Subject to same norms as applicable to ISEC

Harish Damodaran

New Delhi, June 7

The Union Government has finally allowed the State Trading Corporation of India (STC) to export 1.5 lakh tonnes (lt) of sugar. This is over and above the 1.5 lt already allocated to Indian Sugar Exim Corporation Ltd (ISEC) for sales to the Trading Corporation of Pakistan (TCP).

Conditions

Sources said the decision to permit STC to export, which was cleared by the Food Ministry on Tuesday, was subject to the same conditions as applicable to ISEC. These include the stipulation that the contracts for export shall be executed by STC itself and not through any other private exporter or agent. Also, the shipping bills are to contain the name of STC, with the importer also having to open non-transferable letter of credit only in the Corporation's name. Also, STC will have to scout for buyers outside Pakistan, as it is not registered with TCP, the sources added.

The deals

During the current 2005-06 season (October-September), the country has so far contracted nine lt of sugar exports, with actual shipments amounting to around 7.3 lt. "We are likely to cross 10 lt this season," the sources added. Much of this is by mills undertaking re-export obligations against past duty-free imports of raw sugar, with the three lt allocated to ISEC and STC (which are outside the re-export obligation) making up the rest.

ISEC, on its own, has till now bagged six tenders from the TCP for export of 3.5 lt. These include a one-lt tender awarded to it on May 13 at $518 per tonne (cost plus freight, Karachi). The other five tenders bagged were of 50,000 each on February 25 (for $478 per tonne c&f), March 25 ($473), April 10 ($491), May 6 ($509) and May 20 ($506).

For supplying the 3.5 lt to TCP, ISEC would be using the 1.5 lt sugar released to it outside the re-export obligation of mills. For the remaining, it has already sourced one lt from Dhampur Sugar Mills against its re-export obligation and different quantities from other mills, including GMR Industries and NCS Sugars.

Setback to India

Meanwhile, Pakistan's imposition of a 15 per cent regulatory duty on sugar exports to Afghanistan has come as a setback of sorts to the Indian industry. Many mills, including Shri Renuka Sugars, were reportedly sending sugar to Afghanistan through Pakistan by land route. Pakistan has justified the duty citing a huge domestic shortage that has led to prices spiralling above Rs 40 a kg.

(This article was published in the Business Line print edition dated June 8, 2006)
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