The Central Board of Excise and Customs (CBEC), falling under the Ministry of Finance, on Tuesday removed the 20 per cent export duty on sugar to boost overseas sales in view of fall in domestic prices on estimated rise in production and lift domestic price.
The country is facing surplus production of sugar this year. Export duty on sugar used to be levied at 20 per cent. Now, the export duty on sugar is nil.
As per estimate, the country is likely to produce a record 29.5 million tonnes of sugar in the 2017-18 season that ends on September 30, up 45 per cent from the previous year.
Sugar prices have fallen around 16 per cent in the local market since October 1, 2017, making it difficult for mills to pay farmers the 11 per cent Government-mandated hike in cane prices. The domestic demand is 24-25 million tonnes annually.
A notification issued by the Finance Ministry said the estimated revenue implication of the move is Rs 75 crore for a year at current export volumes.
Reacting on the CBEC move, Binod Kumar Pandey, General Secretary of Rashtriya Kisan Mahasangh told The Pioneer that the move will help the farmers.
"This would protect the farmers' interest in the country. The farmers have been demanding this from the past few months,” Pandey said.
Chattar Singh, a farmer from western Uttar Pradesh said there is an urgent need to regulate sugar industry. “The Narendra Modi government should have taken this step earlier,” he added.
Sugar production swings wildly in India, where half of the country's farmland depends on the June to September monsoon rains for water because of a lack of irrigation. Sugar cane is very water-intensive.
With domestic prices falling below cost of production, sugar industry bodies Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) had met senior food ministry officials last month, seeking hike in sugar import duty from 50 per cent to 100 per cent and scrapping of export duty of 20 per cent to liquidate surplus sugar.
Cane arrears to sugarcane farmers touched Rs 14,000 crore at the end of January and might rise further in wake of slide in sugar prices, as per ISMA. Mills have produced 25.80 million tonnes sugar till March 15 of the 2017-18 marketing year (October-September).
Union Minister of Consumer Affairs Ram Vilas Paswan had earlier asked the Ministry of Finance to scrap export duty from sugar to lift domestic price and boost overseas sales.
Last month, the Government doubled import duty on sugar to 100 per cent and restricted sale by mills to keep a checking on falling prices and to check cheaper imports from overseas markets, particularly Pakistan. Trade sources said the move is unlikely to make a major impact as global prices are also depressed. The industry is demanding subsidy on export of sugar.