The Food Ministry is contemplating various options including quantitative restriction and duty on outbound shipments on sugar, in order to check exports. The ministry is pondering over decisions like putting a cap on exports at 35 lakh tonnes for this season, imposing export duty and abolishing import duty. Currently, there is 10% duty on sugar import. The Food Ministry is giving consideration to these directions on account of rising prices of sugar in the retail market which is ruling at around Rs 37-38 level. This additional rise by Rs3/kg is on concern that deficient rains might affect sugarcane crop.
Recently the ministry had made an extra allocation of nearly 300,000 tonnes for sugar sale in the open market during this quarter in order to put a cap on sugar prices and to ensure that prices do not rise further ahead of festival season.
The sugar exports were freed and put under the Open General License (OGL) in May. Prior to that, in the 2011-12 marketing year (October-September) period, the government had allowed two million tonnes of exports.
India is the world's second-largest producer of sugar and the production is estimated at 26 million tonnes in 2011-12 against 22 million tonnes of annual domestic demand. The output is estimated to decline to 25 million tonnes in the next marketing year starting October 2012.
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