Sugar exports likely to dry up on Centre’s proposal to impose 25% tax


With 15 lakh tonne of sugar whites having been exported from India so far, further exports are set to dry up with the Centre’s plans to levy a 25% tax on exports. Some 50,000 tonne to 75,000 tonne headed towards Myanmar and Sri Lanka is likely to be impacted, senior industry officials said on Friday.

On Thursday, Union food minister Ram Vilas Paswan tweeted that there is an increasing trend in the price of sugar in the international market and traders may increase the export of sugar to make profit. He said that the levy was aimed at curbing the country’s exports and would help keep local prices under control in the world’s top consumer of sugar. Traders see this as a move to keep supplies within the country on the back of two straight years of drought.

A flip-flop policy is not good for the trade and some clarity is required for the industry to move ahead, Rahil Shaikh, MD, ED&F Man Commodities said at the sidelines of a sugar meet held in Pune. Around 15 lakh tonne has been exported from the country so far. Sugar production estimates have declined by some 10 lakh tonne. However, the government fears that prices may rise because of export is not correct, Sanjeev Babar, MD, Maharashtra State Cooperative Sugar Factories Federation ( MSCSFF) said.

According to Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, international rates have gone up between $ 520 to 530 per tonne while small-grade sugar in the domestic market is around R3,550-3,600 and R3,650 to R3,800 per quintal. Naturally, millers will find the international markets more lucrative at this point which is why the government has proposed a 25% duty on export, he said, The crop in Thailand has been hit and heavy rains in Brazil have also affected production, he pointed out. Thailand will benefit more since it has been competing with India in the white sugar market. Global sugar prices have also been buoyed by cold temperatures in parts of Brazil and growing demand.

“Right now, there is a 40% import duty and there is no parity with other countries. Rising local sugar prices may force the country to scrap tax on sugar imports.” Shaikh said traders and experts believe the new tax could push up global sugar prices, even though India was already expected to become a net importer in the year from the coming season following back-to-back drought years.