25% custom duty on export of sugar is bit of non-event: M Manickam, MD, Sakthi Sugars

In a chat with ET Now, M Manickam, MD, Sakthi Sugars says that 25% custom duty on export of sugar is bit of a non-event and he as an entrepreneur wouldn't export sugar.

ET Now: 25% custom duty on export of sugar. Is that a big dampener for traders who are looking to export sugar because of the higher international prices?

M Manickam: It is a non-event, as there is no export going out. One month back, the government was trying to export four million tonnes, the traders were given incentive of Rs 45 a quintal of cane crushed for exports. Out of four million tonnes only 1.2-1.4 million tonnes have been exported. There is no incentive for exports for now.

The pressure is building up on the Indian sugar prices as the prices are going up on the international market. The 25% custom duty is not going to make much difference to this domestic market because there is a possibility of sugar shortage in coming year. We should look forward to handle the situation rather than looking at these measures.

ET Now: What is the difference between domestic prices and international prices? Where do you think sugar prices will eventually settle domestically?

M Manickam: Depending upon the crop coming next year, it will be a range bound between Rs 35 and Rs 40, starting from October 16 to September 17 sugar year. The current estimates are around 23 million tonnes. Though we have a shortage and might have to import some sugar. It will be critical if it goes below 23 million tonnes. We cannot say anything until almost March of 17.

ET Now: But you are not bullish about the upcoming season in terms of overall supply and output?

M Manickam: Due to drought, there will be a shortfall next year. This is a speculation though, a lot of which depends on how much cane has survived the drought on Maharashtra and Karnataka. We need to see the sugar production first. For the domestic markets, even with 23 million, we will have a shortage of about two million.

ET Now: Are you saying that if exports were allowed without this 25% duty, it would still be unremunerative?

M Manickam: I wouldn't export as I am expecting domestic prices to move up. Very little exports are being done today.