Local Indian sugar mills, threatened by cheap imports, especially from neighbouring Pakistan, have asked for an increase in the duty.—File Photo

NEW DELHI: India has no immediate plans to raise the import tax on sugar, two government sources said on Monday, casting aside industry’s calls for raising the duty to protect mills from cheap overseas supplies when the country already has a surplus.

“We have no plans to raise the duty for now but we are keeping an eye on prices, imports and production and we will raise it if there’s any need,” one of the sources said.

Currently, domestic prices are stable and supplies are comfortable, the second source said.

On Dec. 13, Food Minster K. V. Thomas said the government was likely to decide on raising the tax within 15 days.

India, the world’s top sugar consumer and the second-biggest producer after Brazil, imposes a 10 per cent tax on sugar imports. Local sugar mills, threatened by cheap imports, especially from neighbouring Pakistan, have asked for an increase in the duty.

Pakistan allowed exports of 500,000 tonnes of sugar in 2012 and Indian traders immediately sealed some deals for small amounts despite a domestic surplus, seeking to capitalise on lower prices in Pakistan and higher rates in India.

Pakistan sugar is currently available at around $505 per tonne free on board (FOB). Domestic futures prices equate to almost $589 per tonne ex-warehouse.

Expectations New Delhi might raise the duty had pushed domestic sugar futures higher early last week.

But overall since the beginning of December, spot prices in Kolhapur, the hub of sugar trade in the biggest producing state of Maharashtra, have fallen more than five per cent while futures have eased about one per cent.

India has been a net exporter of sugar in the last two crop years but had to import in 2009/10, sending international prices spiraling higher.

India is likely to produce about 24 million tonnes in 2012/13, down from 26 million tonnes in the previous year, the Indian Sugar Mills Association, a producers’ body, estimates.

The output forecast is higher than about 22 million tonnes of local consumption.  On Oct. 1, 2012, when the current season began, carryover stocks from the previous season were at about 6.5 million tonnes. Surplus output may help India export sugar for the third straight year in 2012/13.

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