The Hindu Business Line : Sugar industry split over raw sugar import norms

New Delhi, Dec. 11 The Indian Sugar Mills Association (ISMA) has opposed any relaxations in the existing advance license (AL) scheme allowing duty-free imports of raw sugar linked to white sugar export obligation on a ‘grain-to-grain’ basis.

‘Actual user’

Currently, the AL scheme permits mills to import raw sugar at nil duty, subject to their meeting the ‘actual user’ or ‘grain-to-grain’ condition. The white sugar for re-export has to be processed from the same raw sugar imported duty-free against AL/Advance Authorisation (AA).

The export obligation – one tonne of white sugar for every 1.05 tonnes of raw sugar imported – is to be fulfilled within 24 months of the date of issue of the AL/AA. A section of the industry is seeking a relaxation in the ‘actual user’ condition to enable them to first imports raws at zero duty and sell the processed white sugar in the domestic market. The export obligation can be discharged separately on a “tonne-to-tonne” rather than on an actual ‘grain-to-grain’ basis.

“We oppose any relaxation as the existing condition already provides for raw sugar imports directly by mills in a fair manner. Allowing tonne-to-tonne would mean anyone can import raws anywhere and then export whites from elsewhere. It will only benefit traders and not the industry”, said Mr S.L. Jain, Director-General of ISMA.

‘Unwarranted’

Making a similar point, Ms Rajshree Pathy, former ISMA President and CMD of Rajshree Sugars & Chemicals Ltd, said “import of raw sugar at this stage is unwarranted” because it would adversely impact sugarcane growers.

“Farmers are this time demanding a cane price of Rs 150 a quintal, which is justifiable because their costs of inputs and labour have gone up and also there has been substantial increase in the support prices for paddy, wheat and other crops. They will not find cane remunerative unless you pay Rs 150 plus, which we cannot unless ex-mill sugar prices go up from Rs 17-18 to Rs 22 a kg”, she noted.

Batting for farmers

According to her, imports will worsen the situation by depressing domestic sugar prices and further discouraging farmers from planting cane. “Industry cannot survive without the farmer and the current import policy should not be altered for short-term benefits of a few,” Ms Pathy said.

The ISMA view has, however, been countered by the Maharashtra State Cooperative Sugar Factories Federation Ltd (MSCSFF) and a few private mills, including Shree Renuka Sugars.

‘Shortage acute’

“There is an acute shortage of cane, especially in Maharashtra and North Karnataka, where supplies are down 40 per cent over last season. Raw sugar imports will allow mills to operate at full capacity,” said Mr Narendra Murkumbi, Managing Director, Renuka Sugars.

Mr Prakash Naiknavare, Managing Director of MSCSFF, said Maharashtra mills require 750 lakh tonnes (lt) of cane to run at full capacity. “This year we will not crush more than 500 lt, as against 761 lt and 798 lt in the preceding two seasons. Three of our mills – the Mangaga (Sangli) and Rayat (Satara) cooperative factories and Chhatrapati Sabhaji Raje Sakhar Udyog Ltd (Aurangabad) – have had to close down within 15 days of starting operations”, he pointed out.

‘Tonne-to-tonne’ order

Mr Naiknavare said the ‘tonne-to-tonne’ condition would enable factories to process the imported raw sugar along with their cane juice. The resultant white sugar can be initially sold in the domestic market and the export obligation be discharged independently.

The Centre had, in fact, earlier allowed the ‘tonne-to-tonne’ condition under the AL/AA scheme for the sugar industry. This special dispensation, created on September 21, 2004, was withdrawn through a circular issued by the Directorate General of Foreign Trade (DGFT) on April 16 this year.

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