Govt allows duty-free import of raw sugar up to 5 lakh tonnes

The Dollar Business Bureau

With an objective of stabilising domestic supply of sugar, the government has permitted duty-free imports of raw sugar up to 5 lakh tonnes till June 12 under a tariff rate quota.

Imports of sugar beyond the announced quantity and the deadline will attract a 40% import duty, imposed since April 2015. The Directorate General of Foreign Trade (DGFT) has announced it will soon notify the modalities of such imports.

The decision has been taken to keep in check the demand in consumption before the new sugar season. The government has maintained that there is no scarcity of sugar in the domestic market due to massive stocks carried forward from 2015-16.

This is the first such instance since 2015 that the government will allow imports of raw sugar under the open general license (OGL) at zero duty.

This is a marked contrast to the scenario last year when sugar mills exported 1.66MT of sugar. India’s sugar imports could have an impact on the global prices which increased nearly 3% in the trading markets on Wednesday.

The domestic production of sugar has taken a massive hit this year. Although Uttar Pradesh, the country’s largest sugar producing state, has witnessed bumper production this year, other major states such as Maharashtra and Karnataka have witnessed less-than-normal production due to dry spells that hit the cane farms. Tamilnadu the second largest producer of sugar too will see a one-third decline in production due to severe drought conditions prevailing in the state.

The duty-free imports of raw sugar will make the domestic sugar prices cheaper, at least by Rs.3-4 per kg, compared to the current prices of white sugar. The current price of domestic white sugar is about Rs.35-36 per kg. Post-duty free imports, the sweetener prices will work out to about Rs.31-32 per kg

The Food Ministry, meanwhile, has estimated the domestic sugar production to fall to 22.5 million tonnes in the current marketing year till September. The latest projection is down from the earlier estimate of 25.1 million tonnes in 2015-16. The Indian Sugar Mills Association has predicted the domestic sugar output to decline to 20.3 million tonnes in 2016-17.

The government notification also detailed zone wise the amount of raw sugar that can be imported by millers/refiners through assigned ports in the East, West and South zones. An importer can import up to 0.50 lakh MT from Haldia (WB) and Paradeep (Odisha) in the East Zone; up to 3 lakh MT from Tuticorin, Chennai (Tamil Nadu), Mangalore (Karnataka) and Kakinada (Andhra Pradesh) in the South Zone; 1.50 lakh MT from Kandla (Gujarat, Jawaharlal Nehru Port Trust/ Mumbai Port (Maharastra) in the West Zone.