NEW DELHI: Dubai-based world’s largest sugar refinery Al Khaleej’s proposal to set up a wholly-owned sugar refining capacity in India will be
considered by the foreign investment promotion board (FIPB) next week, after being stuck in the policy logjam for more than a year.
The proposal stands brighter chance of being cleared this time round, as the government has modified the sugar policy allowing import and export of sugar on tonne-to-tonne basis, instead of grain-to-grain, a senior government official dealing with the proposal.
Al Khaleej’s proposal was rejected last year by FIPB, as the government then did not allow trading of sugar on tonne-to-tonne basis, a major component of Dubai company’s proposal. In its proposal to the government, Al Khaleej had insisted on replacing grain-to-grain stipulation by tonne-on-tonne.
Located in Dubai, Al Khaleej Sugar’s standalone refinery is the largest in the world with a capacity of 4,800 tonne per day. Since the region does not produce sugarcane, the company sources raw sugar from various parts of the world and refines it. Sugar from the refinery is exported to nearly 40 countries.
Al Khaleej’s plan to set up a fully-owned subsidiary in India is scheduled to be taken up by FIPB at its next meeting. The company plans to expand its capacity by importing raw sugar into India, and process it at the proposed Indian subsidiary.
Tonne-to-tonne basis of allowing duty free import of raw sugar means that advance licences would be given for importing raw sugar on zero duty on the condition that same amount of any category of sugar would be exported within a stipulated time, while grain-to-grain means that the same category of refined sugar would be exported within a stipulated time.
Last year, the Board turned down Al Khaleej’s proposal saying the firm could not be allowed to bring foreign investment, as the commerce and food ministries were not in favour of the proposal.
It had also pointed out that since the director general of foreign trade (DGFT) came out with a circular on April 16, withdrawing a facility of ‘tonne-to-tonne’ basis of allowing duty free import of raw sugar and replacing it with ‘grain-to-grain’.
Source : The Economic Times