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Sugar futures, high import duty vital, higher output certain this season, says trade body

The sugar market at New Bombay could be made as a major sugar trade centre like London and New York provided the government allows forward contracts or futures trading in sugar and streamline the duty structure.

Mohan Gurnani, president of Bombay Sugar Merchants Association, said that import duty of sugar should be increased substantially in order to provide a level-playing field for the domestic sugar factories with those of the exporting countries.

Besides subsidising sugar exports, the exporting countries impose duties ranging from 35 to 300 per cent on their sugar imports, he pointed out.

According to unofficial reports, imports of sugar which are under open general licence, have so far been 800,000 tonnes out of import contracts of 1.5 million tonnes.

The only solution to have a healthy sugar economy was to completely decontrol the industry with safety measures like monthly release mechanism and a buffer stock of about two million tonnes. The government should also consider forming a high-level committee comprising representatives of trade and industry for revival of the sugar economy and advise the authority to take timely decisions, he said.

Sugar production in the current 1998-99 season beginning October will be in the region of 15 million tonnes as compared to 12.85 million tonnes the previous season.

Describing the increased production as the first upswing phase in the sugar cycle, Gurnani said that Maharashtra's production alone went up by 400,000 tonnes in 1997-98 over the 1996-97 production.

Terming sugar as an inflation-free commodity as compared to other essential commodities whose prices have skyrocketed, Gurnani told the annual general meeting of the association that there was an urgent need to decontrol sugar economy through phasing out of levy sugar and lowering domestic duties like octroi and sales tax.

He said the Maharashtra government and the local self-government bodies like the Bombay Municipal Corporation have enhanced various levies and taxes to meet their own extravagant expenses and to bridge their budgetary deficits.

Gurnani said that sugar consumers today pay as much as Rs 30 per quintal towards various fiscal levies and taxes over and above the central excise duty payment of Rs 85 per quintal. Traders' margin in sugar is only about Rs 5 per quintal notwithstanding the different services they do.

He was in view that Bombay region should be treated at par with other cities like Calcutta. The Centre should allow the Maharashtra government to enhance the stocks-limit in this region comprising Thane and New Bombay to 5000 quintals from the present 1000 quintals, he demanded.

UNI

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