Commerce Ministry eases rules for preferential quota sugar sales

The Commerce Ministry on Tuesday liberalised the sales of preferential quota sugar to the European Union (CXL quota) and the US (TRQ quota), effectively allowing all exporters and not just State Trading Enterprises (STEs) to avail of the benefits of the quota.

Sales will be subject to a quantitative ceiling that will be reviewed by the Directorate-General of Foreign Trade (DGFT) periodically, said an official statement.

The quotas essentially allow a quantum of exports to these markets at low tariffs. Additional imports of the sweetener beyond the quota are subject to additional tariffs. The Indian Sugar Exim Corporation (ISEC) had been exporting sugar under this system since 1991.

“The change in the policy of the preferential sugar quota will enable all sugar industries in the country to export sugar subject to a minimal requirement of registration from APEDA or DGFT,” the Ministry said in a statement.

Traders will have to furnish details of exports to the Additional DGFT, Mumbai, as well as Agricultural & Processed Food Products Export Development Authority (Apeda). A certificate of origin, if required, will be issued by the former.

The quota for the EU at present is 10,000 tonnes while that for the US is 8,000 tonnes.

Few to benefit

Ostensibly to aid the struggling millers who owe as much as Rs. 20,000 crore as dues to sugarcane farmers as of last month, the Ministry’s decision has not gone down well with the industry.

“The decision to remove preferential sugar quota exports to the EU and the US from the sugar industry body, the ISEC, will benefit a few petty traders at the cost of the sugar industry,” said Abinash Verma, Director-General, Indian Sugar Mills Association (ISMA).

Verma said that ISEC’s funds have been used for the welfare of the domestic sugar sector and the move will see the profits being pocketed by a few.

“It is all the more surprising to note that this unilateral decision has been taken bypassing recommendations of the Food Ministry…we have already represented before the Prime Minister to investigate the matter and check the move behind the decision and whether it will benefit the country,” he said.

(This article was published in the Business Line print edition dated April 29, 2015)