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NEW DELHI, Feb 24 (Reuters): India probably made the right moves augmenting its dwindling sugar supplies to avoid being cornered like Pakistan and forced into the expensive refined white sugar market.
The world's largest sugar consumer, India has been importing raw sugar to bridge a supply shortfall after a poor cane crop.
Speculation has been rife that the government would cut import duties on white sugar from 60 per cent in next week's federal budget to facilitate imports.
But government officials and traders have been discounting the possibility because of timely rear-guard action.
India is the world's second-largest sugar producer behind Brazil but this year production is expected to fall 13 per cent from 13.8 million tonnes last year.
Traders say India had contracted for 1.1 million tonnes of raw sugar in the new season that began in October and would be looking for another one million tonnes in the remainder of the season. Last year it imported 550,000 tonnes of raw sugar.
Raw sugar imports are $30-$40 a tonne cheaper than white sugar but it also costs $10-$15 a tonne to refine the product.
The government, which controls the supply of sugar in India by allocating fixed quantities that can be sold by producers, relaxed the time for mills to export raw sugar imported under a license scheme, to 36 months after refining from 24 months.
Raw sugar also carries a 60 per cent duty if imported for domestic use but it is allowed to be brought in duty-free if there is a commitment to re- export it after refining within a fixed time-frame.
Analysts said that unlike Pakistan, there has been no panic reaction in India as measures like easing of norms for raw sugar imports had helped the refining industry and prevented high cost white sugar imports.
India and Pakistan are key drivers of global sugar demand after drought reduced the size of their crops.
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