NEW DELHI: Sugar from Pakistan, which is at least Rs 5 a kg cheaper than the Indian variety, is finding favour with traders in the country, especially across the border in Punjab.
“Sugar coming from Pakistan to Punjab costs around Rs 35 per kg in India (including duty and transportation) as compared to the local variety being sold at Rs 40 a kg, offering a good margin for traders,” said Rajauli Singh, a sugar trader in Amritsar.
According to an industry source, Pakistan has the lowest sugar price at Rs 25 a kg in Indian rupee. (1 Pakistani rupee equals 0.5776 Indian rupee). The prices of Brazilian raw sugar are ruling around $500 a tonne while Indian sugar prices have climbed by around 25% in the past three months to about $680 a tonne, making imports from Pakistan viable.
The import duty on refined sugar is 10% which is not good enough to check cheap imports from Pakistan. The Pakistan government has decided to allow export of 4 lakh tonne of sugar this year. With its main importer Iran declining to buy refined sugar in favour of raw sugar imports for its own sugar mills, the worries of Indian sugar mills have increased manifold.
“There is no quantitative restriction on refined sugar import and neither is it covered under regulated release mechanism which controls the sale of domestic sugar in the market. So, dumping of cheaper Pakistani sugar will badly affect the interests of the domestic sugar industry,” said a sugar miller, who requested anonymity. Realising the pertinent threat, the food ministry has already recommended to the finance ministry that the import duty on refined sugar be doubled from 10% to 20%.
“It’s been over a month now.
The finance ministry has to take a decision on this. Import duty on raw as well as refined sugar is 10%. But in such conditions, refined sugar import is more profitable as it doesn’t invite levy obligation and excise duty which makes raw sugar import dearer effectively by at least 4-5%,” said a sugar directorate official.
According to Indian Sugar Mills Association, an industry body, the country is likely to produce 24 million tonne of sugar as against the requirement of 22.5 million tonne, meaning a surplus production for the third consecutive year.
“Last year, the surplus was over 4 million tonne and with an opening balance of around 6 million tonne, India doesn’t need any white sugar imports. If at all import is needed, the government should allow raw sugar imports improving mills’ capacity utilisation,” said a sugar mill owner, who did not wish to be identified.