New Delhi (PTI): India may import three million tonnes of raw sugar this season till September-end due to price parity with the international market and the government decision to do away with the obligation to export an equivalent amount of refined sugar, industry sources said.
"Mills have contracted 1.5 million tonnes of raw sugar so far, of which 7,00,000 tonnes have already landed at various ports. We expect a total of 3 million tonnes of raw sugar contracts by September as parity has improved on account of firm sugar prices in the domestic market," a top industry official said.
Currently, the landed cost of imported raw sugar is Rs 16.50 a kg and will go up to Rs 21.50 a kg after processing in a mill in Uttar Pradesh. The domestic wholesale price is Rs 22.50 a kg in UP.
In February, the Centre had allowed mills to import raw sugar at zero duty for sale in the domestic market, provided they export the equivalent quantity of refined sugar within three years. However, the government has further liberalised the policy with the cabinet last week removing the export obligation.
"It is good that there will be no export obligation, which is expected to boost import of raw sugar," a senior official of a leading private sector firm said.
But the industry body official felt that there would be no impact of the cabinet decision to allow raw sugar import at zero duty without export obligation. "Import depends on price-parity and not on export obligations," he observed.
He also expressed doubts over any quantity of white sugar coming from overseas markets. "I doubt whether these trading firms will be able to import," he said. The landed cost of white sugar is not less than Rs 24 a kg at port.
The cabinet last week also allowed STC, MMTC, PEC and Nafed to import 10 lakh tonnes of refined sugar at zero duty by August. But it has made it clear that there will be no subsidy, for now.
"Sugar prices have improved and it is only now that mills in northern India are being able to meet the cost of production, which has increased due to high sugarcane price and low scale at which mills are operating," the industry official noted.
The industry would now be able to earn profit and recover the losses from earlier sales, he said.
Sugar production for 2008-09 (October-September) is expected at 14.2 million tonnes against 26.4 million tonnes in the year-ago period, according to estimates of the Indian Sugar Mills Association.
Source : The Hindu