Government plans to hike sugar import duty by 5 per cent to 15 per cent

The government plans to increase import duty on sugar to 15 per cent from the current 10 per cent in order to curb shipments and clear sugarcane arrears to farmers estimated at about Rs 9,000 crore, Food Minister K V Thomas said on Thursday.

Imports are putting pressure on domestic prices and thereby preventing millers from clear cane arrears to farmers. Currently, millers are selling sugar to wholesalers/traders at rates lower than even the cost of production.

"We had a meeting on this issue today. The Finance Minister and the Agricuture Minister were also present. We have agreed to raise import duty on both raw and refined sugar to 15 per cent," Mr Thomas told PTI.

Stating that the industry has demanded higher sugar import duty of 30-40 per cent, the minister said, "We have taken cautious steps and agreed for a marginal increase of 5 per cent fearing price rise at a time when state governments have started procuring sugar from open market for PDS."

This will help mills to clear cane arrears, which have risen to Rs 9,000 crore from Rs 5,000 crore in the last one year, he added.

After the meeting, the Food Ministry moved a proposal to this effect to the Finance Ministry for formal approval.

According to the Indian Sugar Mills Association (ISMA), the country has imported nearly 6,00,000 tonnes of raw sugar and another 1,00,000 tonnes of refined sugar from Pakistan so far this marketing year.

Commenting on the government's plan, ISMA director general Abinash Verma said, "The industry has demanded increase in import duty to 40 per cent. The import duty of 15 per cent may not be sufficient to stop imports completely."

He said that market sentiments are dampened because of imports, leading to a fall in prices and preventing traders from stocking the sweetener.

Currently, ex-factory price of sugar in Uttar Pradesh and Maharastra is ruling at Rs 31 and 28.50 per kg, respectively, as against the production cost of Rs 35 and Rs 31 per kg, respectively.

The country has sufficient stocks to meet the domestic demand. Production is estimated to be at 24.5 million tonnes in 2012-13 marketing year (October-September), against the annual demand of 22-23 million tonnes.