Duty-free sugar imports extended

Union minister for agriculture Sharad Pawar, on Thursday announced that the government has extended duty-free imports of sugar beyond the earlier deadline of November.

Pawar, during a conference in New Delhi, said that the zero-duty imports will be allowed till May or June. He, however, did not elaborate on whether the government would raise the cap on duty-free white sugar imports as well. Pawar said sugar prices are expected to soften by the end of October because of this extension.

The government had allowed state-run trade companies to import up to 1 million tonne (mt) zero-duty white sugar till September 30 to help meet local supply requirements. But looking at the poor response from state-run enterprises, it later decided to allow even private players to import duty-free white sugar till November 30, subject to a cap of 1 mt.
India is expected to produce only 15-16 mt of sugar, in the season that starts October 1, as against the demand of 23 mt. This (15-16 mt) is over 40% lower than last year’s sugar production of 26.3 mt. The near 8 mt deficit is being met through the buffer stock and imports.

Due to this shortfall, sugar prices in India have risen by over 50% and are currently trading at Rs 30 per kg, as against Rs 20 per kg last year.

The country has so far placed orders for import of around 500,000 tonne white sugar for delivery till end November. The government has also allowed duty-free raw
sugar import without re-export obligations until March to help bolster sugar supplies amid concerns over shortage. However, analysts feel prices may rise.

An analyst with a leading brokerage house said, “Low cane acreage and weak monsoons may continue to push sugar prices upwards.” Jaiprakash Toshniwal, research analyst, ULJK Securities Pvt Ltd in a report on August 24 said, “International sugar prices are at a very high level due to the lower production in countries with high consumption levels. Thus, if India has to import raw sugar for internal consumption, domestic prices have to remain at a higher level so as to make refining of the imported raw sugar viable.”

Another analyst with a research firm told DNA Money, “Sugar imports will increase in the coming months, which will force domestic prices to rise, as international prices are much higher than the local prices.” With NW18 inputs