New Delhi: The Union Cabinet may discuss a proposal by the food ministry to allow duty-free import of refined sugar and also import of raw sugar at zero duty, but without any re-export obligation, at a meeting scheduled for Thursday. These proposals are meant to ease sugar supplies and control the surge in prices that have moved up by more than Rs 7 per kg since October 2008. As per industry estimates, India's sugar production in 2008-09 crop season could fall by more than 10 million tonne to around 15 million tonne because of low acreage and fall in yield. Sources said another proposal to allow state-run National Agricultural Cooperative Marketing Federation (Nafed) to give discount to bulk consumers of cotton in lines with the one given to Cotton Corporation of India (CCI) in February could also be considered. Meanwhile, experts said allowing easier import of refined sugar was needed to increase supplies during the summer season when demand from bulk consumers like soft drink makers goes up.
Food Ministry wants duty-free import of refined sugar and import of raw sugar at zero duty, but without any re-export obligation, to ease sugar supplies and control the surge in prices that have moved up by over Rs 7/kg since October 2008
Refined sugar futures have risen by 17% on the National Commodity and Derivatives Exchange since the beginning of the year on forecasts of a decline in output.
On Wednesday, spot sugar prices in the Vashi wholesale markets shot up by Rs.60-92 per quintal for the medium grade varieties (M-30) to Rs2,322 per quintal to Rs.2,390 per quintal due to heavy stockists buying amid low supplies. Prices of S-30 sugar varieties also rose by Rs.60 to Rs.77 per quintal to Rs.2,273 to Rs.2,310.
Shares of all major sugar companies like Balrampur Chine, Bajaj Hindustan and Dhampur also went up on fears of sharp fall in production.
Meanwhile, sources said the two proposals, if approved by the Cabinet, will need the consent of the Election Commission. The Indian government had in February allowed the duty-free imports of raw sugar for sale locally on condition buyers export a similar quantity of white sugar later. Last month imposed limits on the amount of sugar traders can hold for a period of 30 days. The curbs, aimed at cooling prices, will stay for four months. These measures were in addition to the curb on exports that it imposed in January to further ease supplies. Earlier, this month, the government decided to make available 5.4 million tonne of sugar for the April-June quarter, as against 5.2 million tonne available during the same period last quarter.
Higher sugar availability was made to ensure that prices remain stable during the summer when demand from bulk buyers like soft drink makers increases.
Apart from releasing higher quota, the government has also extended the date till when mills can liquidate their March monthly quota.
An official statement said that sugar availability for April would by 1.95 million tonnes, while the availability for June would be 1.85 million tonnes. The availability for June will, however, be lower at 1.6 million tonne.
- Fe Bureau & Agencies
(The Financial Express: 9.4.2009)
