Sugar import duty hiked to 40 per cent

30th April 2015, New Delhi: The Union Cabinet on Wednesday decided to hike the import duty on sugar to 40 per cent from the current 25 per cent to check the slide in domestic prices of the sweetener and enable the industry to clear cane arrears to the tune of Rs. 20,099 crore. This is in line with the demand raised by the industry, cane growers and state governments with whom the government recently held a series of meetings. However, no decision was announced on the demand to create a buffer stock of sugar on government account and industry body ISMA urged the government to quickly decide on its request to buy out 10 per cent of current year's sugar production amounting to 3.5 million tonnes "to help the industry come out of the crisis in the short run and ensure that a major portion of cane price arrears of farmers are cleared before the start of the next sugar season."

The meeting, chaired by Prime Minister Narendra Modi, also decided to waive off 12.6 per cent excise duty on ethanol blending for the next sugar season. The saving will be passed on to the sugar industry/distilleries. It is mandatory for millers to produce five per cent ethanol from molasses for blending with petrol.

At the same time, the government has decided to end duty-free raw sugar imports. Under the Duty Free Import Authorisation (DFIA), exporters of sugar could import duty free, permissible quantities of raw sugar for subsequent processing and disposal. To prevent offloading of sugar made from such duty free imports in the domestic markets, the DFIA scheme for sugar would be withdrawn.

The government has reduced to six months the period for discharging export obligations under the Advanced Authorisation Scheme for Sugar to prevent possibility of any leakage of such sugar in the domestic market. The government steps are to improve the price sentiments relating to sugar, said an official spokesman.

The last few years have witnessed over-production of sugar as compared to domestic requirement. This has depressed sugar prices with the mills having been constrained for liquidity, facing difficulties in clearing cane dues owed to the farmers and impacting incomes of 50 million sugarcane farmers. Similar conditions of subdued prices prevail in the global markets.

Ex-factory prices of sugar have fallen to Rs 22-24/kg in the country, while the cost of production is over Rs 30/kg. Sugar production of India, the world's second largest producer, is estimated to be higher than the domestic consumption for the fifth year in a row this year.

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Row over export of fresh vegetables to Saudi Arabia.

Saudi Arabia the fifth-largest importer of fresh vegetables from India, has said pesticide residues in the commodity are higher than permissible levels. It has threatened to take strong action in the near future.

In an advisory to the Agricultural and Processed Food Products Export Development Authority (Apeda), the government of Saudi Arabia said high levels of pesticide residues were detected in two consignments of green chilli. "It has been brought to the notice of authorities of KSA (Kingdom of Saudi Arabia) that in some recent consignments of vegetables from India, there have been interceptions of higher than permissible levels of residues of pesticides. If the situation persists, the government of KSA will take strong action in the near future," the advisory said.

Saudi Arabia accounts for Rs 92 crore of annual imports of fresh vegetables from India. With Rs 284 crore of imports, Pakistan was the largest importer in 2012-13, followed by the UAE (Rs 255 crore) and the UK (Rs 151 crore). With Rs 143 crore of fresh vegetable imports, Nepal was fourth on the list.

“Volume is not a worry. The only worry is the action, as prescribed by the Saudi Arabian authorities. If they ban vegetable imports from India, other countries in West Asia may follow, impacting India's overall vegetables exports severely,” said Vinod Kaul, deputy general manager and head (horticulture), Apeda.

Though Saudi Arabian authorities haven't specified the permissible limit of pesticide residue, it is usually understood the specifications by the European Union are applicable. Specifications by Codex, as well as other global norms, are also understood to be applicable on fresh vegetable exports to Saudi Arabia.

In an advisory to exporters, Apeda has advised adherence to the import requirements of Saudi Arabia, adding products should be tested before exports. “As a region, West Asia is very important to us. We, therefore, do not want any strong action by Saudi Arabia, and its repercussion on other countries in the region. Hence, we have advised our members to test export oriented goods carefully before shipping,” said Kaul.

West Asia accounts for about a third of India's overall fresh vegetable exports. I 2012-13, total exports of fresh vegetables stood at Rs 1,334 crore, a rise of 2.7 per cent compared with Rs 1,299 crore in 2011-12.

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