Govt to hike sugar import duty, raise interest-free loan limit
23 Jun 2014
The centre has decided to raise the import duty on sugar to 40 per cent from 15 per cent and offer other incentives for sugar mills once they clear the dues owed to farmers, minister of food and civil supplies Ram Vilas Paswan said today.
Besides, the government will provide an additional interest-free loan of Rs4,400 crore to cash-starved sugar mills to make payments to cane farmers, Paswan said.
"We have reached a consensus to raise the import duty to 40 per cent and to consider other incentives provided mills clear Rs11,000 ($1.84 billion) in dues to farmers," Paswan said after meeting sugar industry officials.
The government increased the subsidy for raw sugar earlier this month to boost output and exports amidst rising inventory and Paswan said the government would extend the operation of the subsidy scheme for raw sugar exports until September.
The government has raised sugar export subsidy to Rs3,300 per tonne in a bid to boost exports. It also decided to raise the mandatory blending of ethanol in gasoline to 10 per cent from 5 per cent.
Scrips of sugar companies such as Balrampur Chini Mills and Shree Renuka Sugars soared in the intra-day trade today after the government announced plans to increase the import duty on the sweetener.
Balrampur Chini Mills was trading 8.36 per cent higher at Rs86.2 around noon while Shree Renuka Sugars was hovering 10.32 per cent higher at Rs29.40. Scrips of Bajaj Hindusthan was trading higher 7.45 per cent at Rs28.5 while DCM Shriram Ltd was trading around 5.64 per cent higher.
Sugar production in the country so far in the current season ending September is estimated at 23.7 million tonnes, marginally lower than the previous year's output but higher than domestic consumption of 23 million tonnes. Sugar stocks at the end of current 2013-14 season are estimated at 7.5 million tonnes.
