We don’t need sugar imports; raise the import duty

The sugar industry has a lot of expectations from the new Government. First of all we want the Government to increase the import duty on sugar to at least 40 per cent from the current level of 15 per cent. Such a move would help curb the inflow of sugar into the country and stabilise prices. We don’t need any sugar imports as we have surplus here.

But the imports are still taking place.

The country had produced surplus sugar in the last four seasons and this year too we will see surplus production.

Sugar stocks at the end of the current 2013-14 season (ending September) would be around 7.5 million tonnes, more than what many countries produce. Moreover, the next season, 2014-15, is also expected to be a surplus production year.

This extra availability is putting pressure on the millers’ cash flows as sugar prices are still below cost of production.

The decline in sugar prices between September 2012 and January 2014 had resulted in huge losses for millers, affecting their ability to repay bank loans and hence accumulating cane price arrears.

Green push We also want the Government to give a real push for blending ethanol with petrol. Pan-India, ethanol blending is currently estimated at around 2.5-3 per cent.

The Government should immediately push for the mandatory five per cent blending and go in for 10 per cent later.

About six States – UP, Haryana, Delhi, Punjab, Goa and Karnataka – have decided to go for 10 per cent blending.

With the mandatory five per cent blending, the Government can save forex outgo to the tune of $800-900 million and with 10 per cent blending, a saving of $1.7 billion can be achieved.

Further ethanol and molasses should be brought under the declared goods classification so that the interstate movement of these products is freely allowed.

(As told to Vishwanath Kulkarni.)

Ajit Shriram is President, Indian Sugar Mills Association, and Joint Managing Director, DCM Shriram Ltd.

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