Govt plans sugar import tax in 2010/11: Pawar.

The government plans to impose a tax on white sugar imports in the new season that starts in October, but it will wait until it gets a clear picture of the cane crop in the next two months, Farm Minister Sharad Pawar said on Monday.

India allowed tax-free imports of sugar last year to calm soaring prices and overcome a domestic shortfall as farmers had reduced cane planting and the crop was damaged by a severe drought.

However, sugar prices have fallen and Indian millers say imports would be cheaper than local output unless the government levies a tax again.

"We will take a decision on sugar import tax before the current season ends in September. The new import tax on sugar (would) be implemented from the new season," Pawar told reporters.

The June-September monsoon rains are a key influence on cane output, particularly in Uttar Pradesh.

Rainfall was 16% below normal in June, but has revived sharply in the past week.

"The total picture on cane will be clear in August-September," Pawar said.

The government is also considering reversing its earlier decision to increase the amount of sugar millers are forced to sell to official agencies at low state-set prices for welfare schemes.

Source : Money Control