Govt mulls slashing import duty on refined sugar

New Delhi (PTI): The government may cut import duty on refined sugar, and could allow mills to buy raw varieties from the overseas markets beyond September 2009, in a bid to boost domestic availability of sweetener and contain prices.

"We are looking at various options for keeping sugar prices in check," a senior Food Ministry official told PTI.

These options could be reduction in the import duties on white sugar from the present 60 per cent or permission to mills to import raw sugar beyond this season, he said.

He said the government may also look at dispensing with the export obligation for import of raw sugar.

The Centre recently allowed sugar mills to import raw sugar at zero duty till September this year for sale in the domestic market. These imports will be under advance license scheme and on 'tonne-to-tonne' basis, which means that mills would have to export the same quantity later.

Sugar prices in the domestic market have risen by up to 30 per cent since October as production is estimated to fall to 160 lakh tonnes in 2008-09 season (October-September) from 264 lakh tonnes in the previous year.

The official said that the government would like the sugar prices to remain around Rs 21-22 a kg, which he said is a good price for both mills, consumers and farmers.

Mills in Uttar Pradesh and some other states are buying sugarcane at about Rs 150 per quintal. Besides, it costs about Rs 4 a kg for processing sugarcane into sugar and Re 1 as tax, taking the total cost price of sugar to Rs 19-20 a kg. Normally, nine kg of sugar is produced from one quintal of sugarcane.

Industry experts said the government may bring down the import duty to zero level on refined sugar as it could not afford to make consumers pay higher when elections are round the corner.

The government has already delayed the announcement of sugarcane support price for next season by referring the issue to the Prime Minister's Economic Advisory Council (EAC), an expert said.

Last month, the Cabinet referred a proposal to raise the satutory minimum price (SMP) of sugarcane to Rs 107 a quintal from the current Rs 81.18 a quintal, mooted by the Food Ministry, to the EAC.