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In a move that will help the domestic sugar industry which is staring at a surplus production in the current season, the government on Tuesday scrapped the export duty on sugar, giving mills a better way to deal with the glut.
A notification issued by the Central Board of Excise and Customs said export duty on raw, white and refined sugar has been reduced from 20 per cent to nil. The 20 per cent export duty was in force since June 2016.
Industry bodies such as the Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories have been seeking the scrapping of the export duty as the total production in the 2017-18 season is estimated to be around 29.5 million tonnes (mt) — 40 per cent more than the previous season’s 20.3 mt.
Excess production
The glut has been hurting the interests of sugar mills as it has led to prices falling much below the cost of production. India’s average annual demand for sugar is around 24-25 mt.
“The sugar industry welcomes the move, it is first step towards creating a system for sugar exports from India. We hope that the government would come out with export quotas soon,” said ISMA Director-General Abinash Verma.
“We hope to export 2 mt of white sugar over the next 6-7 months. This could go up to 3-5 mt in the next sugar season,” Verma said. When asked wont’ prevailing low global prices affect exports from the country, he said: “The quantum of exports would be 6-7 per cent of the total production. Even if we export it at a price, say, ₹10 lower than the global price, we would be able to compensate the loss if the price of sugar sold in domestic market is marginally higher, say, by ₹1.”
Our Mumbai Correspondent adds: Meanwhile, sugar prices at the Vashi market declined by ₹10-15 a quintal as naka rates were down ₹30 in the earlier part of the day. But towards the evening, prices gained. Mill tender rates were steady. Arrivals declined to 57-58 truck loads and local dispatches were at 54-55 loads.
The Bombay Sugar Merchants Association’s spot rates: S-grade ₹3,042-3,152 and M-grade ₹3,170-3,352. Naka delivery rates: S-grade ₹2,970-3,060 and M-grade ₹3,055-3,145.
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