In response to a long pending demand from the sugar industry, the government on Friday announced its decision to raise import duty from 15 per cent to 25 per cent.
“We hope the move helps stabilise the market but this step was a long awaited one,” Vivek Saraogi, Managing Director, Balrampur Chini Mills, said.
“This should have been done at least a year ago because we have had a sugar surplus situation, downward spiraling markets, and farmer’s cane arrears left to be paid. Sugar prices are also very low.”
Given the prevailing global prices of sugar and rupee-dollar exchange rate, higher duty will make sugar imports unviable.
Cane arrears This is also expected to improve revenue realisation for the sugar mills and help them clear cane arrears, estimated at around Rs.5,000 crore, to farmers at the earliest.
“This will check unnecessary imports of cheaper sugar into the domestic market. With the uncertainty of sugar imports no longer being there, the domestic market sentiments will improve and traders will show better buying interest,” Indian Sugar Mills Association (ISMA) said in a statement.
India was expected to import significantly less sugar in the sugar year ending September 2014 compared to around 6.80 lakh tonnes in the previous year, an industry spokesman said.
India already had a sugar surplus of around 25 lakh tonnes, ISMA said, adding that the industry wanted the government to raise the sugar import duty to 40 per cent in the long run “to check sugar imports, in case global prices fall.”
Sugar stocks rise Meanwhile, reacting to the news on Friday, shares of almost all larger sugar companies rose on the BSE. Bajaj Hindusthan rose 5.32 per cent to Rs.23.75, Shree Renuka Sugars rose 4.44 per cent to close at Rs.21.15, Balrampur Chini Mills rose 2.21 per cent to Rs.69.5, EID-Parry (India) rose 3.44 per cent to close at Rs.201.35 and Bannari Amman Sugars rose 3.8 per cent to Rs.1,110.65. Only Thiru Arooran Sugars fell 3.36 per cent to Rs.56.