The Hindu Business Line : `Mills need not be exempted from export rules' — Mr Manickam, Vice-Chairman and Managing Director, Sakthi Sugars Ltd

Agri-Biz & Commodities - Sugar

`Mills need not be exempted from export rules' — Mr Manickam, Vice-Chairman and Managing Director, Sakthi Sugars Ltd

Harish Damodaran

Coimbatore , March 27

EVEN as there is talk of importers of raw sugar under the advance licence (AL) scheme being exempted from export obligations on payment of a nominal customs duty, the largest importer, Sakthi Sugars Ltd (SSL), has held that ``there is no need for any such move.''

Mr M. Manickam, Vice-Chairman and Managing Director of SSL, dismissed concerns over mills defaulting on export obligations in future, in view of their being less remunerative compared to realisations from domestic sales. ``With regard to my company, I am confident that we will fully discharge our export obligations. The demand from certain quarters for exemption is totally unnecessary,'' he told Business Line.

Under the AL scheme, mills have to export one tonne of white sugar for every 1.05 tonnes of raw sugar they import at zero duty, with the exports required to be undertaken within 36 months from the date of issuance of licence.

In the event of default, the mills have to fork out penalty on the total duty saved amount (the difference between importing at the normal 60 per cent duty and the zero duty payable against ALs).

While the penalty for the first six months beyond the export obligation period is 2 per cent of the duty saved amount, further defaults invite payment of composition fee at the rate of up to 2 per cent per month.

Mr Manickam said that SSL's raw sugar imports carrying future white sugar export obligations totalled 2,20,884 tonnes, of which 15,424 tonnes pertained to an AL issued on August 25, 2003 and the remaining 2,05,460 tonnes against various licences issued in 2004-05.

The total export obligation on the first AL (which had an 18-month deadline ending February 25) amounted to 14,690 tonnes, out of which the company has already exported 6,050 tonnes.

For the remaining 8,640 tonnes, SSL has obtained a six month extension till August 25, for which it has paid a penalty of Rs 13.17 lakh.

``I don't foresee problems in discharging future export obligations, more so when the Government has now given us a 36-months' window, against the earlier 18 months.

``At the most, we may have to seek six month's extension at the end of each export obligation period, for which a nominal 2 per cent penalty on the duty saved amount has to be paid,'' he noted.

SSL is currently looking at exporting about 5,000 tonnes per month, which, Mr Manickam claimed, was not difficult. ``It is a question of choosing the right destination to ship out small quantities regularly for a reasonable price.

``Our first 6,050 tonne shipment to Maldives fetched us $272 per tonne free-on-board and we have just now received another 5,000 tonne order from Sri Lanka for $295 per tonne,'' he said.

According to Mr Manickam, exempting mills from export obligations on their ALs was `undesirable', as it would create a situation akin to the free import regime of the mid-1990s.

``This would go against the industry's own long-term interest. We need to export not only to fulfil our AL obligations, but also to retain a regular presence in the world market.

``Today, export may not be as remunerative as selling domestically, but things may not be the same two years from now,'' he added.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Mills need not be exempted from export rules' — Mr Manickam, Vice-Chairman and Managing Director, Sakthi Sugars Ltd

Ministry seeks proof of export orders to issue new licences

Mixed trend at Kochi tea sale

Cotton futures may move up

Focus on agriculture in WTO