Millers seek import duty on raw sugar now

Till recently, they were pressing for a 60 per cent duty on refined sugar.

The country’s sugar millers will now seek imposition of import duty on raw sugar as well. As of now, the sugar companies had been pressing for a 60 per cent import duty on refined or white sugar only through its apex body Indian Sugar Mills Association (Isma).

“A full fledged import duty is required both on white as well as raw sugar. While an import duty may not provide immediate relief to the industry, it will ensure that mills get a price that is commensurate with sugarcane price,” said Vivek Saraogi, president, Isma and managing director, Balrampur Chini Mills.

The move is important as till now manufacturers were seeking duty on refined sugar. In fact few mills are increasing refining capacities or are setting up green field refineries for converting raw sugar into white sugar. Sharp fall in domestic sugar prices as well as international market seems to have lead mills to seek higher protection when sugarcane crop is also expected higher in coming season.

Saraogi said that Monday’s price does not reflect the sugarcane price paid by the industry. It is worth mentioning that sugar mills in second biggest producing state of Uttar Pradesh (UP) paid an average sugarcane price of Rs 250 a quintal and the cost of production was Rs 3,300-3,400 a quintal. However, their current realisation is Rs 2,700 a quintal.

“India is fully stocked up with sugar. Domestic output in current season is estimated at 18.5 million tonnes. After accounting for import of 5 million tonnes and carryover of 3 million tonnes, the availability is 26.5 million tonnes. We will begin the next season in October with nearly 4 million tonnes. Even next year’s production outlook is healthy and production will not be lower to consumption of 23 million tonnes. Therefore, imports are now unwanted,” he said. The government had allowed duty-free import of both raw and white sugar last year to tide over the shortfall in domestic output and rising prices.

Ex-mill sugar prices in UP had touched a record high of Rs 4,300 a quintal in January. It softened from February following government initiatives like weekly sale mechanism and stockholding limits, and after a decline in international prices. Prices now rule around Rs 2,700 a quintal. Price outlook for sugar remains depressing.

While the government has restored monthly release mechanism from May and allowed the bulk consumers to stock their consumption requirement of 15 days instead of 10 days, it has not improved sentiments in sugar business.

“Bulk consumers will still prefer to import as imported sugar will land at a price of over Rs 2,400 a quintal while domestic sugar is selling for Rs 2,700 a quintal,” said C B Patodia, advisor, Birla Group of Sugar Companies and president, UP Sugar Mills Association.