High-yielding Indian sugar industry incurs losses due to cheap imports
This year, the Indian sugar industry produced more than the domestic demand, but incurred losses due…This year, the Indian sugar industry produced more than the domestic demand, but incurred losses due to cheaper imports. The current duty structure of just 10 per cent, coupled with the low prices of sugar in the international market, led to the inflow of a large quantity of raw and processed sugar in the country.
Raising the issue, Ajit Shriram, co-chairman, CII Task Force on Sugar, and deputy managing director, DCM Shriram Consolidated Ltd, said, “The 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 prices 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 the existing 10 per cent to 30 per cent or more to create a level playing field for the domestic industry,” he added.
P Ramababu, co-chairman, CII Task Force on Sugar, and chairman, Lakshya Strategic Consultants Ltd, said, “This year at least 24 million tonnes of sugar production is expected against the domestic demand of 22.5 millios tonnes, i.e. 1.5 million tonnes excess sugar will be available in the market.”
“Presently, due to the import 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. The government should take immediate measures to curb the imports and save the domestic industry from losing its interest in the sector,” he added.
Ramababu said, “In Uttar Pradesh, due to a high State Advised Price (SAP) of Rs 280 per quintal, the manufacturing cost of sugar is around Rs 36,000 per tonne, while the market price of sugar is around Rs 32,000–Rs 33,000 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 3,000 crore this year alone.”
“The government should also consider that the price of sugar has not increased so much in the last 10 years as compared to other food items, whereas the production cost, including that of raw material, has increased drastically. The marginal rise in sugar prices would not affect the consumer so much as only 30 per cent of the total production is used by the housewives directly, whereas rest of the production goes to the bulk users,” he added.
On an average, a family uses maximum 4-5kg 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.
Earlier, the import duty was 60 per cent. In 2009, when there was shortage of sugar, it was reduced to increase the import and meet the domestic demand. That is not the case this year. However, in a scenario when the indigenous production is more than sufficient to meet the demand, the 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.
