Govt imposes 20% custom duty on sugar exports

The Dollar Business Bureau

The government on Thursday levied a customs duty of 20% on the exports of sugar to boost local supply and control domestic prices which are at a high of Rs.40 per kg.

The decision comes at a time when food prices have increased sharply on food items such as tomato, pulses and wheat.

"To keep a tab on the domestic sugar prices, the government has taken a decision to impose customs duty of 20% on the exports of raw sugar, refined or white sugar," according to a release by the Finance Ministry.

The Central Board of Excise and Customs (CBEC) released the same in a notification.

Due to a sharp increase in global prices, customs duty has been imposed to curb exports. However, the duty is less than the 25 percent, that was earlier proposed by the Ministry of Food & Pubic Distribution.

India is the second biggest sugar producer in the world after Brazil. In the marketing year 2015-16 (October-September), it has shipped around 1.6 million tonnes of sugar. With the government’s decision to impose duty further exports are not likely to take place. 

Sugar prices in the domestic retail market are at a high of Rs.40 per kg from Rs.30 per kg six months ago. To counter the rising prices government has taken several measures to check them, including removal of subsidy on export-linked production and imposition of stock restrictions on traders.

Last week, the Minister for Food & Public Distribution Ram Vilas Paswan had proposed to impose 25% customs duty on sugar exports to keep a check on them. As there has been a 50% increase in global prices of sugar in the past three months on account of supply disruption from Brazil, Indian exports of sugar may increase.

India’s sugar output is expected to fall to 25 million tonnes in 2015-16, as compared to 28.3 million tonnes in the previous year. However, the domestic demand per year is estimated at 26 million tonnes.

The government has estimated that the production would further decline to 23-24 million tonnes next year. But, the country will not experience any shortage as there would be an opening sugar stock of 7 million tonnes at the beginning of next year, taking the overall availability to 30-31 million tonnes.

Earlier, in 2013, the CBEC had prescribed a tariff rate of 20% export duty on raw sugar, refined or white sugar. However, there was no export duty before that period. It is interesting to note that yesterday the CBEC has once again reverted to the old levy of 20% instead of 25% as indicated earlier.