Raise Sugar Customs Duty to 30% to Check Imports, Say Millers

As the inflow of cheaper sugar from Brazil and Pakistan inches close to half-million tonnes, influencing domestic prices, a section of sugar millers has urged the Government to hike import duty to 30 per cent.

Currently, the import of raw and refined sugar under the open general licence scheme (OGL) attracts a 10 per cent duty.

"We request you to check import under OGL. And to improve the ex-factory sugar prices, import duty on raw and white sugar should be increased to 30 per cent," Kallapa B. Awade, President, National Federation of Cooperative Sugar Factories (NFCSF), said in a representation to the Food Ministry.

Sugar prices have been bearish since the beginning of the crushing season in October as millers have been offloading stocks to clear cane dues to farmers.

Further, rising imports of cheaper sugar is also influencing the prices.

The increase in imports is despite domestic output estimated by NFCSF at around 25 million tonnes (mt), against the demand of 22.5 mt.

IMPORTS

It is estimated that traders have so far imported 4.68 lakh tonnes. Including the imported stuff, NFCSF pegs the opening sugar balance for next season starting October at 9.66 mt.

"Considering the initial three months requirement of sugar for 2013-14 of about 5.8 mt, India will have a net surplus of sugar of 3.86 mt," Awade said.

Further, NFCSF said the surplus sugar cannot be exported as international prices are ruling lower. If imports continue, the domestic prices will further hurting realisations and timely payment to sugarcane growers, it noted.

The average ex-factory realisations, which stood at Rs 3,328 a quintal in October 2012, have now come down to around to Rs 2,925, a 12 per cent decline over seven months.

"It is becoming very difficult for factories to pay even sugarcane prices to cane growers. The sugarcane price arrears are mounting and reached to Rs 12,600 crore up to March 15," the Federation said.

NFCSF also demanded that the Government provide subsidy to export the surplus sugar arguing that the shipments would facilitate the factories to clear cane arrears.