The Hindu Business Line : Pawar hints at relaxing raw sugar import norms

Souding sweet: The Union Minister for Food and Agriculture, Mr Sharad Pawar, being welcomed by the President of the Indian Sugar Mills Association (ISMA), Mr Ranjit Puri, and the association Vice-President, Mr Samir S. Somaiya, at the 74th AGM of ISMA in the Capital on Monday. –

Our Bureau

New Delhi, Dec. 22 The Centre seems to be preparing the ground for allowing freer imports of duty-free raw sugar against advance licenses (AL), going by the Union Food and Agriculture Minister, Mr Sharad Pawar’s, comments at the 74th Annual General Meeting of the Indian Sugar Mills Association (ISMA) here.

Comfortable supply

Although it recently revised downwards its projection of domestic sugar output for the current 2008-09 season (October-September) from 22 million tonnes (mt) to 20.5 mt, the Centre has so far been maintaining that the overall supply position is comfortable. This, given the estimated carry-over stocks of 10.5 mt and a domestic consumption requirement of 22 mt.

But on Monday, Mr Pawar appeared to be conveying a different picture. “As per the initial estimates regarding availability of sugarcane and thereby production of sugar, 2008-09 seemed to be a reasonably comfortable season…However, recent reports from some of the States indicate that the sugarcane availability would be substantially less than as estimated earlier”, he said in his inaugural address at the ISMA meeting.

Low output

Later, speaking to presspersons, Mr Pawar noted that Maharashtra (the country’s No. 1 sugar manufacturing State) was originally expected to produce 6.2 mt in the current season, but has now apparently lowered the figure to 4.9 mt. Likewise, States such as Uttar Pradesh and Karnataka have so far recorded lower-than-projected cane yields as well sugar recoveries.

“We are continually monitoring the situation. Let me assure you that whatever decision we may take in future in this regard would be in the best interest of not only the sugar industry and the sugarcane farmers, but also the consumers of sugar”, Mr Pawar said, adding that he had not only held the Food Ministry but also the Consumer Affairs portfolio.

A precursor?

Mr Pawar’s statements are being seen by industry observers as a precursor to relaxation in the existing ‘grain-to-grain’ norms governing duty-free imports of raw sugar against ALs. Currently, these are permitted only if mills re-process the same material into white sugar within 24 months of the licence being issued.

A section of the industry has been demanding an easing of this ‘grain-to-grain’ condition to enable sale of the white sugar (processed from the imported raws) first in the domestic market. The re-export obligation can be separately met later on a ‘tonne-to-tonne’ basis, without the requirement that the white sugar being shipped out is processed from the imported raw grain.

In his address, the ISMA President, Mr Ranjit Puri, observed that in the current ‘grain-to-grain’ framework, the mills importing raws would have to themselves discharge the re-export obligation.

“In the past, when there was a real shortage of sugar in the country, this policy was relaxed, in that the export obligation could be fulfilled by exports through another entity. Today, when there is a balance between demand and supply, we are wholly opposed to such a relaxation”, he said.

State-advised Prices

On the issue of State Governments ‘advising’ (fixing) cane prices much above the Statutory Minimum Price (SMP) set by the Centre, Mr Pawar said he had organised a meeting with Food Ministers of all major sugar-producing States in October 2007 to convince them not to resort to this practice.

“Unfortunately, we could not arrive at any consensus. We may have to undertake an amendment to the law (governing cane pricing) to make the SMP the only legitimate price. But this is not the time for that and it will not happen unless the composition of Parliament is changed”, he pointed out.

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