India May Raise Import Duty on White Sugar, Scrap Tax on Raw

India, the world’s largest sugar consumer, may double the import tax on refined variety to 20 percent and abolish a levy on raw sweetener to protect domestic producers, Food Minister K.V. Thomas said.

A decision will be taken in the next 10 to 15 days and the tax changes will require cabinet approval, Thomas told reporters in New Delhi today. Raw and white sugar imports currently attract 10 percent duty.

Production in India, the world’s second-largest sugar maker, is set to decline for the first time in four years, stoking a 21 percent rally in domestic prices since the end of May after dry weather hurt crop. The rally has boosted prospects for imports and halted exports of refined sugar. Output is forecast to fall 10 percent to 23.5 million metric tons in the year that started Oct. 1, Thomas said on Oct. 9.

“While not much of white sugar is expected to come in, raw sugar imports will increase if the government scraps the duty,” G.S.C. Rao, chief executive officer of Simbhaoli Sugar Mills Ltd. (SBSM), said by phone. “The mills in Maharashtra and Karnataka will benefit more with this move as they will have less cane this year.”

Imported raw sugar may become 2,000 rupees ($37.70) a ton cheaper than local supplies if the tax is withdrawn, Rao said.

Raw sugar for delivery in March fell 0.5 percent to 20.01 cents a pound on ICE Futures U.S. at 1:52 p.m. in Mumbai. The contract for November delivery on the National Commodity & Derivatives Exchange of India Ltd. fell 0.7 percent to 3,320 rupees per 100 kilograms.

The rally in local prices and concerns about lower cane yields in Maharashtra and Karnataka states, the biggest and third-largest producers, have halted exports and made imports viable, Narendra Murkumbi, managing director of Shree Renuka Sugars Ltd. (SHRS), said on Oct. 9.

To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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