Mills likely to go for more raw sugar imports

Chennai, March 1 The Centre’s move to extend the obligation for sugar mills to export refined sugar for importing raw sugar under advance licence to three years from two years is likely to result in shipments of another five lakh tonnes raw sugar into the country.

The decision to extend the export obligation to three years was included as part of the Exim Policy, announced last week.

“The decision will give more courage to sugar mills to import raw sugar. It gives more time to them to export refined or white sugar,” trade sources said.

IMproving local supplies
The time for export obligation has been extended to increase supply in the domestic market and check rising prices.

Under advance licence, raw sugar can be imported at zero Customs duty and exported after being processed into white sugar.

Earlier this month, the Centre had amended the rules for importing raw sugar under advance licence. Under current norms, raw sugar can be imported and sold in the domestic market after processing. The obligation to export can be met by procuring sugarcane from farmers here and then shipping out sugar processed from it.

Before this, raw sugar imported had to be processed and re-exported as white sugar.

Shortage, rising prices
The Centre amended the rules as the country is faced with shortage of sugar and its prices are rising.

During the current season to September, sugar production is projected to be around or lower than 165 lakh tonnes (lt) against 264 lt last year. Initially, sugar production was estimated to be 180 lakh tonnes but poor recovery and cane production, especially in Maharashtra and Uttar Pradesh, have forced pruning of the estimates.

Next season, the industry expects the production to rebound to 220 lt.

Open market sales
Meanwhile, lifting of physical stocks by the trade is estimated to be only 65 per cent of the 15 lt allocated for February by the Government for sale in the open market.

Every month, the Centre decides on the quantity of sugar that can be sold in the open market. This enables the Government to not only ensure better prices for cane growers by lowering the release in the open market, but also keep rising prices under leash by releasing more sugar. “The dispatch of sugar stocks got affected in view of the Centre allowing import of raw sugar and its decision to impose stock limits,” the sources said.

It is likely now that the unsold sugar from February quota will be carried forward for sale in March.

In view of the increased stocks and imports, sugar prices declined last week. The prices dropped Rs 60 a quintal to Rs 1,930-1,955 for S-30 in Mumbai market.

Meanwhile, the Indian Sugar Exim Corporation, a trading arm of the private and co-operative sugar mills in the country, has sold 1,500 tonnes of “damaged” sugar in the southern market at Rs 15,780-16,540 a tonne.

It also sold another 9,000 tonnes at a rebate of Rs 17,650-18,270 without duty for delivery from Tuticorin and Chennai ports.