The Central government today raised import duty on sugar to 100 per cent from 50 per cent, and on chana to 40 per cent from 30 per cent, in a bid to curb fall in prices of these commodities.
Chana futures on the National Commodity and Derivatives Exchange rose over one per cent on the news. The most-active March chana contract on the NCDEX was at ₹3,870 a quintal, up 1.5 per cent from the previous close.
While trading in sugar futures has been negligible due to low volumes for the past few months, spot prices rose in key wholesale markets following the hike in import duty.
Chana stays bearish
The government had, in December, imposed 30 per cent duty on chana imports to restrict fall in domestic prices.
The bearish sentiment in chana market, however, continued due to expectation of a bumper output this rabi season at a time when supplies from last season are already high.
Pulses output rose sharply in 2016-17 (July-June) to a record high of 22.95 million tonnes (mt) against 16.35 mt a year ago, data from the Agriculture Ministry showed.
Chana production in the country was at 9.33 mt in 2016-17, up from 7.06 mt a year ago.
During this rabi season, farmers in the country had sown chana across10.72 million hectares, up 8.3 per cent on year, data released by the Agriculture Ministry showed.
Hike in import duty on chana would restrict purchases, boost domestic prices and safeguard interests of farmers, traders said.
Pakistani imports
For sugar, apart from the fall in prices, there were also concerns over cheaper imports from Pakistan through Wagah border.
Several trade associations had urged the government to raise the import duty on sugar to 60 per cent from 50 per cent as Pakistan, last year, had allowed export of 2 mt sugar with a freight subsidy of 10.70 Pakistani rupee per kg (1 Pakistani rupee is 0.58 rupees).
Pakistan is expected to produce 8 mt sugar in the ongoing season ending September, as against an estimated consumption of 5 mt.