MUMBAI (Commoditiescontrol) - The central government considering to increase import tax on sugar to 75%-100% from the current 50% to restrict cheap shipments from Pakistan.
The govenment want to support domestic sugar prices which dropped by almost 15% at wholesale markets since the new season starts in India. (Fig. 1)
Similarly, millgate sugar prices also dropped 13% during October to January 06. (Fig. 2)
Domestic sugar prices were dropped majorly due to increased sugar output in India. Sugar mills from the country have produced 103.26 lakh tonnes of sugar during first three month of current season 2017-18 (October to September).
Sugar production has increased by 26.1% against the last year.
While, the carry forward stocks of 39 lakh tonnes from previous season also improved the availabilty of sweetener in the country.
However, higher supplies of commodity in local markets kept sugar prices under pressure.
Additionally, the threat of cheap sugar imports from Pakistan also moved down sweetener price in North India. According to the trader from Amritsar, local marketers have imported nearly 2,500 tonnes of sugar as of December month, through the Attari-Wagah land trade route near Amritsar.
Pakistan expected to have bumper sugar production of about 80 lakh tonnes during current sugar season 2017-18 (October-September), as per the Pakistan Sugar Mills Association (PSMA). While country also had produced 71 lakh tonnes of sugar in 2016-17, against the domestic consumption of 51 lakh tonnes.
However, to avoid the excess sugar supply in domestic market, the Economic Coordination Committee (ECC) of the cabinet of Pakistan government had allowed exports of 15,00,000 tonnes of sugar on November 28, with PKR 10.70 per kilogram subsidy, according to local press reports.
Although, Pakistan millers will get the 25% to 27% rebate of the FOB value of sugar exports.
While, sugar imports from Pakistan will be cheaper in Punjab (India), through the Attari-Wagah land trade route near Amritsar.
On other hand, sweetener imports from Pakistan's Sindh province will be cheapest as Sindh's state government has providing additional subsidy of PKR 9.30 per Kg for the export of surplus sugar. The mills from Sindh are holding nearly 500,000 tonnes of sugar stock as of November end, as per the local daily.
Meanwhile, the combined subsidy is almost PKR 20 per Kg for sugar exports, which made the prices for sugar exports from Sindh province even cheaper from rest of the country.
Nevertheless, with a rebate of PKR 20 per kg, the cash freight support will be around 50% of the FOB value of sugar exports.
Although, it raising the possibility of higher exports from Pakistan to India, as India is the nearest sugar market for Pakistan.
However, to restrict cheaper flows of the sugar from Pakistan, government may increase import duty on the sugar to 75%-80% from 50% at current. While, government can also raise sugar import duty to 100% under Indian Customs Tariff Act.
On other hand, central government is not considering to decline export duty on sugar for current sugar season 2017-18, as the commodity supply and demand is looking balanced and the closing balance will still remain tight at around 40 lakh tonnes, as similar as 2016-17. Meanwhile, there is absolutely no scope of any exports in this season.
| INDIA: Sugar Balance Sheet (October to Sepetember) |
| Particulars (Lakh tonnes) |
2016-17 E |
2017-18 F |
| Opening Stock (as on 1st Oct) |
77 |
39 |
| Production |
202 |
250 |
| Imports |
4.5 |
3 |
| Total Availability |
283.5 |
292 |
| Total Sales/Dispatch |
244 |
250 |
| Ending Stock (as on 30th Sept) |
39.5 |
42 |
E-estimate || F-Forecast
Source: ISMA, Ministry of Consumer Affairs, Food and Public Distribution
Figure: 1
Figure:2
(By Commoditiescontrol Bureau: +91-22-40015532)
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