Government likely to hike import duty on sugar to 60%
The Dollar Business Bureau
The government is likely to increase the duty on the import of sugar to 60% from the present 40% in order to control the cheap imports and to maintain local prices.
Any decline in the domestic prices of sugar will impact the millers' capacity to pay sugarcane dues to farmers.
In the wake of lower sugar production expected during the current marketing year of 2016-17, the government, in April, had permitted 5 lakh tonnes of raw sugar import at zero duty in order to boost local supply.
“We are monitoring global price movement closely. Prices in the international market are falling and some traders are keen to import even at high customs duty. So, we are considering raising the import duty,” a senior official from the Food Ministry told to PTI.
Higher import duty will be levied if there is further decline in the international sugar prices in order to ensure that cheap shipments do not put pressure on the retail prices in the domestic market, which are currently ruling at Rs.40-50 per kg.
The official further said that 5 lakh tonnes of raw sugar have already been contracted, of which, most of it has arrived already, while adding that the import was allowed for ensuring sufficient supplies in the local market.
The domestic demand for sugar is around 24-24.5 million tonnes a year, while the production in the 2016-17 crop season is estimated at little more than 21 million tonnes and there is buffer stock from previous year.
On the question of more import being undertaken at 40% duty, the official replied that there are reports that extra 3 lakh tonnes of sugar from Brazil has been contracted and the shipments are on the way.
However, the official said that the sugar is generally shipped by refiners for re-exporting and not for domestic purpose. If it has been contracted for domestic use, the shipments will reach only in next 45 days and the taxes prevailing at that time need to be paid.
In the meantime, the government has urged the industry to keep the gap between domestic and global prices so that the traders are not benefitted by import.
At present, global raw sugar prices have declined to less than 13 cents per pound as compared to 16-17 cents a pound, the prices prevailing four months earlier.