New Delhi, Aug 21 (NVI) India will permit duty-free imports of up to 1 million metric tonnes of raw sugar, the government has said amidst the rising prices and low availability of the sweetner.
According to a Commerce Ministry notification, the import quota will be available until October 31, covering the festive season when sugar consumption typically rises due to increased demand for traditional sweets.
India currently imposes a 100 per cent duty on sugar imports.
Domestic sugar prices have climbed nearly 40 per cent over the past two months as lower production has tightened supplies. The supply squeeze has prompted India to turn to imports for the first time in nearly a decade.
The announcement triggered a rise in international sugar prices, with benchmark white sugar futures in London and raw sugar futures in New York gaining as much as 4 per cent.
The government has opened the 1 million-tonne quota to port-based sugar refineries that import raw sugar duty-free for refining and traditionally export the resulting white sugar. These refiners will now be allowed to sell refined sugar in the domestic market from imported raw sugar.
The move could add around 300,000 tonnes of sugar to the domestic market relatively quickly, according to a Mumbai-based dealer with a global trading firm.
However, another New Delhi-based trader said most new imports were likely to come from Brazil, with shipments taking nearly two months. This could mean the impact on domestic supplies will be felt mainly from October.
Sugar mills and refiners with operational capacity to process raw sugar into white sugar have been asked to apply for the zero-duty tariff-rate quota between 21 August and 28 August. Preference will be given to importers that commit to completing imports by 15 October.
Ashok Jain, president of the Bombay Sugar Merchants Association, said the import decision was likely to limit the recent rise in domestic sugar prices, even as expectations of higher Indian purchases pushed international prices higher.
