Centre’s decision to impose export duty on sugar would make the exports unviable while the domestic prices are likely to soften only “marginally,” trader bodies and analysts said on Friday.
In a bid to keep the domestic prices of sugar under check in the country, the Central government had on Thursday issued a notification, imposing 20 per cent duty on the export of raw sugar — white or refined sugar.
“With the recent spurt in global prices, sugar exports from India were just about becoming viable but the 20 percent export duty will make Indian exports unviable,” Indian Sugar Mills Association (ISMA) Director General Abinash Verma told The Hindu.
‘Remains stable’
“I do not think export duty is going to push down the domestic sugar prices. They are going to remain stable in the long run,” he said. “It seems that the government wants to conserve sugar domestically in view of an expected fall in sugar production in the next 2016-17 sugar season,” he added.
Notably, due to delayed harvest in Brazil, there has been a rise in international prices, which has made exports of Indian sugar feasible as well. India has so far exported 1.6 million tonnes in the marketing year that began on October 1.
Under criticism after sugar prices surged to around Rs. 40 per kg from Rs. 30 per Kg 6-7 months ago in most parts of the country, the Centre’s latest decision of imposing export duty on sugar will deter exports and is likely to help keep sufficient availability of sugar in domestic market.
‘Symbolic gesture’
“The government’s decision seems to be more of a “symbolic” gesture as surge price is not going to significantly come down. Prices will have a marginal downward impact, but not a significant one,” Mr. Sabyasachi Majumdar, Senior Vice President at ICRA — the credit rating services company told The Hindu.
Mr. Majumdar said that even before the government’s decision on sugar export duty, country’s export since April-May had started falling due to strengthening of local prices on expectations of lower output in coming season.
The country’s sugar production in 2015-16 marketing year is estimated to drop to 25.2 million tonnes, as against 28.3 million tonnes in the previous year. The annual domestic demand is expected to be at 26 million tonnes.
Besides, for the next 2016-17 marketing year, the government has forecast a further dip in sugar production at 23-24 million tonnes. However, the government has said that there wouldn’t be a shortage as the country would have 30-31 million tonnes of sugar supply, taking into account the carry-over stocks.