India slaps 20% export tax on sugar to boost domestic supplies

India has imposed a 20-per cent tax on sugar exports to keep domestic prices under check, the government said on Thursday.

The move  is likely to boost global prices of sugar.

Food minister Ram Vilas Paswan said this week the government plans to introduce a 25-per cent tax on sugar exports to maintain local supplies. But the rate had later been reduced to 20 per cent.

''To keep domestic prices of sugar under check, government has decided to impose export duty of 20 per cent on the export of raw sugar, white or refined sugar,'' according to a notification issued on 16 June 2016.

The duty, which works to around Rs7,000 per tonne, is likely to bring exports to a halt, reports said quoting Indian Sugar Mills Association (ISMA) director-general Abinash Verma.

At current market prices, exporters were getting a margin of about Rs500-Rs1,000. Indian sugar will now look increasingly to local demand.

Sugar output in India, the world's second-largest producer behind Brazil, is expected to decline this year due to a drought in major growing regions, while global prices have risen to two-and-a-half year highs.

The government seems to have taken the step to stop any extra exports because the sugar production and consumption next year seems to be almost equal to each other and there will be a tight position even though there is likely to be a surplus of about 45 lakh tonne to be carried forward into the next sugar season.