Policy updating since last 40 years in sugar industry

Sugar Import policy

After the uncertainty of over 2 years, the new millenium appears to have bought a ray of hope for the beleaguered Indian sugar industry, with the Government of India’s conscious efforts to provide a, long denied, level playing field to the indigenous sugar vis-a-vis imported sugar. On 29^th December 1999,two important announcements were made. First, that the import duty on sugar was increased to 40% and the second, the levy free ratio of 40:60 was relaxed to 30:70 w.e.f. 1^st January 2000.

The imported sugar was free of levy obligation, release control, bagging requirement into gunny bags etc. applicable to indigenous sugar. Government amended the Sugar Control Order in June 1999 creating an enabling provision for subjecting imported sugar to the mechanism of monthly releases. However, due to further decline in the International sugar prices, even this increase in import duty did not have much impact on unabated imports

Though the industry had been asking the Government to increase the import duty for long time, the decisions had been delayed mainly due to an apprehension that it would lead to price rise. The fact that there was no rise in prices following the import duty hikes has provided this apprehension to be baseless. Besides, increase in import duty, imported sugar also needs to be subjected to levy obligation as applicable to indigenous sugar.

Sugar Export Policy

The Government of India have permitted an export of 10 lakh of Sugar from India with a view to liquidating atleast a part of the excessive sugar stocks which have accumulated with the industry for a variety of reasons. The safety level of stocks taken into account by the Government in policy planning are much lower, equal to about 2/12 months requirement of free sale sugar and 3 months requirement of levy sugar i.e. total quantity of no more than 40 lakh tonnes on an optimistic basis. Since no other country in the world follows dual pricing policy of free sale and levy sugar the above step is intended to place the Indian sugar industry on an even keel to facilitate exports. The government's decision to free sugar export from levy obligations a welcome step.

Limitation of time has created certain inadequacies. Firstly, it ignores the fact that actual shipment of sugar is a 45 to 60 days operation in India, as opposed to much shorter time lead in other exporting countries. A major handicap is that under Government’s order mills have to pack sugar in 100kg. Jute bags. No country accepts such large packs of sugar, which is also against the ILO convention for handling. Secondly the current crushing season is already over and the entire stocks with the factory is in 100 kg bags. Under the circumstances, sugar mills have to re-fill 50 kg bags from out of sugar already packed in 100kg gunny bags. This is a time consuming job. In India the price of sugarcane moves only in one direction. The Government of India announces an increase in the Statutory Minimum Price of sugarcane every year and the State Government go a step further in announcing much higher state advised prices year after year.

A quick exercise reveals that at the prevailing higher international prices, millers on an average cannot hope to realise even the price of levy sugar on sugar export on ex-factory basis. Indeed, considerable sacrifice is called for on the part of the industry to ship sugar out of the country. The president of India on January 15,1997, repealing the Export promotion act, 1958 has boomeranged The ostensible purpose of decanalising export of sugar was to provide the much needed incentive to sugar in order to clear surplus stock, thereby help farmers to realise their due and to let India earn it place in international export market. Even the government is now concerned over the situation of ‘no exports’ despite surplus stock in the country. Prior to decanalising of sugar export, sugar export was being handled by State Trading Corporation (STC) and Indian Sugar &General Industry Export Imports Corporation Ltd (SIEC). It captured new markets with the strategic advantages like Sri Lanka, Pakistan, Indonesia, Russia and so forth and had also managed better realizations. In the year of surplus, export of sugar has been helping sugar factories from incurring unnecessary expenses on storage and in getting better realization in free market.

Statement Showing Sugar Policy

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