Industry upset over delay in imposing import duty on sugar

The sugar industry today expressed disappointment over the deferment of import duty on sugar due to inflationary concerns, stating that the Centre should have considered the high production cost of the sweetener before taking such a decision.

Industry said it would again ask the government to consider their demand for imposition of duty on refined sugar imports to protect domestic mills from sliding prices. Last week, an empowered group of ministers (eGOM) on food had deferred taking a decision on levying duty on sugar imports.

"It is most unfortunate that the government has deferred a decision on imposing import duty on refined sugar because of inflationary pressure," Indian Sugar Mills Association (ISMA) Deputy Director General M N Rao said.

Rao said that the government should not expect retail sugar prices to slip to last year's level, considering the fact that mills have paid as much as Rs 250 per quintal for sugarcane in the current 2009-10 crop year (October-September).

"How can the government ignore high production costs and expect low prices?" he asked. Sugar prices, which touched nearly Rs 50/kg in mid-January, have slid to Rs 32-34 a kg at present but still stand higher than last year.

National Federation of Cooperative Sugar Factories Managing Director Vinay Kumar said, "We are disappointed that it has got deferred. We will again approach the government to consider our demands, otherwise we will not be able to pay good cane price to farmers next year."

Millers paid Rs 250 per quintal for cane this year, which is much higher than the centre's Fair and Remunerative Price (FRP) of Rs 130 per quintal for 2009-10 and the statutory minimum price (SMP) of Rs 81 for the previous year.

The government has shifted to a new system of fixing sugarcane price from the current crop year. Under FRP, it has also factored in the risk element and profit along with the cost of cultivation.

"Rather than allowing duty-free imports, the government should give preference to domestic millers," Rao urged. The industry stated that duty-free imports were allowed only to deal with an emergency situation.

There is enough data to show that the availability of sugar in the domestic market is enough to meet the demand for the current season as well as the lean period in October- November, when mills do not operate in full swing, it added.

The government allowed duty-free import of sugar in February 2009, and as much as six million tonnes of the sweetener has been purchased from the global market since then.

Meanwhile, the country's sugar output in the 2009-10 crop year has improved from the earlier estimate to 18.5 million tonnes, against an annual demand of 23 million tonnes.

source: BS