 "Order slip halts sugar re-export")
Thousands of tonnes of sugar meant for re-export after refining, valued at Rs 700 crore, are stuck at various ports due to a minor slip in a recent government notification.
An export duty of 20 per cent was levied in mid-June on locally produced sugar, to ensure adequate domestic availability and curb price increase. It has inadvertently also impacted export of raw sugar, imported for re-export, and Customs authorities are seeking a 20 per cent duty.
The notification sought to impose export duty of 20 per cent on (domestic) raw, white or refined sugar. However, it did not clarify that raw sugar imported for re-export needs to be exempted. It is learnt container-loads of sugar weighing about 200,000 tonnes from domestic refineries are awaiting this clarification and have been stranded at Kandla and Mundra ports for over a week. This refined sugar was bound for markets in West Asia and Africa. The ownership of these shipments could not be ascertained.
India has four sugar refineries, owned by three sugar companies. Renuka Sugars owns two refineries, at Kandla and Haldia; EID Parry has a refinery at Kakinada. Simbhaoli Sugars runs a refinery in Kutch, with London-headquartered global commodity trade house ED&F Man.
An export duty of 20 per cent was levied in mid-June on locally produced sugar, to ensure adequate domestic availability and curb price increase. It has inadvertently also impacted export of raw sugar, imported for re-export, and Customs authorities are seeking a 20 per cent duty.
The notification sought to impose export duty of 20 per cent on (domestic) raw, white or refined sugar. However, it did not clarify that raw sugar imported for re-export needs to be exempted. It is learnt container-loads of sugar weighing about 200,000 tonnes from domestic refineries are awaiting this clarification and have been stranded at Kandla and Mundra ports for over a week. This refined sugar was bound for markets in West Asia and Africa. The ownership of these shipments could not be ascertained.
India has four sugar refineries, owned by three sugar companies. Renuka Sugars owns two refineries, at Kandla and Haldia; EID Parry has a refinery at Kakinada. Simbhaoli Sugars runs a refinery in Kutch, with London-headquartered global commodity trade house ED&F Man.
These refineries import raw sugar to convert to premium white sugar. The imports take place under the Advance Authorisation Scheme and do not attract any duty. The condition is that this sugar cannot be sold in the domestic market; it has to be re-exported within six months of import. Refineries earn a margin in the process.
“They (now) say they will let you export, if a 20 per cent duty is paid but this is not feasible; buyers will not accept it,” said another industry official.
Sugar is considered a ‘sensitive’ commodity and carries a weight of 1.73 per cent in the wholesale price index, used to capture overall inflation.
The country’s sugar output in the 2015-16 sugar season (it ends on September 30) is estimated to have declined nearly 10 per cent for the year before, to 25.2 million tonnes. Prices in the past year are up 45 per cent to levels where mills are not incurring cash losses by selling sugar. Sugar output in the next season is certain to dip further, by an estimate of 10 per cent, owing to a water crisis in the largest producing state of Maharashtra.