In order to curb the inflow of cheaper sweetener, the government has decided to hike the import duty on sugar to 40 percent from the current 15 percent. The move is likely to increase the sugar prices up to Rs 60 per quintal in the country. Besides, the government will provide additional interest-free loan of Rs 4,400 crore to cash-starved sugar mills to make payments to cane farmers. The decision was taken after a high-level meeting attended by various ministers including Food Minister Ram Vilas Paswan and Commerce & Industries Minister Nirmala Sitharaman among others.
Food Minister Ram Vilas Paswan also announced that the subsidy on raw sugar exports would be extended till September 2014. Furthermore, mandatory blending of ethanol (a by-product of sugar) with petrol was also enhanced to 10 percent as against 5 percent at present. However, Food Minister cleared that all these decisions were subject to the sugar industry's guarantee that it would clear all arrears estimated at around Rs11,000 crore. The government’s latest decision is likely to provide impetus to Indian sugar industry through making imports costlier and improving the liquidity of sugar mills.
India, the second largest producer of sugarcane after Brazil, holds about 5 million hectares of land under sugarcane with an average yield of around 70 tonne per hectare. India produced 25.14 million tonnes of sugar in the crop season ended September 30, 2013, almost 4.5% less than the previous year's because of low rainfall in Maharashtra, Karnataka and Tamil Nadu in 2012. The Indian Sugar Mills Association (ISMA) has estimated Indian sugar production at 24 million tonnes for 2013-14.