Govt allows sugar exports to Pakistan

The government has given permission to the Indian Sugar Exim Corporation (ISEC) to export 1.5 lakh tonne of sugar to the Trading Corporation of Pakistan.

"We can source grain from any sugar mill in the country, with or without re-export obligation, but on the condition that the exports would take place against the TCP tenders," said SL Jain, member-secretary.

ISEC would not be allowed to export to private traders in Pakistan. As per Indian bylaws, mills which had imported raw sugar are required to export same quantity of white sugar, without any customs duty, in a 24 months period.

Presently, ISEC holds orders to the tune of 2 lakh tonne, from TCP, out of which 95,000 tonne has been shipped from Mumbai and Chennai ports.

ISEC also plans to bid for the next two tenders to be issued by TCP, with the next one of 50,000 tonne scheduled to be exported on May 13, said Jain.

Till date, ISEC's exports were done against the re-export obligation licenses held by various mills, including Dhampur Sugar. This had led some mills to charge ISEC a hefty premium, as high as $ 15 a tonne in some cases, to use their respect license.

"We can now source sugar from any mill and thus, cannot be charged premium for using a mill's license," said Jain.

The permission to export additional 1.5 lakh tonne would allow ISEC to export about 3 .5 lakh tonne. ISEC, however, is inclined to export more. As per Indian Sugar Mills Association's estimates, Pakistan is expected to have a sugar deficit of 7-8 lakh tonne per annum for two years.

In the current sugar year, TCP has already contracted 4 lakh tonne of white sugar from various sources like the Dubai-based Al Khaleej and India's ISEC.

From India, apart from the 95,000 tonne exported till date by ISEC, various millers like Simbhaoli Sugar Mills are estimated to have exported about 80,000 tonne. India is expected to have good sugar output for the next few years.

In 2005-06, India's sugar production is estimated at 190 lakh tonne, compared with 127 lakh tonne last year. In line with rising sugar production capacities, especially in Uttar Pradesh, the output in 2006-07 is expected at 225 lakh tonne, said Jain.

"The International Sugar Organisation said that the global supply/demand outlook is roughly in equilibrium and the price of raw sugar would stay near its highs. It was agreed by many that a rise in production in response to the surge in prices should keep a cap on prices. Production in major consuming countries such as China and India is recovering, and consumption continues to expand at a steady pace of 3 million tonne a year," a Sucden report said Wednesday, at its annual sugar club industry dinner.

Pakistan and Bangladesh are in the market to buy physical refined sugar while Russian demand is subdued due to poor import margins and ample stocks, the report added.