- India is considering cutting or scrapping its 100% import duty on sugar to boost supplies and contain prices
- El Niño and below-normal monsoon rainfall threaten sugarcane cultivation and global sugar supply
- Sugar prices in Maharashtra hit a record Rs 46 per kilogram amid rising demand in the festive season
India is considering cutting or scrapping its 100% import duty on sugar as the government looks to boost domestic supplies and contain prices that have climbed to record levels, according to people familiar with the matter cited by Bloomberg.
Officials are weighing proposals to lower the levy on inbound sugar shipments ahead of the festive season, when domestic consumption typically rises sharply. The move could help ease supply pressures and contain further price increases.
El Niño Adds To Supply Concerns
The deliberations come as concerns over global sugar supplies grow, with the El Niño weather phenomenon threatening harvests and recently pushing New York sugar futures to their highest level in about a year.
ALSO READ: Dalmia Bharat Sugar Q1 Results: Profit Plummets 80% As Revenue Slips, Margins Contract
India is also facing weather-related risks. Monsoon rainfall, which is critical for sugarcane cultivation, is running 13% below normal, according to the India Meteorological Department. The deficit had exceeded 40% towards the end of June, raising concerns over crop development and sowing.
Sugar Prices Hit Record
Ex-mill sugar prices in Maharashtra, India's leading sugar-producing state, recently touched around Rs Rs 46 per kilogram, the highest on record, according to the Indian Sugar and Bio-energy Manufacturers Association (ISMA).
The timing is particularly important as sugar consumption typically peaks between late August and January, driven by demand for traditional sweets, processed foods and beverages during the festival season.
To strengthen supplies, factories in Uttar Pradesh and Maharashtra are planning to begin sugarcane crushing 10-15 days earlier than the usual early-November start, following consultations with the food ministry.
The government has also imposed stock limits on traders to discourage hoarding and contain inflationary pressures.
India May Turn To Imports
India, the world's second-largest sugar producer, does not typically rely on imports for domestic consumption. The country last imported substantial volumes of sugar in 2017-18, according to ISMA data.
As of August 14, sugarcane had been planted across 5.83 million hectares, slightly below the area covered at the same time last year, according to the agriculture ministry.
A cut in the import duty would therefore mark a significant policy shift, potentially allowing overseas supplies to supplement domestic availability as the country heads into its peak sugar-demand season.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
