The Hindu Business Line : Rethink on duty-free raw sugar imports

WITH domestic sugar output set to recover in the ensuing 2005-06 crushing season (October-September), the Government is having "second thoughts" over continuing with the existing concessions on duty-free imports of raw sugar under the advance licence (AL) scheme.

"We are having second thoughts over continuing with the existing concessions after October, as I don't think India will need to import large quantities of raw sugar in the next season," the Union Food and Agriculture Minister, Mr Sharad Pawar, said here on Wednesday.

He was speaking to presspersons after witnessing the signing of a memorandum of understanding (MoU) between the National Commodity and Derivatives Exchange Ltd (NCDEX) and the Food Corporation of India (FCI).

Mr Pawar said the country's sugar production during the current season is likely to be in the range of 125-130 lakh tonnes (lt), which is higher than the 120-lt level that was being anticipated earlier.

"Even now, mills in Uttar Pradesh are crushing cane and they will continue to do so for the next 3-4 weeks. And with production likely to go up significantly in the next season, we may review some of the concessions being given to mills for import of raw sugar, including a 36-month period to meet white sugar export obligations, against the earlier 24-month norm," he added.

Regarding the high volatility in futures trading observed for guarseed and jeera at the NCDEX in recent weeks, Mr Pawar said: "The Government would not intervene, especially when these do not concern commodities of common consumption."

The Minister said the commodity exchanges were "independent organisations" and "we do not want to interfere in their operations."

According to him, the Government would be more concerned in the event of trading volatility in essential commodities such as sugar or edible oil. "In the case of sugar, we saw volatility for a brief period of about a week in January and we immediately took action, including providing concessions on raw sugar imports.

The MoU signed between NCDEX and FCI is aimed at establishing a "working relationship" between the two organisations "in the areas of procurement, quality testing, grading and open market operations. Under the terms of the MoU, FCI would work with NCDEX to promote online trading in foodgrain (both spot and futures), including using the latter's platform for procurement and sale of grains and devising modalities for designing such contracts.

NCDEX will act as a facilitator to carry out procurement through an associate company, National Collateral Management Services Ltd (NCMSL). FCI would also share its warehousing space with NCDEX and use the services of NCMSL for third party audit of its stocks and operational facilities.

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Rethink on duty-free raw sugar imports