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Journalism of Courage
NEW DELHI, JAN 14: The Centre has decided to increase the basic customs duty on import of sugar from five to 20 per cent ad-valorem. But the additional duty of customs per tonne remained unchanged at Rs 850. This increase in the customs duty is effective from January 14.
The decision has been taken due to the declining trend in the international prices of sugar, continual inflow of imports against huge export subsidy given by the exporting country, huge carryover stock of sugar in the country and the need to provide adequate level of protection to the domestic producers.
The sugar industry was lobbying for increasing the basic custom duty to 50 per cent ad-valorem as this, according to them, would ensure a level playing field.
Industry sources claimed that due to low level of import duty in the country, countries like Pakistan, European Union, Brazil, Thailand and Mexico are dumping sugar in India. The exports from these countries are backed by massive export subsidies. In rupee equivalent, these subsidies work out to about Rs 23 per kg in case of European Union, Rs 6 per kg in case of Mexico, Rs 4.50 per kg in case of Pakistan, Rs 4 per kg in case of Thailand and Rs 3 per kg in case of Brazil. This has resulted in the landed cost of imported sugar being cheaper than domestic sugar.
Industry sources also claimed that the cost of sugar production in the country is less than in other countries. This is reflected in the comparative open market prices in India and these countries. The present open market price in India is Rs 15 per kg on an average while in rupee equivalent, it is Rs 60 per kg in European Union, Rs 20 per kg in Mexico and Pakistan, Rs 19 per kg in Brazil and Rs 18 per kg in Thailand.
These countries have also imposed heavy import duty on sugar like 300 per cent in case of European Union, 173 per cent in case of Mexico, 104 per cent in case of Thailand, 55 per cent in case of Brazil and 36 per cent in case of Pakistan. Except Pakistan, all these countries have imposed import duty beyond the maximum limit permissible by WTO.
According to the WTO norms, EU is permitted to impose import duty to a maximum limit of 160 per cent. In case of Mexico, this maximum permissible limit is 156 per cent, in case of Thailand it is 94 per cent and in case of Brazil it is 35 per cent. Industry sources argued that India can increase import duty on sugar to the maximum permissible limit allowed by WTO which is 150 per cent.
Industry sources claimed that actual imports till date stand at 11 lakh tonne causing an outflow of Rs 1,430 crore in terms of foreign exchange. Additional seven lakh tonne of imports are also likely to take place. But according to government sources, the total imports from April to November, 1998 are only 5.48 lakh tonne.
Currently, the levy sugar price is Rs 10.22 per kg while the ex-factory sugar price is Rs 13.20 per kg. The sugar industry realises this loss from the 60 per cent free sale quota. The average open market sale price is Rs 15 per kg. The release mechanism for free sale is controlled by the government in every quarter.
As there has been no significant increase in the release quota, the market price is almost stable at this level, despite the landed cost of imported sugar being about 280 per tonne inclusive of freight cost of about 30 per cent. Thus the cost of imported sugar works out to Rs 11.90 per kg.
