Govt may let private firms buy white sugar duty free

India, the world’s biggest consumer of sugar, may allow private traders to import refined sugar duty free to cool domestic prices that have reached a three-year high amid a decline in production.

The government may ban futures trading in the commodity if domestic prices increase further and extend duty-free imports of raw sugar beyond July 31, N Sanyal, joint secretary at the food ministry, told reporters in New Delhi on Monday.

Increased purchases by the Asian country may help support white sugar prices that have climbed 26 per cent this year amid forecasts for a global output deficit. Prices in Mumbai, the nation’s biggest wholesale market for the commodity, have surged 60 per cent in the past year because of a shortfall in supplies.

August-delivery white sugar fell as much as 1.7 per cent to $400 a tonne in London today. Raw-sugar futures for July delivery dropped as much as 1.6 per cent to 13.44 cents a pound in after-hours electronic trading on ICE Futures US in New York.

The country’s state-owned companies have contracted to buy 20,000 tonnes of white sugar after the government last week allowed them to import up to 1 million tonnes by August 1, Sanyal said. As much as 15,000 tonnes will come from Thailand and the rest from Brazil.

Raw-sugar imports may reach 3 million tonnes by September 31, said Sanyal, matching a forecast by the Indian Sugar Mills Association, a producers’ group. Of this, 740,000 tonnes have arrived, he said.

Extra sugar
The country’s sugar output may total 15 million tonnes in the year ending September 31, he said. That compares with 14.5 million tonnes' forecast by the association last month.

The government on April 17 asked mills to sell an additional 600,000 tonnes locally in the April-June quarter to boost supplies.

The quantity won’t be increased further, Sanyal said.

While mills can dispose 90 per cent of their annual output at market rates, the government sets the quantity and time for each monthly sale. Producers must sell 10 per cent to the government at below-market prices for resale to the poor.