India fixes 300,000 tonne import quota for sugar mills in southern regions
India will soon permit import of 300,000 tonnes of raw sugar at a concessional rate of 25 per cent import duty against normal 40 per cent duty. Import is most likely to be permitted to sugar-starved mills in the southern states, where prices are Rs 2-2.50 higher than in Maharashtra.
Business-Standard reports.
South Indian mills will get the permission to import 3 lakh tonnes of sugar to be refined and sold by mid-October. New crop sugar would enter the market by October-end and import supplies would not be able to help the mills in terms of managing the supply balance.
The government allowed import of raw sugar to mills and refineries three months back and a quota of 500,000 tonnes was fixed, along with a zero import duty to help address the crisis. While the industry is still waiting for a government notification, sources said the mills are expected to be allocated quota as last time, owing to the region's insufficient refining capacities.
As of now, sugar from Maharashtra is sold in Tamil Nadu as prices are over 5 per cent higher in the former state.
The issue that has raised concerns among industry players is that refining raw sugar is less viable for smaller firms because it leads to higher wastage, as compared to making sugar from juice.
Last month, mills in south India had requested the government to permit them to import sugar. However, instead of allowing imports, the government had imposed a stock limit for mills. Sugar prices in the region, however, continued to be high, thereby, compelling the government to reconsider its position.
The arrival of raw sugar across ports in southern India may not take much time as sugar imported by Bangladesh may be diverted to Indian ports. Moreover, raw sugar lying in customs bonded warehouses, which are typically outside domestic tariff area, will also enter south Indian mills.