Sugar mills in South India surrender most of their import quota

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A farmer in India's Maharashtra state transports sugarcane. Photo/IAC

Sugar mills from South India are surrendering their raw sugar import quotas, as imports are unviable and the deadline not practical.

On the last day for surrendering the quotas allocated to them with a 0.5 per cent penalty, a number of mills have opted out of imports. At least one-third of the 3-lakh tonnes of raw sugar permitted to be imported through a 7 September order by the Exim Facilitation Committee are being surrendered.

A major portion of this will be by mills in Tamil Nadu followed by those in Karnataka.

To manage the huge shortfall in sugar production anticipated for the 2017-18 season in Tamil Nadu, the government had allowed an import of 3-lakh tonnes at an import duty of 25 per cent.

The imports were permitted through ports in Tamil Nadu and Karnataka, which got the lion’s share, and some quantity was to come through Andhra Pradesh and Maharashtra.

Short deadlines to complete the import formalities, availability of vessels, congestion at ports, and voyage time have rendered imports non-feasible.

Mills in Tamil Nadu were allowed about 1.40-lakh tonnes of import; Karnataka 1.10-lakh tonnes; Andhra Pradesh 34,000 tonnes; and Maharashtra 5,900 tonnes.

Tamil Nadu mills, which are staring at just about 20-30 per cent of capacity utilisation due to sugarcane shortage, were hoping this would provide some relief. But more than half the import quota allowed for the State was being surrendered. Karnataka mills are likely to surrender about 20-25 per cent, sources said.

When imports were allowed a couple of weeks back, sugar was selling at about Rs.38 a kg, and mills estimated they would be able to turn a profit of about Rs.1-1.50 a kg on the processed raw sugar. But sugar prices are now down to Rs.36.50 a kg. Besides, raw sugar prices are increasing, in addition to Indian rupee moving up to Rs.65 against the dollar compared with Rs.63 earlier.

Prashant has worked in the publishing industry for 17 years. His keen interest in commodities developed while working for organisations such as like Thomson Reuters, Wolters Kluwer & McGraw-Hill eventually brought him here. In his free time, Prashant consults with businesses in the digital space.

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