PUNE: Sugar mills in drought-affected Tamil Nadu have demanded tariff-rate quota (TRQ) import of 6 lakh tonne of raw sugar at zero import duty to help minimise losses.
Officials aware of the matter told ET that the government is reviewing the situation and may accept their demand, as it will not only help keep sugar prices in southern India under control but also enable sugar mills clear cane farmers' dues.
India imposes 50 per cent duty on imported sugar in order to maintain domestic prices. Cheap imports have always been seen hitting the profitability of local sugar mills which then delay payments to cane farmers.
The Indian Sugar Mills Association (ISMA), which allegedly has more representation from mills in Uttar Pradesh, has been opposing imports, claiming that the country has enough stock of the sweetener.
However, South IndianBSE -0.36 % Sugar Mills Association, Tamil Nadu (SISMA-TN) has approached the central government, requesting it to allow sugar import.
The trade body claims the state's sugar stock, including production from its special season, will get over by first week of October, while production of new sugar will be delayed by two months till December due to lack of cane availability.
Limiting mills' financial losses due to under capacity utilisation is the main reason for their wanting to process imported raw sugar.
"Tamil Nadu has been suffering from drought we have never seen in the past 140 years, which has brought down cane availability for the next season to just about 20-25%, which will increase our overhead costs," said Palani G Periasamy, president of SISMA. "We need to keep our mills operational." Mills claim their per unit fixed cost of production will increase manifold next season, if 75% of their remain idle.
Source: economictimes.indiatimes.com