Centre mulls one-time waiver to allow sale of imported raw sugar

The UPA government is considering handing out a one-time waiver to importers holding lakhs of tonnes of duty-free raw sugar in Kandla...

The UPA government is considering handing out a one-time waiver to importers holding lakhs of tonnes of duty-free raw sugar in Kandla and other ports to sell it to other millers after finding itself in an awkward situation where the unprocessed commodity has not been lifted from the ports despite duty restrictions being eased almost a month ago.

With its back to the wall over rising prices,the government has been forced to consider the option even while knowing well that the consortium of Uttar Pradesh-based millers are now virtually blackmailing it so that they can sell the unprocessed sugar to millers based in Gujarat and Maharashtra at a tidy profit.

More than nine lakh tonnes of raw sugar stored in warehouses in Kandla port for several weeks now was expected to bring down escalating sugar prices after the government last month allowed the importers to process it in states outside of Uttar Pradesh,where it was originally destined.

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The raw sugar could not be transported to Uttar Pradesh after the Mayawati government banned its import into the state,saying the decision would enable better cane prices for farmers.

Last week,the matter was taken to the highest level when Agriculture Minister Sharad Pawar took a delegation of sugar importers to Prime Minister Manmohan Singh and held discussions. The delegation was then directed to meet the Prime Ministers Principal Secretary the next day,who then advised them to discuss further with the Finance Ministry.

What has put the government in a spot,however,is that the UP-based importers,primarily Bajaj Hindustan,Simbhaoli Sugars and Dhampur Sugars,who had originally imported the raw sugar at duty free rates are unable to work out profit sharing formula with Maharashtra and Gujarat based millers who were willing to process it.

Officials contended that it was not the governments job to get into how much profit was made by each side. It was not keen to make exceptions as the move can be cited as a precedent in future. The importers,on the other hand,cannot sell the raw sugar as the restrictions eased by the government last month only allows them to process it and not sell it.