Duty-free sugar to boost supply fires up global prices
NEW DELHI: Traders and millers expected Indian sugar prices, at Rs 38.50 a kg in Mumbai wholesale market, to be under pressure but a government notification allowing duty-free import of raw sugar up to 5 lakh tonnes till June 12 to boost domestic supply helped global prices buck trend and rally 3.7% on Wednesday.
Global prices rallied to 16.75 cents per pound or about Rs 34 a kg at Indian ports, traders said.
The government notification laid in Parliament said: “Notification No. 12/2017-Customs, dated the 5th April, 2017, seeking to further amend notification No. 12/2012-Customs, dated the 17th March, 2012, so as to allow duty free import of raw sugar up to 5 lakh metric tonnes under tariff rate quota (TRQ) up- to and inclusive of 12th June, 2017.”
India is the world’s biggest aggregate consumer of the sweetener accounting for 25 million tonnes annually and often imports the commodity when local output falls to prevent prices from soaring.
Union food & public distribution minister Ram Vilas Paswan said in order to address regional production gaps and also to maintain domestic prices at reasonable levels, the government decided to allow import of a restricted quantity of only 5 lakh tonne of raw sugar at zero duty through open general license.
“The import shall be done with zonal quantity restrictions and will be open for only millers/refiners having their own refining capacity,” he said.
Paswan further said that considering the quantity of sugar available as opening stocks and the production in the current sugar season, it is estimated that there is adequate quantity of sugar available in the country for domestic consumption. “The scheme shall be operated by the Directorate General of Foreign Trade (DGFT) as per their rules and regulations,” he said.
Applications shall be received online by DGFT at from 13th to 24th April, 2017, government officials said.
“Looking at the tightness in the market, it’s a good push by the government. Current global prices at import parity were coming to Rs 34-35 a kg while domestic average price is at Rs 37 a kg," said Rahil Shaikh, managing director at ED&F Man Commodities India Pvt Ltd.
Lower yields in Andhra Pradesh, Karnataka and Maharashtra saw the government lowering production target to 22.5 million tonnes for the current season from 25.1 million tonnes in the earlier season. India started the 2016-17 year with a carry forward stock of 7.75 million tonnes.
Praful Vithalani, president of All India Sugar Trade Association said the limited import of 5 lakh tonnes would ensure steady supply of sugar in the market, ensuring prices were stable.
“The government will wait and watch how the monsoon pans out and if there is any impact of El Nino before making any other decision on imports,” Vithalani said, adding that the trade as well as farmers were waiting for clarity on the notification.
The import of raw sugar would benefit port-based sugar refiners such as ShreeRenuka Sugars, EID Parry, Simbhaoli Sugars and ED&F Man said a sugar miller from Mumbai.
“The import can lead to drop in sugar prices and impact mills. This move was not required,” said Sanjeev Babar, MD of Maharashtra State Co-operative Sugar Factories Federation.
Global prices rallied to 16.75 cents per pound or about Rs 34 a kg at Indian ports, traders said.
The government notification laid in Parliament said: “Notification No. 12/2017-Customs, dated the 5th April, 2017, seeking to further amend notification No. 12/2012-Customs, dated the 17th March, 2012, so as to allow duty free import of raw sugar up to 5 lakh metric tonnes under tariff rate quota (TRQ) up- to and inclusive of 12th June, 2017.”
India is the world’s biggest aggregate consumer of the sweetener accounting for 25 million tonnes annually and often imports the commodity when local output falls to prevent prices from soaring.
Union food & public distribution minister Ram Vilas Paswan said in order to address regional production gaps and also to maintain domestic prices at reasonable levels, the government decided to allow import of a restricted quantity of only 5 lakh tonne of raw sugar at zero duty through open general license.
“The import shall be done with zonal quantity restrictions and will be open for only millers/refiners having their own refining capacity,” he said.
Paswan further said that considering the quantity of sugar available as opening stocks and the production in the current sugar season, it is estimated that there is adequate quantity of sugar available in the country for domestic consumption. “The scheme shall be operated by the Directorate General of Foreign Trade (DGFT) as per their rules and regulations,” he said.
Applications shall be received online by DGFT at from 13th to 24th April, 2017, government officials said.
“Looking at the tightness in the market, it’s a good push by the government. Current global prices at import parity were coming to Rs 34-35 a kg while domestic average price is at Rs 37 a kg," said Rahil Shaikh, managing director at ED&F Man Commodities India Pvt Ltd.
Lower yields in Andhra Pradesh, Karnataka and Maharashtra saw the government lowering production target to 22.5 million tonnes for the current season from 25.1 million tonnes in the earlier season. India started the 2016-17 year with a carry forward stock of 7.75 million tonnes.
Praful Vithalani, president of All India Sugar Trade Association said the limited import of 5 lakh tonnes would ensure steady supply of sugar in the market, ensuring prices were stable.
“The government will wait and watch how the monsoon pans out and if there is any impact of El Nino before making any other decision on imports,” Vithalani said, adding that the trade as well as farmers were waiting for clarity on the notification.
The import of raw sugar would benefit port-based sugar refiners such as ShreeRenuka Sugars, EID Parry, Simbhaoli Sugars and ED&F Man said a sugar miller from Mumbai.
“The import can lead to drop in sugar prices and impact mills. This move was not required,” said Sanjeev Babar, MD of Maharashtra State Co-operative Sugar Factories Federation.
