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Sector Focus : Sugar

Sugar: State of the industry (2000-01)

• During the 2000-01 sugar season (October to September), demand for sugar is expected to increase by 3.2 per cent, in line with the historical growth rates.
• At present, the sugar inventory in the country is at 100 lakh tonnes. However, sugar production is expected to decline in 2000-01, as compared with that in 1999-2000. Sugar production is expected to decline as sugar producers are expected to pay arrears to sugarcane farmers, instead of making additional purchases. Production is also likely to be affected by adverse weather conditions in Madhya Pradesh, Maharashtra and Gujarat.
• During the October-March 2000-01 period, domestic prices are expected to remain stable.
• Up to April 2001, international prices are expected to remain stable or could decline marginally, due to surplus supply of sugar from India and Thailand, in the international market. However, prices are expected to increase after April 2001.
• During the April-December 2000 period, margins of sugar producers increased marginally. However, margins are expected to remain stable or decline marginally in April-March 2000-01. The co-operative sector in the sugar industry is expected to have cash flow problems, due to a reduction in levy quota.

Decontrol of sugarcane prices: The industry expects sugarcane prices to be decontrolled. It expects sugarcane prices to be linked to the sugar prices in the market.

Sugar: Excise duty

	Feb 1999			Feb 2000
	Basic	AED	Total	Basic	AED	Total
Levy sugar (Rs/quintal)	17	21	38*	17	21	38
Free sale sugar (Rs/quintal)	34	37	71*	34	37	71
Molasses			Rs 50 per quintal			Rs 50 per quintal

AED: Additional excise duty * In addition, a cess of Rs 14 per quintal is to levied under the Sugar Cess Act, 1982 with effect from 1st November 1982
In the 1999-2000 Union Budget, MODVAT credit was enhanced from 95 per cent of the excise duty paid on inputs to 100 per cent
Source: Central Excise and Customs Tariff

Sugar: Customs duty

(per cent)
1994-95	0
1995-96	0
1996-97	0
1997-98	0
May-98	5
Jan-99	20
Feb-991	27.5
Dec 99	40
Jan 2000	60

Includes a 10 per cent surcharge levied on the basic customs duty. Notes

1. In addition, a CVD of Rs 85 per quintal is levied from May-1998.
2. Special additional customs duty of 4 per cent are not levied on sugar imports.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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