To avoid dumping of sugar in the domestic market, the government is mulling raising import duty on white sugar and retain the levy at 10 per cent on raw sugar for the next three months.
Currently, import duty on white and raw sugar is 10 per cent. “There is a case to increase import duty on white sugar from 10 per cent to avoid flooding of white sugar in the domestic market. We are working on a proposal,” a senior government official said.
However, the import duty on raw sugar should be in place for at least next three months to avoid large scale imports, he said.
A final call on this issue would be taken by the Finance Ministry, he added.
The hike in import duty on white sugar is necessary as large imports could dampen domestic prices, hitting margins of Indian mills and further affecting cane payment to farmers, the official said.
The ex-mill rate of sugar in the country has declined by Rs 200 to Rs 3,260 per quintal in last few days on sufficient supply.
Currently, white sugar is being imported mostly from neighbouring Pakistan as Indian prices are higher.
Sugar production in the country is estimated to be 26 million tonnes in this year, higher than the annual demand of 22 million tonnes.