India Allows Duty-Free Sugar Imports to Cap Prices.

Feb. 17 (Bloomberg) -- India, facing a domestic shortage of sugar, allowed duty-free imports of raw sugar to prevent an increase in domestic prices, following a cabinet decision last month.

The government allowed mills to purchase raw sugar abroad for processing and sale in the local market, provided they export a similar quantity of white sugar later, the commerce ministry said in a notification on its Web site today.

Purchases by the South Asian nation may help support prices that have risen 12 percent on ICE Futures U.S. in New York since the beginning of the year.

Raw-sugar imports by India may exceed 1 million tons in the year ending Sept. 30, S.L. Jain, director general of Indian Sugar Mills Association said. Mills will need to export the same quantity within two years, he said.

India’s sugar output may total 18 million metric tons in the year to Sept. 30, down from 20 million tons forecast in December, Farm Minister Sharad Pawar said last month. Production last year was 26.4 million tons.