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Thursday, June 3, 2010

Industry body sees 40% import tax on sugar

India may impose an import tax of at least 40 per cent on white sugar to arrest a sharp fall in local prices of the sweetener, industry officials said on Thursday.

India, the world's top consumer of white sugar, had last year withdrawn a 60-per cent import tax on the commodity when output fell 44 per cent to 14.7 million tonnes, turning the country into a big importer and helping New York raw sugar futures surge to their highest in 29 years in February.

"Imported sugar sells much lesser than our production cost," said M N Rao, deputy director general of the Indian Sugar Mills Association. "At least a 40 per cent duty will give some respite," he said, and added the millers would not mind the earlier duty rate of 60 per cent. Imposing the duty again would help mills pay a good price to cane farmers and encourage higher cultivation, industry officials said.

Farm Minister Sharad Pawar said India may take a decision "in a week or so" on re-imposing duty on sugar imports, a Press Trust of India report in the Financial Express newspaper said on Thursday. Millers in India have been demanding a duty on refined sugar imports as the prices of the sweetener fell in local markets by about 30 per cent in the last four months, the report said.

For a timeline on changes in India's sugar import regime, analysts say India could slap an import tax on sugar before the start of its 2010/11 season in October, to protect farmers and millers from a flood of imports as global prices crash. On Wednesday, August white sugar in London ended $15.10 lower at $456.80 per tonne on long liquidation amid improved global sugar production outlook.

The global sugar market will see a surplus of about 5 million tonnes this year, 30 per cent more than previously expected, even as consumption rises, though India is unlikely to export any excess sugar soon, industry sources said.

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