The Union Government in July 2013 hiked the import duty on sugar to 15 per cent from the present 10 per cent to restrain cheaper inflow of the sweetener into the country.
The hike in import duty is meant to stabilise sugar prices which in turn help the millers to make cane payments, which at present is estimated at 9000 crore Rupees.
The hike on the duty of raw and refined sugar imports, has come into effect from 8 July 2013.
The decision was taken followed with the representations by sugar co-operatives and farmers to hike the import duty as a pessimistic trend in realisations has not only hurt the millers but also the cane payments to farmers.
The sugar cooperatives on the other hand had demanded to make the hike to 30 percent and had urged government to Check imports under open general licence.
The sugar co-operative think that the inflow of cheaper sugar from countries such as Brazil and Pakistan was influencing the domestic prices. The recent de-control of sugar sales announced by the Centre has not helped the millers to clear up the cane dues as ample supplies in the market have kept the prices of sweetener for quite some time now.
The increase in imports is despite the domestic output estimated at around 24.5 million tonnes against the demand for 22.5 mt.
According to industry estimates, the opening sugar balance for the next season starting October is estimated at around 8 million tonnes. The other major concern is that millers are unable to export the surplus sugar as international prices are ruling lower than domestic prices.