'Sugar industry to bear more losses on higher imports'

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SME Times News Bureau | 17 Jan, 2013
This year despite surplus production of sugar over the domestic demand, industry has had to incur losses due to cheaper imports competing with domestically produced sugar from sugarcane of Indian farmers, said industry body CII in a press statement on Thursday.

Current duty structure of just 10 percent and low prices of sugar in the international market are leading to inflow of large quantity of raw and processed sugar in the country, it said.

Raising the issue, Ajit Shriram, Co chairman, CII Task Force on Sugar and Deputy Managing Director, DCM Shriram Consolidated Ltd said, "Indian sugar industry, one of the main drivers of country's rural economy, is already suffering owing to excessive controls of the central and state governments, coupled with recent hikes in cane price across the country. Inexpensive import due to low import duty is adding to the heavy losses to the industry which may result into huge cane price arrears. Government should increase the import duty immediately from existing 10 percent to 30 percent or more to create a level playing field for the domestic industry."

P Ramababu, Co Chairman, CII Task Force on Sugar and Chairman, Lakshya Strategic Consultants Ltd said, "This year at least 24 million tons of sugar production is expected against the domestic demand of 22.5 millions tons i.e. 1.5 million tons excess sugar will be available in the market. Presently, due to imports of processed sugar from Pakistan and raw sugar mainly from Brazil, the industry in India is passing through a hard time to maintain its viability. Government should take immediate measures to curb the imports and save the domestic industry from losing its interest in the sector."

Ramababu added, "In Uttar Pradesh, due to higher State Advised Price (SAP) of Rs 280 per quintal, manufacturing cost of sugar is coming around Rs 36000 per tonne while the market price of sugar is around Rs 32000 – 33000 per tonne only, leading to a net loss of approx Rs 4000 per tonne, which at 79 lakh tons of sugar production, would work out to over Rs.3000 crore this year alone."

"Government should also consider that Price of sugar has not increased so much in the last 10 years as compared to other food items whereas the production cost including raw material has increased drastically. Marginal rise in sugar prices would not affect the consumer so much as only 30 percent of the total production is used by the housewives directly, whereas rest of the production goes to the bulk users. On an average a family uses maximum 4-5 kg sugar per month. A rise of even Rs 5 per kg would affect the family budget by Rs 25 only per month whereas it would help the millions of farmers," he added.

Earlier too the import duty was 60 percent which was later reduced to increase the import and meet the domestic demand in the year 2009, when there was shortage of sugar, which is not true this year.

However in a scenario when the indigenous production is more than sufficient to meet the demand, government should look at the import policies adapting to the current market reality. Otherwise, with an unviable global market for exports from India, all the sugar so imported will only get stuck in the country and only add to the surplus already there in the country, it said.