Duty-free sugar imports extended till April 2011

The previous deadline for bulk consumers was December 2010.

The government has further extended the Customs duty exemption on raw sugar imports by bulk consumers. The new deadline is April 1, 2011.

The initial exemption order, issued in October last year, was effective till April this year. It was then extended till December 31 this year.

A bulk consumer is a person, establishment or an industrial unit consuming more than 10 quintals sugar in a month for production or for a purpose other other than sale. The import is exempt from both basic Customs duty and special additional duty.

Bulk consumers include soft drink, confectionery and biscuit producers. They consume a substantial part of sugar output and were earlier required to pay an import duty of 60 per cent on raw sugar.

The sugar industry seems divided over the impact of the move. BJ Maheshwari, director of Dwarikesh Sugar Industries Ltd, said it would affect the domestic sugar industry as spot prices had declined below the cost of production.

“If the industry is not protected through an immediate measure to lift prices, sugar mills’ financials will be hit hard. Consequently, farmers will not get adequate compensation, which will affect their sowing plan for the next season,” he warned.

Futures contracts in white sugar, for delivery in May, on the benchmark International Continental Exchange, are at $481.60 a tonne. Early this year, it was over $700 a tonne.

Sanjay Tapriya, chief financial officer of Simbhaoli Sugar Mills Ltd, said the decision would have no immediate impact on prices, as the government would have to review the decision before the beginning of the next season, that is, October 2010.

Indian refineries generally focus on processing sugar from domestic sources.

“Anyway, the season is almost over for now and not much activity takes place during off-season. Hence, the price will not be affected at all,” said Tapriya.

An analyst with a commodity broking firm said the price had bottomed out. The decision, he said, proved that the government wanted to stop the price from moving upwards.

About a fortnight ago, a sugar industry delegation had met the Union agriculture minister to press for relief from low prices.

Vivek Saraogi, president of the Indian Sugar Mills Association and managing director of Balrampur Chini Ltd, had said farmers’ arrears could go up if prices did not move upwards.

An agriculture ministry official estimated sugar output at 23 million tonnes (mt) in the current season ending September 2010, as against the industry’s latest estimate of 18-18.5 mt.

source: BS