Maha Congress ask govt not to impose duty on white sugar soon

NEW DELHI: Congress leaders from Maharashtra have asked the government to reject a proposal to hike import duty on white sugar mooted by Union food minister Sharad Pawar.

An empowered group of ministers (EGoM), a group of Cabinet ministers with the authority to take decisions, is expected to soon consider a proposal to hike duty by around 16%. The matter is slated to be discussed before the monsoon session of parliament, which usually begins by mid-July.

Alarmed by the prospect, party leaders from Mr Pawar’s home state Maharashtra have appealed to the government not to impose duty on white sugar until December 2010, after the crushing season for the new sugar year begins. They have conveyed their apprehensions to party president and NAC chief Sonia Gandhi, PM Manmohan Singh and FM Pranab Mukherjee that sugar retail prices could shoot up by as high as Rs 5-6/kg in the peak demand and festival season starting October should duty be hiked now. Wholesale prices are expected to spike by an average Rs 500-600 per quintal if duty imposed on white sugar were around 20% or even slightly lower.

“It’s only over the last four months that this essential commodity has witnessed some price stability and any sudden change in policy or norms will send sugar prices spiralling for consumers. It is being projected that sugarcane farmers will benefit from the higher import duty but they will only get the government-set price already announced for 2009-10,” said MPCC leader and party spokesperson Kanhaiyalal Gidwani.

In a letter to NAC chief and party president Sonia Gandhi and FM Mukherjee, the state party leadership has argued against what it described as a sudden policy change. “Any sudden change in policy in import duty before December 2010 will lead to our losing credibility in the international market and jeopardise ample sugar availability for the peak season in the local markets. It will also prevent already contracted sugar imports from being carried through. Long-term planning is imperative to ensure price stability.}

Last week, the Indian Sugar Mills Association (ISMA) pegged imports of raw and white sugar as equivalent to 5.5 mt, including a carryover of 1.2 mt from last year. Contracted imports to the tune of 0.5 mt are currently expected to land here between June-September 2010. Sugar imports already landed were estimated at 2.75 mt (white sugar) and 0.75 mt (raw sugar).

A Delhi-based commodity trader asserted: “High global prices of sugar have prevented traders and millers from entering fresh import contracts since domestic sugar prices are around Rs 2,000/tonne lesser. So any duty hike now is unlikely to impact consumer prices. But a sudden hike in duty could benefit traders and millers who imported heavily earlier this year and have not offloaded stocks on account of poor local prices. Even if global prices soften by October, a duty hike will prevent a fresh flood of imports in peak demand season and will increase prices.”