The Hindu Business Line : Mills seek change in raw sugar import norms

Currently, raw sugar can be brought into the country only on prior import condition. The mills say the conditions could be relaxed as uncertainty prevails on the production front.

Chennai , July 16

THE sugar industry has urged the Union Food and Agriculture Minister, Mr Sharad Pawar, to allow liberal import of raw sugar and change its norms for its shipment into the country.

"We have urged Mr Pawar to revive the earlier scheme for importing raw sugar in view of the changed circumstances with regard to sugar stocks in the country," an industry official, who did not wish to be identified, told Business Line.

Currently, raw sugar can be brought into the country only on prior import condition. This means, the Government will allow sugar exports under advance licence scheme only after import of raw sugar. The Government had come with this stipulation in November 2002 as a few mills in South India imported raw sugar against exports of white sugar.

The companies imported raw sugar from countries such as Brazil for reprocessing into white sugar and then, disposed it in the domestic market to recoup the losses incurred in the course of exporting white sugar. While the firms saved considerably on inventory holding cost, they also took advantage of the low prices for raw sugar in the global market. The Indian Sugar Mills Association (ISMA), in particular, had opposed such imports then. However, it is now favourably inclined towards import of raw sugar.

When contacted, the ISMA Director-General, Mr S.L. Jain, said currently, the conditions of the industry were different from what it was in 2002. "Then, we had surplus sugar and we were also facing another good year of production. Things have changed now," he said.

During the current season (October 2003-September 2004), the trade projects sugar production to be around 140 lakh tonnes (lt) against the Government's estimate of 160 lt. This is sharply down from 201.45 lt during 2002-03.

Next year too, the production is expected to be low going by the just-completed sowing statistics. Area under sugarcane has declined to 37.3 lakh hectares from 45 lakh hectares during the same period a year ago.

"Drought in South India and Maharashtra is likely to pull down production. Though there is a balanced situation now as far as stocks are concerned, we will have to watch out to see what happens next year," Mr Jain said.

"It is better to have surplus sugar than face an unknown future. These imports will give a real cushion to meet any eventuality," he said.

The raw sugar that is being imported now under the advance licence scheme or the Duty Free Replenishment Certificate scheme will have to be exported as white sugar. The mills have 24 months to do this.

Mills are favouring raw sugar imports also because it helps them to utilise their capacity that could otherwise be idle in view of sugarcane shortage.

So far, around 8.5 lakh tonnes of raw sugar have been contracted for imports and of this, 4.5 lakh tonnes have arrived. "Further contracts are being signed," the industry official said.

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