Revised policy will hurt sugar sector: Sena

The Shiv Sena . said the revision of policy regarding duty-free import of raw sugar would "badly affect" the domestic sugar industry particularly due to the two-year "window" period accorded to the importers to match it with export of refined sugar.

According to Kanhaiyalal Gidwani, convener of the Sena's action committee for essential commodities, this move has made it almost legal for importers to import raw sugar, refine in India and sell it in the domestic market.

"This means the importers margin of profit would be far higher than a domestic manufacturer and would badly damage the domestic sugar market," he said.

While the importers belonged to other states, the sugar cane farmers of Maharashtra were going to be badly affected, he added.

"October to April is the cane crushing season for Maharashtra and the industry which is reeling under the effect of three years of drought is going to get no respite due to the action of the government," he said.

According to Gidwani, India consumes up to 180,000 tonnes of sugar a year. "The domestic rate of raw sugar is Rs 1,500 a quintal while the import rate is Rs 1,100 a quintal, therefore you can see that the importer stands to make a huge profit from this transaction," the Sena leader said.

The Union government took the decision to allow duty-free import of raw sugar with a window of two years to match it with export tonne to tonne on September 17. The rationale put forward by the Finance Minister P Chidambaram was that it would help in making up for the shortage of raw sugar, which is around 50,000 tonnes.

According to Gidwani, the government should have kept the window period on exports up to 3 months. "That amount of time is enough to prepare refined sugar, while the two-year window means that anyone can divert the sugar for other purposes and make a short term profit of crores," he said.

It is significant that the Sena, which along with its ally, the Bharatiya Janata Party (BJP) has no significant political presence in the western Maharashtra sugar belt, which is considered a Congress-NCP stronghold. The issue is expected to hit a raw nerve not only during the elections but also the upcoming festival season.

He said the amendment in the policy had been made after a well-studied and schemed plan of the UPA government to eventually allow this imported raw sugar under the pretext of re-exports to be legally diverted to the domestic market.

Gidwani said if the motive of this policy was only to ensure adequate supply of sugar in the market as claimed by the government, it would be advisable to reduce the import duty on the refined sugar from the current 60 per cent to 25 per cent and retain the counter-value duty which is Rs 85 per quintal.

He said in the present scenario, it would be appropriate to reduce the Custom import duty and maintain the prevailing price, as this would enable it to generate revenue by way of import duty and sugarcane farmers would be able to realise a good price for their cane crop by which a farmer will be in a position to invest for better produce for the next season ensuring better productivity.