The Centre is planning to allow duty-free imports of white sugar on private account.
Currently, only three state-owned agencies – STC (State Trading Corporation), MMTC(Minerals and Metals Trading Corporation) and PEC (Project Equipment Commodities)– are allowed to import up to 10 lakh tonnes (lt) of white sugar at zero duty. Moreover, even this facility, granted by the Union Cabinet on April 9, is available only up to August 1.
Extended quota?
“The Cabinet, in the coming week, is set to extend this duty-free import period until March 31, 2010. It may also allow private parties to import, which could either be within the existing 10 lt quota, already allocated to the three organisations or within an extended quota of 15 lt,” official sources told Business Line.
Unviable proposition
With international prices ruling way above domestic levels, the designated agencies have so far succeeded in contracting one lt of whites. It is not clear whether permitting private players would considerably change the situation.
Currently, London white sugar for October delivery is quoting at around $460 a tonne, which after adding freight of $45, would translate to around $505 or well over Rs 24,600 a tonne. Once port discharge costs and similar charges on wholesale distribution (adding up to Rs 1,000) plus countervailing duty of Rs 850 and sales tax of Rs 1,000 are factored in, the price of imported sugar would cross Rs 28 a kg, making it unviable.
The Cabinet, in its meeting next week, is likely to also permit mills to undertake duty-free import raw sugar duty-free up to March 31, 2010. Currently, this facility is open only till August 1.
According to the sources, mills have so far contracted around 25 lt of raw sugar imports, of which 18.5 lt have already arrived. “We expect about 12 lt of this to be processed into white sugar. This, along with opening stocks of 100 lt and production of 150 lt, will result in total sugar availability of roughly 260 lt during the 2008-09 season (October-September). After deducting consumption of 225 lt, the season will end with stocks of 35 lt, excluding the unprocessed raws of 12-13 lt,” they noted.
Opening stocks
The sources felt that the supply position would be fairly comfortable in the coming festival season. The problem, if any, would be in the 2009-10 season, “where we will be beginning with only 40-45 lt of stocks as opposed to 100 lt in 2008-09”. A lot would depend on production during the ensuing 2009-10 sugar season, they added.
Source : Business Line