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A significant portion of the raw sugar import quota allowed to South Indian sugar mills are being surrendered as imports are unviable and the deadline not practical, according to reliable sources.
On the last day today for surrendering the quotas allocated to them with a 0.5 per cent penalty, a number of mills have opted out of imports. At least one-third of the 3-lakh tonnes of raw sugar permitted to be imported through a September 7 order by the Exim Facilitation Committee are being surrendered.
A major portion of this will be by mills in Tamil Nadu followed by those in Karnataka.
To manage the huge shortfall in sugar production anticipated for the 2017-18 season in Tamil Nadu, the Centre had allowed an import of 3-lakh tonnes at an import duty of 25 per cent.
The imports were permitted through ports in Tamil Nadu and Karnataka, which got the lion’s share, and some quantity was to come through Andhra Pradesh and Maharashtra.
According to senior executives in the know, out of the 10 days allowed for purchase orders, there were just 5-6 working days. Sugar mills need at least three weeks to close a deal. There were also issues of vessel availability, congestion at ports and voyage time, they said.
Mills in Tamil Nadu were allowed about 1.40-lakh tonnes of import; Karnataka 1.10-lakh tonnes; Andhra Pradesh 34,000 tonnes; and Maharashtra 5,900 tonnes. Tamil Nadu mills, which are staring at just about 20-30 per cent of capacity utilisation due to sugarcane shortage, were hoping this would provide some relief. But more than half the import quota allowed for the State was being surrendered. Karnataka mills are likely to surrender about 20-25 per cent, sources said.
When imports were allowed a couple of weeks back, sugar was selling at about ₹38 a kg, and mills estimated they would be able to turn a profit of about ₹1-1.50 a kg on the processed raw sugar. But sugar prices are now down to ₹36.50 a kg, said a company official. Plus, raw sugar prices are increasing, and the rupee had also moved to ₹65 against the dollar compared with ₹63 earlier.
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