PUNE: The Indian Sugar Mills Association has demanded an increase in import duty on the sweetener from 40% to 60% to prevent dumping of the commodity following the fall in international raw sugar prices. It has also demanded reduction in goods and services tax on ethanol from 18% to 5%. Global sugar prices have fallen nearly 30% in three months to about 15 cents per pound.
“Prices have fallen due to an expected major turnaround in global sugar production and estimated surplus from all major sugar producing countries including India. Global sugar prices fell steeply when Brazilian production started in April,” the association said in a letter to the government.
The association said that if raw sugar prices fall further, even at the current 40% import duty, raw sugar could be easily and profitably imported into India. “If that happens, current domestic prices may see a major fall, making it unviable for the sugar mills,” it said in the letter.
ISMA president T Sarita Reddy said, “With an increase in FRP (fair and remunerative price) by 11% for next sugar season, any fall in domestic sugar prices of Rs 36 per kg exfactory will mean that FRP of Rs 255 per quintal of sugarcane will become unaffordable. It will deeply hurt interests of the Indian farmer.”
The industry body said that there is no need to bring in any further sugar into the country. The government had allowed duty-free import of 5 lakh tonnes to keep domestic prices under check. “We earnestly request you to increase the import duty on sugar to the bound rate of 60%,” the letter said.
However, importers said that imports are not likely.
“International market has slid 40% in the past four months while domestic prices have been steady,” said a trader with a Gurgaon-based firm, requesting not to be named.
“Last week, when New York went down to 13.74 cents per pound, this resulted in opening import parity for east coast refineries even after paying 40% import duty. We believe additional import is still unlikely because domestic prices will fall if there is excess supply in the market which will again close the parity,” he said.
On Friday, sugar price in Mumbai was Rs 40 a kg and traders said they expected the price to stay firm.
“There is no parity to import raw sugar on west coast India and since there is no hedging mechanism available in domestic market there is absolutely no chance of anyone importing at 40% import duty,” said Rahil Shaikh, managing director at ED&F Man Commodities India Pvt Ltd.
“In our view the government should start to look at a progressive trade policy and avoid restrictive policy by removal of stock limit and lowering export duty to zero.”
Refiners and traders also said that since the Indian sugar season starts from October there is very limited time to import raw sugar, process and sell.
“Even if someone contracts Brazilian crop and loads it for shipment in July, it will land in India in August. The times to process will coincide with the domestic crop. So it is unviable to import,” a trader said on condition of anonymity. The West India Sugar Mills Association met the Union petroleum and natural gas minister requesting reduction in GST on ethanol since the supply of green fuel has f ..
Source: economictimes.indiatimes.com