Centre increases import duty on sugar; stocks rise

Possible surge in domestic sugar prices may impact consumers but will revive cash-starved mills who owe farmers Rs 6,800 cr

The Union finance ministry on Friday announced a rise in the import duty on sugar. Through a notification dated August 21, the duty on raw and refined sugar was increased from 15 per cent to 25 per cent.

After sugar mills had demanded an increase in the duty in June, Food Minister Ram Vilas Paswan had announced a package for the sector, including raising the duty to 40 per cent.

But that decision has been pending. Sugar prices in the global market have been declining through the past two months. On June 26, the ICE benchmark sugar was quoted at $18.73 a pound, against the current $16.02 a pound, a fall of 14.5 per cent.

“An increase in the duty will make imports unviable for port-based refiners, despite a plunge in global prices due to ample supplies from top exporters Brazil and Thailand,” said a spokesperson of the Indian Sugar Mills Association (Isma).

Sugar mills, especially those in Uttar Pradesh, have been under pressure for long. UP sugar mills have decided not to begin crushing for the season beginning October, fearing losses.

“With uncertainty on sugar imports no longer there, the domestic market sentiment will improve and traders will show better buying interest. This will also improve the revenue realisation for sugar mills and help them clear cane arrears of farmers at the earliest,” Isma said.

It added the sugar sector wants the government to raise the sugar import duty to 40 per cent to check imports in case global prices fall. “The country is already reeling under about 2,500,000 tonnes of surplus sugar,” Isma said.

A city-based trader said through the past few weeks, imports were rare, as traders had expected an import duty rise. Now, they don’t see the possibility of an immediate increase in spot prices, as supplies are adequate.

On Friday, sugar futures rose 0.5 per cent on the National Commodity and Derivatives Exchange, closing at Rs 3,053 a quintal. Shares of sugar makers Bajaj Hindusthan, Shree Renuka Sugars and Balrampur Chini Mills Ltd rose 2-10 per cent.