Indian sugar refiners to gain from export tax

The Dollar Business Bureau

India’s proposed duty of 25 percent on sugar exports, with an aim to maintain domestic supplies, can increase opportunities for country’s refiners, who are not subjected to the levy unlike mill owners. This enables them to sell their produce to countries like Sri Lanka and Myanmar.

India’s total sugar production is likely to register a significant decline this year due to droughts in many sugar-growing states including Maharashtra and Karnataka.

Local traders said global sugar refining margins have declined after raw sugar deficit, driven by a shift in the world market. Margins may recover as low quality of white sugar exports from mills may stop following the duty on sugar export.

“The duty on exports will be applied only for local output (mills). The levy will not be applicable on refiners,” said an official at EID-Parry (India).

“If domestically produced sugar shipments halt then those markets can be served by the refiners. Sri Lanka and Myanmar would be among countries where refiners can export their output,” he added.

Sugar prices in the local retail markets have gone up by Rs.4-7 per kg since April this year due to less availability of the product in the domestic market.

India’s sugar exports stood at $1.40 billion in 2015, compared to $1.30 billion in 2014. Its top five international importers were Sudan, Myanmar, Somalia, Sri Lanka and UAE.

The country has exported around 1.7 million tonnes of sugar till date in the current marketing year that began in October last year.