Sugar Import Tax On Anvil

The government plans to impose a five per cent tax on sugar imports to stem an influx of cheaper foreign sugar, a senior food ministry official said yesterday.

Certainly, there will be some duty because international sugar prices are crashing, the official, who asked not to be identified, said. It will not be a zero-duty item. India, with the exception of Maharashtra, currently allows duty-free imports of sugar.

The official said the food ministry had suggested the surcharge to the newly appointed food minister Surjit Singh Barnala, who backed the idea.

He (the minister) is supportive of the proposal, the official said. It is expected that he would agree to the proposal but he has not agreed yet. It will be done quickly.

The official said the matter was currently with the cabinet committee on prices, which looks into decisions relating to commodity price rises, imports and exports. We hope a decision will be taken soon, he said.

Maharashtra last month introduced a four per cent tax on imported sugar, a move traders said was likely to divert arrivals from Mumbai to other ports.

Industry officials say a surge in cheap imports has hurt the countrys sugar industry, pushing domestic prices down.

The food ministry official said private traders imported about 3,55,000 tonnes of sugar between September 1997 and March 1998. India had negligible imports in the 1996/97 (October-September) sugar season.

Trade officials said domestic sugar prices had fallen by Rs 300-400 a tonne in the past three months. On Thursday, sugar S-30 was quoted at Rs 1,420/1,460 per quintal while M-30 was traded at Rs 1,455/1,520 per quintal.

The ministry official said the proposed surcharge would make imports costlier by Rs 620 ($15.7) a tonne.

The official said India was mainly importing from Latin American countries, which was costing about $310 per tonne (C & F) at the Indian ports.

A panel was looking into possible suggested changes for the sugar industry, and hoped some steps aiming at deregulation were expected in their report, the official said.Some changes are likely to come, he said.

Definitely some relaxations will be there. But it will not be decontrolled in one sweep. (Initially), there will be some sort of arrangement which will reduce the control on the sugar industry.

Sugar is one of the very few industries which is still under government regulation.