NEW DELHI – Indian mills are yet to start exporting raw sugar to Indonesia as the southeast Asian country has not amended import licences that were issued before a key colour standard for the sweetener was modified, industry officials said.
In a first, India is set to export raw sugar to Indonesia, which mostly imports the sweetener from Thailand and Australia.
Last week, the International Commission for Uniform Methods of Sugar Analysis–a standards body that publishes norms for analysis of the sweetener—modified the colour standard for raw sugar to 600-1,200 from 1,200. Following this move, import licences for Jan-Jun that have already been issued will have to be amended.
"Indonesian trade minister had visited India last week, and they immediately want to import raw sugar, but import licences have already been issued… which have to be modified and needs to go to customs saying that the ICUMSA standard has been lowered now," an official with a global supply chain said.
The standard has been modified in a bid to make India lower import duties on Indonesian palm oil and its derivatives, the official said. India issued import licences for 1.1 mln tn of refined palm oil per year.
The country is running out of time to sign deals with Indonesia as most leading mills have already exhausted their export quota, and there isn't enough scope to produce large quantities of raw sugar.
Both countries would have benefited if Indonesia had considered India's demand of lowering the ICUMSA earlier, another industry official said.
"Trade for not more than 250,000 tn can happen because raw sugar availability in India is not much. Even the 612,000-tn reallocation won't help a lot," another official said.
Indian mills expect their sugar exports to fetch better prices as their freight charges are cheaper than those of Brazil, and prices are higher in Thailand.
The revision in quality standards for imports of raw sugar will help India, a structural exporter, in the crushing season that begins on Oct 1. Indonesia annually imports 3.5-4.0 mln tn of sugar. The lower the ICUMSA level, the better the quality.
The southeast Asian country imports only raw sugar, which typically has very high ICUMSA levels. However, even Indian sugar of the poorest quality does not meet its import norms. Sugar from Thailand is of a high ICUMSA level. This year, Indonesia could not import sugar from Thailand, where production was lower.
India's white refined sugar, considered the best globally, has an ICUMSA level of 45 and raw sugar of 400-800. Sweetener of low quality has an ICUMSA level of 150-200.
Exporting sugar is crucial for India as it is a major producer of the sweetener, and has to exhaust excess stocks. In 2020-21 (Oct-Sep), India is estimated to have a surplus of 10 mln tn, against 14.6 mln tn in the ongoing season.
So far, Indian mills have signed contracts to export 3.5 mln tn of sugar and are likely to ship about 2 mln tn by the end of this month.