The Hindu Business Line : Govt urged to encourage import of raw sugar

THE Government should encourage imports of raw sugar under advance licence to tide over the imbalance in demand-supply position, a senior trade representative said at a Sugar Summit 2005 held last week.

In his presentation on "Domestic marketing of imported sugar - Role of government, industry and importers" at the summit, Mr Praful Vithalani, partner at Jagjivan Keshavji & Co, said: "The Government has already allowed duty free imports of raw sugar with permission to sell processed white sugar in the domestic market."

Mr Vithalani said: "One option with Government is that mills should be permitted to import raw sugar at five per cent (15 lakh tonnes) of the total production of 202 lakh tonnes made in season 2002-03 with freely tradable license. Those mills, which do not want to import, can sell their license to any other mills at premium. Another option is that mills which have exported in the last two years can be permitted to import. The same quantity should be allotted to mills, which they sold to exporters."

The Government should also import white sugar through STC, FCI and MMTC to have supply in the market as one of the options by bringing down levy sugar obligation from the current 10 per cent to nil, he said.

"In such case, marketing will not be a problem as same price is fixed. If at all, white sugar imports are unavoidable, the Government has three options, i.e., through Government agencies, through industry and through importers with quantity restrictions," he said.

On imports through Government agencies, he said that prices could be stabilised at a reasonable level by releasing the required quantity of imported sugar along with monthly release mechanism.

However, the agencies may not be able to perform like industry and importers, as it requires quick decision on purchase and sales.

Speaking on "Role, strengths and weaknesses of co-operative sugar sector", Mr Prakash Naiknavare, Managing Director of Maharashtra State Co-operative Sugar Factories Federation Ltd, said there was a higher degree of fragmentation in the industry, which led to higher number of sick units. The sugar industry was bound to see a consolidation in the near future. It would be beneficial for the sector.

He said that the industry transformed from single product to a dynamic integrated multi-product line such as molasses, alcohol and ethanol. Two year ago, ex-factory price of sugar was Rs 975-1,050 per quintal and molasses was Rs 500-600 per tonne. Current average ex-factory price realisation was Rs 1,600-1,700 per quintal for sugar and Rs 3,500-4,000 per tonne for molasses

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