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Sugar may not turn bitter for the time being, as the Finance Ministry on Thursday extended zero duty on imports for another four months till March 2012.
“With a price difference of just Rs 1.50-2 a kg between the domestic and international prices, domestic sugar mills will certainly not think of raising prices at least for some time,” a person familiar with the development said. The earlier notification expired on November 30.
Faced with high inflation, the government first allowed sugar import at zero duty in the beginning of this calendar year till March, but extended it repeatedly. Without such a notification, the import duty on sugar would be 60 per cent.
It is believed that increase in state administered prices (SAP) in Uttar Pradesh and the first instalment of cane in Maharashtra alone can force the industry to hike the price. The recent approval by the government to export up to one million tonnes has already reflected in an increase of about 15 per cent in sugar prices ex-factory, and by about Rs 3 a kg in retail.
However, the Directorate General of Foreign Trade is yet to formally notify the empowered group of ministers' (EGOM) decision to allow sugar exports of 10 lakh tones.
Industry body Indian Sugar Mills Association (Isma) said, “If the government's intention of giving some relief to sugar mills from exports is to be realised, the notification should not be delayed any further. With a declining trend in global sugar prices, Indian exporters may soon lose the present export margin of about Rs. 1-1.50 /kg.”
There are various estimates for sugar output for sugar year 2011-12. The Agricultural Ministry has estimated that production would be between 255 and 260 lakh tonnes, while the Food Ministry has estimated it at 246 million tonnes. The Industry estimates that the production could be in range of 260 lakh tonnes, while consumption is projected to be around 220 lakh tonnes, leaving a scope to export up to 40 lakh tonnes, which the industry has been demanding.
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