Financial Daily from THE HINDU group of publications
Tuesday, Jun 29, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Deals struck to import 7 lakh t raw sugar
Mumbai , June 28
CONTRACTS have been signed for import of at least seven lakh tonnes of for raw sugar during the past few days, trade sources have said.
Of this, about 1.5 lakh tonnes of raw sugar had already arrived at Kandla port.
Majority of imports were likely to come from Brazil, Cuba and Pakistan, sources said.
This is reportedly part of the United Progressive Alliance (UPA) Government's plan to import 20-25 lakh tonnes of raw sugar under the pretext of the it being used for processing and for re-export, the sources, who did not wish to be identified, said.
There is no customs duty applicable and raw sugar is being imported under advance licence scheme (ALS). And, there is no quantity limit on the volume being imported.
Import of raw sugar is viable because of the current price difference. The difference between landing cost and domestic price is about Rs 5,000 a tonne, the sources said.
"The plan to allow import of raw sugar is good for the industry if it is only for processing and re-export without any diversion to the domestic market," said Mr Kanhaiyalal Gidwani, member of MLC (Maharashtra).
Raw sugar is being imported as sugar production in the country has been affected this year (October 2003-September 2004). Sugar production, hit by lower cane output due to drought in Maharashtra, Tamil Nadu and Karnataka, is likely to be 140 lakh tonnes only. The production is seen hit next year also and, therefore, the mills, particularly in Maharashtra, are looking to raw sugar imports to utilise their capacity.
Within the sugar industry, the National Federation of Cooperative Sugar Factories Ltd is not averse to duty-free import of raw sugar, provided it is undertaken by the mills themselves under the actual user condition.
Raw as well as white sugar currently attract a basic customs duty of 60 per cent and a countervailing duty of Rs 850 per tonne, making imports unattractive in the normal course. But these duties are not applicable on raw sugar imported under ALS or Duty-Free Replenishment Certificate (DFRC) schemes.
Under advance licence, raw sugar imports are subject to the actual user condition, with the licence holders also obliged to export white sugar re-processed from the imported material. Entry 52 of the standard input-output norm (SION) permits duty-free import of 1.05 tonnes of raw sugar against a corresponding future obligation to export one tonne of white sugar.
On the other hand, the DFRC scheme allows imports on a post-facto basis, i.e., after exports have taken place. Further, the DFRC licence, which has a normal validity period of 18 months, is transferable and can be sold to third parties, including traders, for a consideration. Using this facility, many South-based mills, including Sakthi Sugars, Shree Renuka Sugars, Thiru Arooran Sugars and Bannari Amman Sugars, had earlier this imported over one lakh tonnes of raw sugar from Brazil, Australia and Thailand against their past exports of white sugar.
However, in its public notice dated November 29, 2002, the Directorate-General of Foreign Trade placed a prior import condition on all new DFRC licences issued under entry 52 of SION. Mills can no longer replenish the white sugar exported by them by importing raw sugar against new DFRC licences and reprocessing the same to white sugar. This has made the DFRC licences virtually the same as ALS, except that the latter are not transferable.
This has now come in handy for the importers, who have 18 months time to process and re-export the raw sugar as white sugar.
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