In a move, which would make imports unviable and may lead to jump in domestic sugar prices, government hiked the import duty on both raw and refined sugar to 25% from the existing 15%. The rise in cost, which ultimately would have to be borne by consumer, would definitely help revive the business of cash-starved mills that owe farmers around Rs 6,800 crore. However, this hike is way lower than the one reported earlier by Food Minister Ram Vilas Paswan, who in June, underscored that import duty could be raised to 40% from 15%, if mills pay farmers' dues, estimated at nearly Rs 50 billion.
Presently, sugar mills are facing cash crunch as domestic prices have slipped below the cost of production, ultimately hurting profitability. Currently, domestic sugar prices are ruling stable in the range of Rs 34-40 per kg in view of surplus stocks, as per the data maintained by the Consumer Affairs Ministry. Mills in Uttar Pradesh are selling sugar at Rs 30.50 per kg, while the cost of production remains at Rs 37 per kg. Similarly, mills in Maharashtra are selling the commodity at Rs 28.50 per kg as against the cost of production of Rs 31.
Despite this, in the current sugar year to September, India is likely to import just 30,000 tonnes compared with 680,000 tonnes a year earlier. The country in total consumes around 23 million tonnes of sugar annually.
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