Prices of sugar were down in key wholesale markets across the country after the Centre allowed imports of the commodity, traders said.
The Centre has allowed import of 300,000 tonnes raw sugar at a basic Customs duty of 25 per cent under the tariff rate quota for 60 days, a notification said on Thursday.
Sugar imports currently attract a duty of 50 per cent. Import of sugar will now be allowed at 25 per cent to improve domestic supplies and check rising prices, a senior government official told Cogencis. A 50 per cent import duty makes overseas purchases unviable.
The import of 300,000 tonnes sugar has been allowed through the ports of Tuticorin and Chennai in Tamil Nadu, Karaikal in Puducherry, Mangalore in Karnataka, and Kakinada, Visakhapatnam and Gangavaram in Andhra Pradesh.
This season, average sugar prices in southern India have been ₹150-200 per 100 kg higher than those in the north due to this fall in output. Since the import has been allowed under the tariff rate quota, millers and refiners will have to convert the imported raw sugar into refined or white sugar within 30 days from the date of bill of entry, the notification said.
Tariff rate quota
In case a government-licensed importer fails to utilise the tariff quota partially or fully, the importer will have to surrender the unutilised imported raw sugar to the Director General of Foreign Trade by September 25, the notification said.The government will also levy a penalty of 0.5 per cent of the cost, insurance and freight value of the unutilised quota, it said.
Expectations of a record high production in Uttar Pradesh also weighed on the sentiment in north Indian markets, they said.
Sugar output in Uttar Pradesh is likely to rise to a record 10.3 mt in the next season starting October from 8.77 mt a year ago, a State official said, citing higher cane acreage due to favourable weather. Prices fell by ₹5 per 100 kg in the spot markets of Delhi and Muzaffarnagar. Prices in Mumbai and Kolhapur also fell by nearly ₹10, traders said. The government last week had also imposed stock holding limits on sugar mills for September and October to keep prices in check with a slew of festivals lined up over the next few months.
The India Sugar Mills Association has pegged the sugar output estimate for 2017-18 (Oct-Sept) at 25.1 mt, up from 20.3 mt in 2016-17, ISMA Director-General Abinash Verma said.
Outlook
Sugar prices are likely to trade down in the near term as imports of the commodity are likely to weigh on sentiment, traders said.
Buyers are keeping away from bulk purchases as they are expecting prices to fall further, Mumbai-based trader said. Prices are likely to fall by ₹10-15 per 100 kg by next week, they said.