Import duty on sugar likely as acreage improves

NEW DELHI: Import duty on sugar is likely to be upped this week after the food ministry wrote to the finance ministry asking that the duty be hiked to 15%. Zero duty on imports will end by June 30 even as sowing picks up pace, making it imperative for the government to put in place a clear policy well before the deadline expires.

"The finance ministry could announce the increase in duty soon. The governmetn does not want the industry and farmers to be disadvantage by imports," a food ministry official said.

However, analysts point out that with local prices nosediving daily due to ample supply even as international prices zoom up on apprehensions of a poor Brazil crop, the likelihood of imports is low even without a hike in duty.The domestic sugar industry is now lobbying to convince the food and commerce ministries that it is necessary to urgently open up the export quota, which has already been exhausted.

Making a decision on opening up exports imperative is also sugar output projections for 2011-12. That is pegged at much higher than for the previous year, at around 29.3mt which is a good 3mt higher than for 2010-11.. For the current 2010-11 season which ends in September, the food ministry has estimated sugar output at 24.5 mt, up from 19 mt a year ago.

To date, mills have exported almost four lakh tonnes out of the half million tonnes allowed by the government under OGL for the 2010-11 sugar year beginning October last. Industry officials from the industry platform National Federation of Co-operative Sugar Factories Ltd. and the Indian Sugar Mills Association expressed keeness that given the ample supply in the home market, the government will allow exports to the tune of 1.5mt this time round in order to allow the sugar sector to take advantage of firm prices global prices.

source: ET