'Sugar import not a sweet idea'

Industry feels move does not make sugar commercially viable for importers.

The government's decision to allow import of 1 million tonne of sugar, even at zero duty, will not make it commercially viable for importers, says the industry.

The international sugar price for August delivery is $470 per tonne compared with the current average domestic price of $404 or Rs 18,500 a tonne.

Secondly, the landing cost would be much higher at $550 or Rs 25,135 per tonne. Given the countervailing duty of Rs 850 per tonne, the retail price would be as high as Rs 30,385 per tonne, factoring in the domestic transport charges and the profit margin of wholesalers and retailers.

"The international sugar price is much higher than the existing domestic price and therefore importing sugar does not make any sense," said JK Banka, chief general manager, Dwarikesh Sugar. The sugar can be imported till September this year.

Others echo Banka's views, pointing out that the imported sugar would make sense only if it could be sold at Rs 31-32 per kg. The current retail price is only Rs 21-22 per kg.

This can increase the sugar prices instead of curbing it. Some say the import will make sense only if the government opts to give a subsidy of 15 per cent in addition to the zero per cent duty offer.

As things stand now, there is no rationale behind the idea of importing sugar. The total domestic sugar production in the current cane year is estimated at about 19 million tonne and domestic consumption is also at the same level.

The sugar forecast for the next season is estimated at about 22 million tonne, which would be more than adequate for domestic consumption, even if there would be an increase in demand by ten per cent.

It appears that the government has not taken into account all these factors before taking the decision. Many believe that no one would opt to import sugar, as it would not be possible to sell sugar at such a high price.