The recent surge in domestic sugar prices along with a strengthening rupee has made imports viable once again. About 400,000 tonnes of raw and refined sugar is estimated to have been contracted over the last two weeks. For last couple of months, millers had stopped contracting imports due to lack of price parity.
Ex-mill sugar prices have risen 15-20 per cent in the past two weeks to touch Rs 4,000-4,150 a quintal in major producing states of Maharashtra and Uttar Pradesh. In the same period, the rupee has appreciated by over 2 per cent against the dollar, making imports further viable.
Industry sources said that about 200,000 tonnes of raw sugar has been contracted for imports, mainly by southern millers while another 200,000 tonnes refined sugar has been contracted by the government trading agencies. The landed price of refined sugar is at Rs 3,850 a quintal while the same for raw sugar is Rs 3,250 a quintal.
“At current price levels in the domestic market, import of sugar is viable. Some quantities have been contracted recently,” said Vinay Kumar, managing director, National Federation of Cooperative Sugar Factories.Industry officials, however, are uncertain whether domestic prices will sustain at current levels. “The current prices are unprecedented. We are apprehensive about government intervention to tame high prices in a bid to contain food inflation,” said an industry official.
The union government has allowed duty-free import of raw sugar to tide over the domestic production shortfall. In the 2008-09 season, domestic sugar output fell 42 per cent to 15 million tonnes, causing retail sugar prices to more than double.