The food ministry will drop a plan to recommend a 10% duty on raw sugar imports for now amid strong opposition from the industry, but it may still favour doubling the tax on refined sugar purchases from overseas, a senior government official said on Friday.
The ministry may also convey its proposal on rasing the duty on refined sugar imports to the finance ministry for necessary action, instead of placing the proposal before the Cabinet Committee on Economic Affairs (CCEA), the official told FE. “We may think of revising raw sugar import tax after 2-3 months, after reviewing domestic supplies,” he said. At present, the government levies a 10% duty on both raw and refined sugar imports.
Last week, food minister KV Thomas had said the government might consider imposing a 20% duty on refined sugar imports while scrapping the tax on purchases of the raw sweetener from overseas, after a meeting with agriculture minister Sharad Pawar. The food ministry might place the proposals for the CCEA clearance in 10-15 days, he had said.
Both the proposals were aimed at promoting domestic refiners while discouraging inflows of cheaper white sugar. Currently, the government levies a 10% import duty on refined as well as raw sugar.
However, senior industry executives have protested such moves, saying raw sugar imports in large volumes would hurt manufacturers in the long run as the country already has adequate supplies. Since sugar sales in the open market are tightly regulated, cheaper dumping of the sweetener from abroad may jeopardise the ability of cash-strapped sugar manufacturers to pay farmers for their cane supplies, they have argued.
At Thursday’s price, after factoring in transportation, refining and other charges, the cost of white sugar production from the imported raw would be less than Rs 30,000 per tonne, compared with the current mill-gate price of Rs 35,000 a tonne, a snior trade executive said. This makes a case for raw sugar imports if the tax is abolished.
Pawar also told PTI on Wednesday the government could take a decision on revising duty structure on raw and white sugar imports in three months, factoring in the progress in cane crushing in key producing states. The crushing has just started this month in Maharshtra.
The government and industry bodies expect sugar output to be in the range of 23 million to 24.5 million tonnes, compared with 26.2 million tonnes a year before. However, Thomas has said domestic supplies won’t be a problem, as the output would still cross the annual consumption of around 22 million tonnes, and the country also has carry-forward stocks of six million tonnes from 2011-12. The country had exported around 3.3 million tonnes of sugar in 2011-12, the highest since 2007-08.
