Trade expects India to soon ease raw sugar imports

NEW DELHI, Jan 30 (Reuters) - India's sugar mills expect the government to shortly allow them to import duty-free raws with an obligation to export the same quantity of refined sweetener within two years, traders said on Friday.

The federal cabinet deferred a decision on Friday, according to a government spokesman, but industry officials say they expect the new policy to announced soon after prices spiked weeks before a general election is due.

"Details of the cabinet meeting are still awaited," Vinay Kumar, director general of the National Federation of Cooperative Sugar Factories, said.

Another trader said the cabinet was in favour of zero-duty imports for domestic sales but had sought some clarifications before formally approving it.

Farm Minister Sharad Pawar said last week India's sugar production was expected to fall 32 percent to 18 million tonnes in the year to September, and the government was considering permitting mills to import raw sugar at zero duty. The lower output forecast has stoked prices. In the physical markets of the western city of Mumbai, prices have climbed to about 2,000 rupees ($40.83) per 100 kg, up 46 percent on year, traders say.

Traders and mill owners were still awaiting clarity on the issue from the government, said a Mumbai-based senior official of a leading sugar firm.

But mills have already contracted imports of raws expecting the government to change the policy, a government official has said.

Expectations that India would allow imports of raws at zero duty helped benchmark prices in New York end near a fresh four-month high of 12.92 cents per lb on Jan. 26.

And traders say the delay in India's decision to permit raws imports for domestic sales led to a drop of 0.28 cents to 12.59 cents per lb on Thursday.

India currently allows imports of raws duty-free raws only if the same consignment is refined and shipped out again.