Under pressure, Centre mulls 60% tariff on raw, white sugar

By : Sanjay Jog
Last Updated: Tue, May 04, 2010 20:11 hrs

Country may have an output of 18.5 mt, in addition to the carry-forward stock of 4.7 mt.

The Centre is considering a 60 per cent import duty on both raw and white sugar. The current duty is zero.

The aim would be to end all imports, with the industry fearing domestic prices would fall drastically if imports continues during the sugar surplus cycle. The decision is expected this month, possibly after the ongoing Budget session of Parliament.

Sources told Business Standard: "The government had exempted import duty in 2009-10 to tackle the problem of less production, which was estimated at the beginning of the crushing season. Similarly, the government took the decision for zero import duty to put spiralling sugar prices under control. Till date, the industry has imported 4.2 million tonnes of raw and white sugar. The government has extended the zero import duty concession till December. For bulk consumers of sugar, the government has allowed duty-free imports till April 1 next year."

By the revised estimates, said the sources, the country was expected to have sugar production of over 18.5 mt, in addition to the carry-forward stock of 4.7 mt.

Essentially, nearly 23.2 mt of sugar would be available against the country’s requirement of 22 mt.

And so, said the sources, the Centre felt duty-free import was no longer required. "Instead of putting a ban, the government mulls imposition of 60 per cent duty, which will make the import a non-viable proposition for the industry," they said.

A section of the industry, they added, may still want to import raw sugar from Dubai, as it is priced much lower then the prices in the Mumbai market. "Imported raw sugar from Dubai will fetch a price of Rs 2,378 a quintal against Rs 2,730 a quintal in the Mumbai market. However, if the duty-free import will continue, the sugar prices in the domestic markets will also fall and put additional burden on sugar mills," they said.

Kanhaiyalal Gidwani, spokesman for the Maharashtra Pradesh Congress Committee, said the government must wait until June 11 when the crushing season will be over and the situation would be clearer.

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