Indian Govt axes import duty on 1 million tonnes white sugar

by Dave

When I was in India in late Jan/Feb, I met officials at the State Trading Corporation. I was surprised to find out that imports of sugar when required do not happen directly with Brazilian companies/ who have capacity to spare but through brokers in Europe/Middle East.
An example of language and cultural barriers at work.

I had outlined this problem area in a post last year on uncertainty avoidance.
The example I gave was in a potential sugar deal – where the Brazilian side refused to send samples. At some point there Brazilian exporters will need to directly deal with Indian counterparts. These demand/supply shortfalls are bound to persist into the future as India gets richer and per capita sugar consumption rises.

Economy and Politics –

The Union government will remove a 60% import duty on up to 1 million tonnes of white sugar for the next four months, government and trade sources said, and will also drop a requirement that raw sugar only be imported for re-export.
The Cabinet decision comes two months after the world’s biggest consumer of the sweetener waived tariffs on raw sugar imports, a response to a smaller-than-expected domestic crop.

“It has been decided that both white sugar imports and waiving the export obligation of imports of raw sugar will remain in vogue till 31 July,” a senior trade official told Reuters, requesting anonymity because the information isn’t public.
The measures, which could boost global prices in a market already in a steep deficit, require formal approval from the Election Commission, which guards against populist moves meant to win votes.

Three state-run trading firms and a farmers’ cooperative – the State Trading Corp of India Ltd, MMTC , PEC and National Agriculture Cooperative Marketing Federation of India (NAFED) – would be allowed to import up to one million tonnes of white sugar tax-free, a top government official said.

Indian mills have so far contracted to import about one million tonnes of raws and could buy another 500,000-700,000 tonnes before the end of the season in September, said Kuwadia.

“Raw sugar imports are anyway favoured as it is cheaper at $270-$280 per tonne than white sugar which is available at $360-$390 per tonne,” he said.