The Indian government has asked bulk users to source imported sugar from refiners rather than buying from domestic mills if they want to keep more than 15 days of their requirement. The decision is likely to “strike a balance” between the interests of bulk consumers and maintaining stability in the market.
The government has relaxed the existing 15-day stockholding limit for bulk consumers to 30 days, provided the quantity of stock held beyond 15 days limit shall be sourced exclusively from sugar imported under the Advance Authorisation Scheme (AAS) and Tariff Rate Quota (TRQ), the Food Ministry said in a statement on Friday. The stockholding limit for purchase from the open market shall remain unchanged and will be restricted to 15 days’ of consumption only, it said.
“The measure is intended to strike a balance between the interests of bulk consumers and the need to maintain stability in the domestic sugar market. It will provide greater operational flexibility to genuine industrial consumers during the upcoming festival season while ensuring that additional stocks are sourced from imported sugar rather than placing undue pressure on domestic stocks,” the Ministry said.
Bulk users plea
Currently, bulk consumers, who are defined as those using over 10 tonnes of sugar per month as raw material for their production, are permitted to hold sugar stock for a period not exceeding 15 days of their consumption. This means if some one having a monthly consumption of 100 tonnes can keep maximum 50 tonnes at any point of time.
However, after the relaxation, such bulk user may keep 50 tonnes of sugar sourced from domestic factories and additional 50 tonnes from refiners, who had imported raw sugar at zero duty under AAS, TRQ schemes.
The government has said that at a recent consultation meeting, the bulk consumers had represented that the existing limit should be enhanced in view of the upcoming festivals. They had suggested that they should be permitted to directly source sugar from importers to ensure uninterrupted availability of the sweetener for industrial consumption without adversely affecting domestic supplies.
Weekly stock disclosure
Apart from relaxation for bulk users, the government has also put in place a mechanism for the declaration and weekly disclosure of sugar stocks every Friday by bulk consumers through the Department of Food and Public Distribution’s online portal.
The ministry also said that retail sugar prices have declined by around 10 per cent from their peak (₹65 per Kg in August to ₹58.50 per Kg). However, ex-mill prices have already declined by nearly 25 per cent during the same period. Pointing out that the slower decline in retail prices indicates the benefit of the reduction in ex-mill prices not yet been fully transmitted through the supply chain to the consumer, the ministry told sugar industry representatives also to persuade their dealers to achieve the objective, sources said.
In a joint meeting held with representatives of Indian Sugar & Bio-Energy Manufacturers Association, the National Federation of Cooperative Sugar Factories and All India Sugar Trade Association on Friday, Food Secretary Sanjeev Chopra underlined that the reduction in ex-mill prices has not yet been reflected fully in retail prices, the ministry said.
The government also made a strong appeal to the sugar trade, wholesalers and retailers to immediately pass on the benefit of the significant reduction in ex-mill sugar prices to consumers, emphasising that the decline in retail prices must keep pace with the correction already achieved at the mill level. It called upon the entire sugar value chain to collectively ensure that sugar and sugar-based products remain affordable and within the reach of consumers during the forthcoming festivals.
The Government will continue to closely monitor the availability and prices of sugar in the domestic market and take appropriate measures, as necessary, to ensure adequate availability of sugar to consumers as well as the requirements of the food processing and other industries.
Retail prices of sugar are ruling below ₹60 a kg with the all-India average price at ₹58.55. Until last week, prices were around ₹60 a kg. Wholesale prices have dropped to levels of ₹5,000 a quintal and below. Mill-level prices are ruling at ₹4,300-4,550 a quintal, lower by at least ₹200 from a week ago.
In the global market, raw sugar futures for delivery quoted lower at 17.52 US cents a pound ($389 a tonne), while spot prices were 17.43 cents ($387). In London, white sugar futures ruled at $509.30 a tonne.