Govt mulls scrapping export duty on sugar in view of falling domestic price

FCI likely to save Rs 1,600 per year on grain procurement post-GST

After doubling the import duty on sugar to 100 per cent and fixing the quantum of stocks that mills can hold in February and March, the government on Friday said that it is considering abolishing the export duty on sugar to boost shipments in view of fall in domestic prices on the estimated rise in production.

At present, there is 20 per cent export duty on sugar.

"Sugar production is estimated to rise nearly 24.9 million tonnes in 2017-18 season (October-September) from 20.2 million tonnes in the previous year," Food and Consumer Affairs Minister Ram Vilas Paswan told reporters today.

The industry has pegged production at 26 million tonnes and the government will review its estimates based on input from sugar producing states. The domestic demand is 24-25 million tonnes annually.

In view of rise in sugar output, the minister said the government has already doubled import duty to 100 per cent to check cheaper imports from overseas markets, particularly Pakistan.

With domestic prices falling below cost of production, sugar industry bodies Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) had met senior food ministry officials last month, seeking hike in sugar import duty from 50 per cent to 100 per cent and scrapping of export duty of 20 per cent to liquidate surplus sugar.

In a related development, Paswan said that Centre is saving around Rs 1,600 crore annually in the procurement of foodgrains as its tax expenses have reduced after the introduction of GST.

Only GST is being levied on procurement and not state taxes, resulting in 18 per cent reduction in taxes on foodgrain procurement, he said. The government is expected to save Rs 1,600 crore annually, he added.

On capital restructuring in Food Corporation of India (FCI) as announced in the Union Budget 2018-19, Paswan said the government will infuse equity in the FCI next fiscal to reduce interest burden. FCI will also issue long term bonds.

FCI is the government's nodal agency for procurement and distribution of foodgrains.

Paswan said the government has linked over 80 per cent of ration cards with Aadhaar. Point of Sale (PoS) machines are being deployed in ration shops.

This will help food ministry to introduce portability of PDS under which beneficiaries can take their foodgrains quota from any ration shops in the states.

PDS portability has already been started in five states -- Andhra Pradesh, Telangana, Haryana, Gujarat and Delhi.