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Run up to the Budget: Sugar sector
Duty Structure
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Product
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Excise Duty
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Customs Duty
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Levy Sugar
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Rs 38 per quintal
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60%
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Free Sale Sugar
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Rs 71 per quintal
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60%
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Molasses
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Rs 500 per ton
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- India is the largest consumer and the second
largest producer of sugar in the world.
- Sugar is a controlled commodity under the Essential
Commodities Act, 1955 & Sugar Control Order, 1966.
- At the beginning of the each crushing season
the Government fixes the statutory minimum price (SMP) for sugarcane, which
is the main input for sugar.
- Each producer has to surrender a fixed percentage
of its produce to Government as Levy sugar for distribution through Public
Distribution System. Levy sugar price is fixed by the Government and is generally
lower than the cost of production.
- The current rate of Levy Sugar obligation is
30%. Government has already announced reduction of Levy obligation from 30%
to 15% w.e.f. 01/04/01. With this announcement, prices of sugar are witnessing
a downward trend in the open market.
- The domestic prices of sugar are higher than
that prevailing in the international market. As a result, imports of sugar
are rising.
Pre-budget (FY 2000-01) Wish List from the industry
- The CII has demanded complete decontrol of sugar
produced in 2001-02. Government should procure sugar for PDS or targeted PDS
through an open tender.
- Till decontrol is effected, same levy obligations
should be imposed on imported sugar as is applicable on domestically manufactured
sugar. This would provide an equal opportunity for Indian industry.
- The industry has asked for decontrolling of
molasses distribution and ensuring uniformity against State policies on this
co-product.
Other demands include:
- Developing of a futures market for sugar.
- Setting up of a Sugar Cane Pricing Board.
- Abolishing of internal trade barriers like entry
tax and export passes.
Expectations from the budget
Measures to decontrol the sugar industry are expected
in this budget.
Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001
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