Sugar import duty may be hiked to 40 per cent

Sugar prices are likely to go up in the coming days as a meeting of a group of ministers headed by Union minister for food, consumer affairs and public distribution Ram Vilas Paswan on Tuesday decided to recommend a hike in the customs duty on sugar to 40 per cent from 25 per cent at present.

A senior official said that the decision was taken to check falling prices of sugar in the domestic market so that mills earn more revenue to clear the mounting sugar cane arrears of about Rs 20,000 crore due to farmers.

Millers have been claiming that the ex-mill prices of sugar have fallen to Rs 21-Rs 24 per kg in the country while the cost of production is more than Rs 30 per kg.

Consensus also emerged on creating buffer stock, restructuring of loan, promotion of ethanol output, export subsidy on white sugar to help solve the current crisis faced by farmers and millers.

"While some of these suggestions will be implemented after the Cabinet clears the pro-posal, the finance ministry can hike the customs duty through an executive order", the official added.

Paswan told news agency PTI, "We discussed the suggestions made by farmers and state governments for early clearance of cane dues."

Last August, import duty on both raw and refined sugar was raised to 25 per cent from 15 per cent to bail out the cash-starved sugar industry.

The sugar industry is finding difficulty in paying cane price to farmers as mills have been incurring losses for the last few years due to low realisation and high cost of production.

The Centre recently provided a subsidy of Rs 4,000 per tonne for exports of 1.4 million tonnes of raw sugar to improve cash flow of millers.

The Indian Sugar Mills Association has been demanding that the government give exports subsidy on white sweetener, create buffer stock of 2 million tonnes and also restructure millers' debt amounting to more than Rs 36,000 crore.

Sugar production of India is estimated to be higher than the domestic consumption for the fifth year in a row this season.