The Hindu Business Line : ISEC to go ahead with export of preferential quota to EU

EVEN as higher domestic prices have made exports a not-so-remunerative proposition, the Indian Sugar Exim Corporation Ltd (ISEC) plans to execute the entire preferential sugar export quota to the European Union (EU) allocated to it for the current year.

This follows the Directorate-General of Foreign Trade, on September 28, allocating 10,000 tonnes of white sugar under preferential quota and 10,400 tonnes of raw sugar (equivalent to about 10,000 tonnes of white sugar) under the special preferential sugar quota for export to the EU during 2004-05.

The entire quantity has been allocated to ISEC, which is the sole designated agency for exporting to the EU under preferential quota.

"Given the high prices prevailing here, mills definitely stand to make more money from selling in the domestic market relative to what they would get by supplying to us. But we will still go ahead with fulfilling the preferential export quota, as it is important to the industry from a long term point of view," a top ISEC official told Business Line. ISEC is a joint venture international trading arm of the Indian Sugar Mills Association and the National Federation of Cooperative Sugar Factories Ltd. Currently, mills are realising around Rs 1,500 for every quintal of sugar they are selling domestically. On the other land, the current London white sugar quotes for December delivery are in the region of $ 240 per tonne or Rs 1,100 per quintal. But according to the official, there was a similar situation in the early 1980s, when domestic prices ruled way above the realisations from exports. At that point, the State Trading Corporation (STC) had an annual export quota of 25,000 tonnes to the United Kingdom.

"Since STC did not supply the quantities under the quota then, today our annual white sugar quota to the EU as a whole is only 10,000 tonnes, with the earlier additional 15,000 tonnes being allocated to the ACP (Africa, Caribbean and Pacific) countries. We cannot afford not to supply the quota because a couple of years from now, domestic prices may not be all that remunerative," the official pointed out.

Besides, the 20,000 tonnes of white sugar equivalent preferential quota to the EU, the country enjoys a similar duty derogation facility for export of 8,000 tonnes of raw sugar to the US.

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