Govt may scrap white sugar import duty: Experts react

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Govt may scrap white sugar import duty: Experts react

The government is mulling to scrap the 60% import duty on white sugar. Calling the government’s intention to scrap import duty on sugar ‘a desperate move’, SP Tulsian of sptulsian.com said, "I do not think it is economical to import sugar even after excluding the import duty.”

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The government is considering to scrap the 60% import duty on white sugar. Sugar stocks reacted mixed to the news: Shree Renuka Sugars closed up more than 5% while DCM Shriram ended down more than 5%.

"This may be a preventive step [to prevent sugar prices from increasing] but I do not think it is economical to import sugar even after excluding the import duty," SP Tulsian of sptulsian.com said. Tulsian added that sugar prices were expected to touch Rs 25 per kilogramme ex-mill by June and the government's possible move may be "a desperate bid to counter it", he said.

Sugar shortage

Sugar has seen an acute shortage and experts had expected prices to spiral up ahead. The latest news that the government may scrap the import duty is among the many moves that the government is considering to control sugar prices. "We are looking at various options for keeping sugar prices in check," Food Ministry officials had said last week.

Yesterday, the government indicated that it has released 1.6 million tonne of sugar under the free sale quota, taking the total released for sale to 1.7 million tonne. The government also recently imposed a stock limit on sugar and is considering raising the SMP (statutory minimum price) for cane to help lift sugar production and tame prices going forward.

Production downgrades

Sugar production for the full year has constantly been downgraded by sugar mills and experts. Agriculture Minister Sharad Pawar recently said he expected production to be at 16.5 million tonnes. However, SL Jain of ISMA (Indian Sugar Mills Association) said output in the year-to-September may total 16 million tonnes versus 18 million tonnes that was estimated last month.

'EC may obstruct'

Reacting to the news, ISMA's Jain said sugar prices were expected to consolidate in a narrow range for a couple of months. "However, any change in cane pricing or import policies can only happen after approval from the Election Commission now," he said, referring to model code of conduct that has come into effect after the announcement of the election dates - it prevents the government from taking any step that may possibly have populist overtones.