Govt reimposes 60% duty on sugar imports

With sugar production set to exceed domestic demand, the government has decided the zero duty regime on sugar imports to lapse, which in effect will restore 60% duty on the sweetener. Import duty on sugar was abolished in early 2009 to boost domestic supply because of a short fall in output in 2008-09 sugar year (October –September). Before that the duty on sugar import was 60%. The duty free regime was valid till December 31.

“There is no need for a fresh notification with the validity of duty free import notification on sugar lapsing. It will automatically revert to 60% duty. If required we can seek a reduction in duty later,”a senior government official said.

India had imported about 6mt of sugar since February 2009 to meet domestic demand. Sugar production in India, the world’s second largest producer, had declined to 14.7mt in 2008-09against the annual domestic demand of 23mt . In 2009-10, the production improved to 19mt, but it was still short of demand. However, in the current sugar year, production is expected to rise to 24.5mt and the country has now begun exporting the sweetener. Prices have also softened to Rs 30-32 per kg in retail from nearly Rs 50 a kg in mid-January 2010.

Meanwhile, the government would notify export of sugar under the open general licence (OGL) this week. The government might give mills three months to export sugar under the OGL. Agriculture minister Sharad Pawar had last month said the government had decided to allow mills to export about 5 lakh tones of sugar under the OGL. Mills may be allowed to export 2.5% of their average annual sugar output since 2008-09 under the OGL.