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Sugar import duty increased to 40%; DFIA scheme, ethanol excise duty go
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Ashwani Maindola, New Delhi
April 30 , 2015
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The government, in a recent development, has announced a number of
measures for the sugar industry, these include import duty hike to 40%,
withdrawal of DFIA scheme and removal of excise duty on ethanol supplied
for blending.
Amongst these, import duty under the open general
licence (OGL) has been increased to 40% from the current 25%. This would
prevent any imports in case international prices of sugar were to
depress further, according to ministry of food.
Besides, the
Government of India has withdrawn Duty Free Import Authorisation (DFIA)
scheme. Under DFIA, exporters of sugar could import duty-free,
permissible quantities of raw sugar for subsequent processing and
disposal. To prevent leakage of sugar made from such duty-free imports
in the domestic markets, the DFIA scheme for sugar would be withdrawn,
the ministry added.
Similarly, the period for discharging Export
Obligations under the Advanced Authorisation Scheme for sugar would be
reduced to six months, so as to prevent any possibility of leakage into
domestic markets.
Also the government has allowed removal of
excise duty on ethanol supplied for blending. Presently 12.36% Central
Excise duty is levied. It has been decided that ethanol produced from
molasses generated during the next sugar season and supplied for ethanol
blending would be exempted from Excise duty and the price benefit would
be passed on to the sugar mills/distilleries.
The ministry of
food said that these measures would significantly improve the adverse
price sentiment in respect of sugar and improve the liquidity in the
industry, facilitating the clearing up of cane dues for farmers.
It
is pertinent to mention here that past four years have witnessed
continued overproduction of sugar as compared to domestic requirements.
This has depressed sugar prices, consequently the mills have been
constrained for liquidity and were facing difficulties in clearing cane
dues owed to farmers.
Further, this has affected the incomes of
50 million sugar cane farmers. Similar conditions of subdued prices
prevail in the global markets. The government has, from time to time,
provided financial assistance to the industry to overcome liquidity
constraints such as providing interest-free working capital loans and
incentives for raw sugar exports. However, due to adverse price
sentiment plaguing the sector, problems of cane dues persist. As on
March 31, 2015, the cane dues stood at Rs 20,099 crore, which are higher
than the previous year.
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