No urgency for sugar import as demand falls

Published on : March 07, 2017 Topic : Business

India's sugar scene seems to be stabilising, with a fall in demand and estimates here remaining low for coming months. As a result, say sources, the government is not in a rush to reduce the import duty.

The production estimate was further reduced by the Indian Sugar Mills Association (Isma) at a meeting on Monday, from 21.3 million tonnes to 20.3 mt. Their original estimate for sugar season 2016-17 (October-September) was 23.5 mt. Demand has also been falling and consumption estimates have been lowered to 23.8 mt.

T Sarita Reddy, president of Isma, told this newspaper: "While production has been revised lower, demand is falling. As a result, government officials we met concurred with the industry view that there is no need to rush to allow import, as the country has enough (stock) to also meet two months' demand for the next season."

Prices have also been stable for the past month, adding to the rationale for not hastening on import.

After demonetisation, Isma lowered its consumption estimate to 24.8 mt a month before. And, at Monday's meet to 23.8 mt.

It estimates the coming season (from October 2017) would see much higher production, around 25 mt; also, the season would start with carryforward stock of 4-4.2 mt, enough to take care of two months' demand.

Reddy added: "Mills from Southern India also made a separate representation about their debt issues in the wake of drought the area has faced. The government assured them it would favourably consider the debt restructuring issue and release the balance sugar subsidy amount by the end of the month."

From April, the government will also not provide a subsidy for sugar for the Public Distribution System (PDS) to states; this could raise the price at ration shops, leading to a probable fall in demand. "We haven't taken that into account on consumption," said Reddy.

Adding: Wwe will again meet in May to review the production and consumption pattern, and present the scene to the government."

Source: Business Standard
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