New Delhi, Jan. 29 There is confusion over whether or not the Centre has allowed duty-free imports of raw sugar against advance licences (AL) on a ‘tonne-to-tonne’ basis.
According to Mr Uma Kant Mishra, Principal Director-General of the Press Information Bureau (PIB), the issue was discussed by the Cabinet Committee of Economic Affairs (CCEA) on Wednesday, but no decision was taken.
“It was on the agenda. It was discussed but deferred,” he told presspersons here on Thursday, without giving any further details.
But according to officials in the Food Ministry, the CCEA has given the nod to the proposal, which will enable mills to sell white sugar processed from the imported raws within the country. The re-export obligation under the AL scheme – one tonne of white sugar for every 1.05 tonnes of raw sugar imported duty-free – can be discharged separately, with the exportable sugar being processed using indigenous cane.
This is as against the current AL dispensation, under which raw imports at zero duty are subject to the ‘grain-to-grain’ condition. This makes it compulsory for the white sugar being exported – within 24 months of the AL being issued – to be refined only from the originally imported raw sugar.
“As far as we know, the tonne-to-tonne proposal has been cleared at Wednesday’s meeting,” a top Food Ministry official told Business Line, even as there was no official note to this effect issued by PIB. Even the bunch of press releases detailing all decisions taken at the Union Cabinet/CCEA’s late night Wednesday meeting made no mention of the proposal concerning raw sugar imports.
While allowing raw sugar imports against ALs on a ‘tonne-to-tonne’ basis, the Food Ministry has also apparently proposed that mills in non-coastal areas be permitted to discharge re-export obligation through merchant exporters or procuring sugar from other mills.
The reason for this is that these mills, being in the hinterland, are placed at a disadvantage vis-À-vis those in the coast. The latter would find it cheaper to both import and re-export. “To take care of this location handicap, it has been proposed that a mill in UP meet its re-export obligation by sourcing and shipping out white sugar from a factory in Maharashtra or Tamil Nadu. The only requirement to be met is the tonne-to-tonne condition,” official sources said.
The proposed relaxation in the existing ‘grain-to-grain’ condition has been made in view of a looming shortage of domestic sugar. With output during 2008-09 (October-September) expected to fall to 160-170 lakh tonnes (lt) against 263.28 lt and 283.28 lt in the preceding two seasons, the Centre is afraid of any spike in prices in the run-up to Parliament election.
To ensure maximum supply of sugar within the country, the Food Ministry is said to have also proposed that mills currently undertaking re-exports against past ALs be permitted to defer shipments till December 31, 2009 without attracting any compounded fee. The pending re-export obligations against AL imports between September 21, 2004 and April 15, 2008 is estimated at about 8 lt.
Source : Business Line