The government is likely to retain an import duty of 60 per cent on import of sugar from January 1, 2011.
Prior to this, the import duty on sugar was stipulated at 60 per cent since 2000.
The ministry of agriculture has suggested a reduction in the import duty so that imports do not work out costlier when the need arises. Towards this, it proposes capping the duty in the range of 10-30 per cent, official sources said . However under the current circumstances, the finance ministry is not willing to cut the import duty below 60 per cent , sources said.
“In the current scenario, when the output is good, there is no need for imports. Even if one does, it will be not be lucrative to sell in the domestic market. Therefore even if duty is reduced, it does not help anybody. The question of higher duty and its implications arises in a situation when the demand goes up and supply falls short.", the source said.
Therefore the ministry is working on rationalising the import duty and had informally suggested the same to finance ministry which is at the helm of deciding the import duty structure on commodities.
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Sources said, a formal proposal on import duty cut will be sent to the finance ministry after assessing the output by early January 2011 when the agriculture ministry expects to get firm projections on cane acreage , yield and sugar recovery.
This will then be considered as part of budget recommendations, sources said .
Official projections have pegged sugar output this year at 24.5 million tonnes (mt) while industry reportedly is sticking to its outlook of 25.5 mt against a local consumption demand of only 23 mt.
Recently for better price recovery, the government had allowed export of half million tonnes of sugar. Earlier, exports were allowed under ALS (advanced license scheme) of one million tonnes and for re-export from ports, the quantity of imported sugar lying unused last year.