NEW DELHI: The relevant notification that will put into effect a government decision allowing zero duty import of white or ready-to-eat sugar
taken to check spiralling prices is likely to come within a week.
The move may not help the case for sugarcane farmers but is expected to at least freeze the spiralling wholesale and, consequently, retail price of the commodity. It is also expected to cap sugar prices at importing ports to around Rs 25,000/tonne.
The official nod for permitting zero duty white sugar imports, after much dithering by the government, was taken by the CCEA (Cabinet Committee on Economic Affairs) late on Thursday. According to a government official, a notification by the Revenue department of the Finance in this regard will come in a week.
The CCEA also allowed import of raw sugar at zero duty, by removing the future export obligation. So far, raw sugar was allowed to be imported under the advance licence scheme, under which there is a mandatory export obligation. Under the scheme around 1.2 million tonnes of raw sugar has already been imported so far by the industry and it has to re-export the quantum on a “tonne-to-tonne” basis, or a quantity equal to imports. Industry estimates are that another one million tonnes of raw sugar will be imported within the next two months.
The carryover stock is at nine million tonnes plus an estimated output of 14.2 million tonnes of sugar stacks up against an annual consumption of around 23 million tonnes. That would mean a leeway of two million tonnes as carryover into 2009-10, freezing wholesale prices to an extent. Mostly south Indian sugar mills that have lesser leftover re-export obligations from last year are the ones who are likely to import the most.
Raw sugar prices rule at Rs 21,000/tonne in southern ports and north Indian ports rule at Rs 22,000/tonne approximately. The delay in allowing white sugar imports at zero duty is seen as having helped cooperative mills, several of them in food minister Sharad Pawar’s home state of Maharashtra, given that they could keep in business during the sugarcane-strapped season by processing imported raw sugar imported under AL by private mills, who also had to bear the burden of re-export obligations.
The decision has now been forwarded to the Election Commission (EC) for its approval. That is expected to come in by Monday. Although the EC had already granted the decision its approval before it was sent to the Cabinet in end March, the approval was for allowing imports at zero duty up to June 31. That decision was taken at the beginning of March, allowing a two month leeway for white sugar imports at zero duty.
However, the Cabinet Secretariat is understood to have returned the decision, asking for comments on the decision by all the concerned ministries. At the CCEA meeting on Thursday, however, it was decided to increase the deadline up to July 31 since the decision was being approved by the CCEA only in beginning April. While this will allow two months for imports, it will nonetheless mean that another two months of the ongoing sugar season (up to September 2009) will remain.
Although only state run trading firms PEC, STC, MMTC and one cooperative, NAFED, will be allowed to import white sugar up to one million tonnes with this decision, this will not be mandatory, according to officials. They will not be given any subsidy for import of white sugar at zero duty.
Currently, white sugar price rules at US $ 430/tonne (c&f) , which translates to around Rs 21500/tonne. Inclusive of countervailing duty, sales tax on sugar, discharge cost etc, the total cost is estimated at Rs 22,000/tonne. Compared with that, the import price at ports is up to Rs 24,000/tonne (Rs 23,500/tonne at Kolkata, Rs 23000/tonne at Mumbai and Rs 24,000/tonne approximately at Kandla)
Source : The Economic Times