A bumper production of sugarcane has prompted the government to withdraw 20 per cent export duty on raw and refined sugar, giving a boost to the industry.
The Central Board of Excise and Custom has notified the removal of duty. The government had earlier doubled the import duty by 100 per cent to discourage inflows from the global market.
The sugar production is expected to cross a record 29.5 million tonnes mark in 2017-18. Till the current month, 25.80 million tonnes of sugar has already been produced.
The sugar industry had been pressing for scrapping the export duty to explore the international market because of record output for two years in a row. With domestic prices falling below cost of production, leading sugar industry bodies Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) had been demanding scrapping of export duty to liquidate surplus domestic stock.
The industry aims at exporting 1.5-2 million tonnes by October till new sugar starts arriving. India is the world’s second largest sugar producer, having a surplus production as the domestic demand is pegged at 24-25 million tones annually.
It’s a politically sensitive issue as well as the domestic prices have fallen below the cost of production, impacting the farmers and the industry. The government will face elections next year where it will become an issue in the sugar belts.
Sugar prices in the international market has been lower than domestic rates for two years now with a difference of around `650 per quintal. The industry is targeting African, West Asian and South Asian markets for shipments.
Apart from slashing duties, the industry has also sought reintroduction of mandatory sugar export scheme of 2015-16 giving incentive of `75 per tonne of sugarcane for the mill exporting its quota. Since 2010- 11, India has been exporting more sugar than importing but the trend was reversed this year.
By January this year, the arrears to sugarcane farmers had reached `14,000 crore and it may go up further because of crash in prices.