne-to-tonne’ basis, which means mills would need to export the same quantity later.

It has also assured of adequate domestic sugar supply as the country has over 10 million tonnes of the carryover stock from the previous season.

The Indian Sugar Mills Association (Isma) has projected a raw sugar import of up to 1.5 million tonnes to bridge the supply-demand mismatch in the country this year. The industry is now hopeful of importing refined sugar as well.

Sugar prices in the domestic market have risen by up to 30 per cent since the beginning of the season in October 2008 due to the projected slump in output.