Sugar imports lose appeal as domestic prices plunge below import parity

Pune: A sharp fall in domestic sugar prices is making it difficult for importers to bring in the 1 million tonne of raw sugar allowed by the Centre to cool local prices, as imports have now become pricier than local supplies.

Ex-mill sugar prices have fallen to ₹44-50 a kg from around ₹65 in recent weeks across states, eroding the import parity for refiners. Port-based refineries have committed to import about 260,000 tonnes, but only a few thousand tonnes have so far entered the domestic market, industry officials said.

The prevailing scenario is likely to push refiners to wait for local prices to rise to import parity rather than sell at a loss. Meanwhile, ex-mill prices increased 2-3% on Monday amid a squeeze in supplies, the officials said.


"The challenges for the imported sugar have increased as international prices have firmed up while the domestic prices have fallen," said a prominent sugar importer, who asked not to be named. "The sugar sold initially and the material at the ports will move inland."

The Centre met sugar importers Monday and urged them to enhance imports of the sweetener. Last week, it extended the window for application of sugar imported under advanced authorisation scheme to a one-time Tariff Rate Quota scheme. This allows port-based refineries that regularly import raw sugar for processing and re-export to sell their produce in the domestic market under a specified quota.

"The cost of white sugar made by processing imported raw is above ₹55/kg, excluding the cost of logistics," said another sugar importer. "Domestic ex-mill sugar prices had declined to ₹45-46/kg in Maharashtra and ₹48-50/kg in Uttar Pradesh. We can sell imported sugar only if there is parity."

Meanwhile, factory level sugar prices have started to rise from Monday.

"The fear of government action under the Essential Commodities Act and raids on shops have ensured that the supply chain has been disturbed, affecting the sugar prices," said a prominent sugar industry leader, asking not to be identified.