Sugar mills seek increase in duty to curb unwanted imports

Global price crash makes raw sugar viable even at 40% duty, mills' supply glut due to cheap import

Sugar mills have urged the government to raise the import duty on raw sugar to 60 per cent from 40 per cent.

 
The government had allowed import of 500,000 tonnes of raw sugar till June 30, which industry sources said had been contracted for. Mills have imported 477,000 tonnes, but a price crash in the global market has made raw sugar imports viable even with 40 per cent Customs duty. Mills have contracted for another 296,000 tonnes. India will soon be flooded with imported sugar despite abundant local output.
 
A letter from a member of the Indian Sugar Mills Association (ISMA) to its chairman G Sarita Reddy,  said, “Mills would require sugar price of Rs 36 a kg to enable them to pay the fair and remunerative price of Rs 255 a quintal to farmers.
 
We do not want sugar prices to fall from this level due to imports. Hence, the import duty should be raised immediately to 60 per cent. The government should also not extend the import period beyond June 30.”
 
ISMA had earlier forecast India’s sugar output at 21.3 million tonnes and a carryover stock of 7.5 million tonnes, substantially higher than the 23.5 million tonnes estimated demand. Much of the sugar is available in northern states, resulting in a deficit in the the west and south. “The longer term competitiveness of the Indian sugar industry is a worry. High cane prices are leading to a very high cost structure,” said Narendra
 
Murkumbi, managing director, Shree Renuka Sugars, India's largest sugar refiner.
 
According to industry estimates,  transportation of refined sugar from the north to the west and the south is an issue because of costs. Mills in the deficit regions need locally grown raw sugar.