PR Resource – Muarateweh.net

(Bloomberg) – India, the world’s biggest consumer of sugar, permitted duty free imports of the sweetener for sale domestically to prevent an increase in prices as output slumps.

Mills can purchase raw sugar abroad provided they export a similar quantity after processing within two years, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., said in a phone interview in Mumbai.

Purchases by the South Asian country may help support a rally that’s made sugar the second-best performing agricultural commodity this year. Prices in New York climbed to more than a three-month high on Jan. 26 on speculation that India will buy the sweetener for the first time since 2006.

��India is a key driver of the price for the global season 2008-09 as a result of the drop in production,” said Leonardo Bichara Rocha, an economist with the London-based International Sugar Organization, or ISO, said in a phone interview yesterday.

Raw-sugar futures for March delivery climbed 0.4 percent to 12.64 cents a pound in after-hours trading on ICE Futures U.S., ending a three-day decline. The most-active contract gained 16 percent in the five weeks ended Jan. 23.

“We have to ensure our food security,” Trade Minister Kamal Nath said in an interview at Davos, Switzerland. There will be no restrictions on the amount that can be imported, he said.

The trade ministry may notify the changes in the rules in a day or two, federation�¢â‚�™s Kumar said.

India’s sugar output may total 18 million metric tons in the year to Sept. 30, down from 20 million tons forecast in December, Farm Minister Sharad Pawar said last week. Production last year was 26.4 million tons.

Global Estimate

The ISO will next month revise its estimate of global sugar output for the year ending Sept. 30 to account for the drop in India’s production, Rocha said.

World production will decline 3.8 percent to 162.26 million tons this year, the first since 2004-05, the ISO said on Nov. 11. That leaves a deficit of 3.6 million tons, the agency said.

Currently, duty-free imports of raw sugar are allowed into India only if the same cargo is refined and sold overseas again. Sweetener bought for sale locally attracts a 60 percent duty.

Under new rules, there’ll be no restriction on the quantity mills can buy abroad under the so-called advance license scheme. Importers who fail to re-export within two years will need to pay the tax. Mills will be allowed to buy from producers close to the ports to reduce costs of shipments.

Import Forecast

India may import between 1 million and 1.5 million tons for sale locally and abroad after refining, said S.L. Jain, director general of the Indian Sugar Mills Association.

Indian officials discussed the proposal at a meeting on Jan. 28 and no decision was made, government spokesman Umakant Mishra said at a briefing in New Delhi yesterday. That led to raw-sugar futures for March delivery falling 2.2 percent to 12.59 cents a pound yesterday, the most since Jan. 12.

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Source:
Thomas Kutty Abraham and Edward Evans