Sugar stocks drop after export duty announced

The 20% customs duty on sugar exports is aimed at boosting domestic supply

Sugar stocks fell sharply on Friday after the government imposed a 20 per cent duty on the raw, white variety's export.

Shares of Ugar Sugar Works, KCP Sugar & Industries, Oudh Sugar Mills and Rajshree Sugars & Chemicals fell 10 per cent each.  Most of these had rallied sharply in the past month with a rise in sugar prices.

The 20 per cent duty is aimed at boosting domestic supply and keeping prices, now Rs 40 a kg, under check. Globally, its price has risen 50  per cent in six months, due to a delayed harvest in Brazil, the world's largest producer (India is second).

Prices of raw sugar in the domestic market fell in the opening session at the Navi Mumbai wholesale market with the government decision on Friday. However it later came back to Thursday’s level. About 65,000 tonnes worth of export contracts in Maharashtra will now not be honored.  India has exported around 1.6 million tonnes so far in the current 2015-16 sugar marketing year (ending September 30).