Government hikes sugar import duty to 15%; prices to go up

The government has increased the import duty on sugar to 15 per cent from 10 per cent to save domestic industry from a price fall, a move that could drive up sugar costlier for the common man.

The government says the move to make imports costly would help sugar mills realise higher prices, which would in turn help them clear Rs9,000 crore of arrears that mills owe to cane farmers.

A notification issued by the Central Board of Excise and Customs (CBEC) on Monday said the import duty on both raw and white (refined) sugar has been raised to 15 per cent from the existing 10 per cent.

Sugar imports have been preventing local sugar mills from realising higher prices, thereby forcing them to delay clearance of arrears they owe cane farmers for sugarcane bought at high procurement prices.

Sugar mills in Uttar Pradesh are reported to be selling sugar to wholesalers at rates lower than their production costs.

Currently prices of sugar in the retail market is ruling at Rs40 per kg and packed sugar at Rs50 per kg in Delhi.

The decision to hike import duty on sugar was taken after a meeting of finance minister P Chidambaram, agriculture minister Sharad Pawar and food minister K V Thomas held on 4 July.

Speaking after the meeting, food minister Thomas had said that there was an agreement to increase sugar import duty to 15 per cent to help industry clear outstanding payments to cane farmers that have risen to Rs9,000 crore from Rs5,000 crore over a one-year period.

Industry associations like ISMA and NFCSF have been demanding a 30-40 per cent increase in import duty amidst a rising sugar surplus in the country.

According to the ISMA, Indian traders have imported nearly 6,00,000 tonnes of raw sugar and another 1,00,000 tonnes of refined sugar from Pakistan so far this marketing year.