Union cabinet gives its nod for hike in import duty on sugar to 40%

 The Dollar Business Bureau The Union Cabinet, chaired by the Prime Minister of India, on Wednesday, gave its nod for import duty hike on sugar from the current 25% to 40%. This move by the government comes a day after the government’s decision to ease norms for the export of sugar to the United States and the European Union. According to an official release, the government’s move to increase import duty on sugar is in view that it would prevent any imports in case of depreciation in the international prices of sugar. The government has further decided for the withdrawal of the ‘Duty Free Import Authorization (DFIA)’ scheme for sugar. A scheme under which the exporters would import duty-free, permissible quantity of sugar for subsequent processing and disposal. With the decision to withdraw the DFIA scheme, the government intends to prevent the use of sugar made from such duty-free imports in the domestic market. To further prevent any possibilities of leakage of sugar made from duty-free imports into the domestic markets, the government has also decided to reduce the period for discharging the export obligations to six months. The government has also decided to remove the excise duty on ethanol. In this regard, the ethanol generated from the molasses in the next sugar season and supplied for blending will be exempted from the excise duty and the price benefits thereafter will be provided to the millers/distilleries, informed the release. The government’s moves will improve the adverse sentiments in the case of sugar pricing and the liquidity in the sugar industry, besides also facilitating the ways for clearance of arrears of the cane-dues for the farmers. Over the past four years, due to the imbalance between the domestic requirement and continued over-production of sugar (beyond the requirement) has irked the millers, resulting in they not being able to clear the cane dues that they owed to farmers, affecting the incomes of 50 million sugarcane farmers. This was inspite of the government’s efforts in providing time-to-time financial assistance which includes providing interest-free loans, incentivisation of raw-sugar exports, among others.    

 This article was published on April 29, 2015 – 7:15 pm IST.