As a precautionary measure, the government has abolished import duty on sugar till June even as the country's domestic output is set to exceed domestic demand and mills are exporting the sweetener.
According to a notification issued by the Central Board of Excise and Customs dated April 15, the import duty on sugar has been brought down to zero for raw and refined varieties till June 30.
The temporary measure would help alleviate any unforeseen shortage considering that sugarcane crushing season almost ends by June and the actual sugar output for the ongoing 2010 -11 season, which runs from October-September, would be known by then.
Sugar import was allowed duty-free till March. Since the duty-free notification has lapsed on March 31, the duty automatically reverted back to 60 per cent from April 1.
Import duty on sugar was abolished in early 2009 to boost domestic supply in view of the production dip in the 2008-09 and 2009-10 sugar year. The country had imported about six million tonnes of sugar to meet the shortfall.
Sugar production in India, the world's second largest producer, had fallen to 14.7 million tonnes in 2008-09 against the annual domestic demand of 22 million tonnes. In 2009-10, the output improved to 19 million tonnes, but was still short of the actual demand.
However, in the current sugar year, the production is expected to outstrip demand at 24.5 million tonnes and the country has started exporting the sweetener.
Recently, the government allowed export of 5,00,000 tonnes of sugar under the open general licence (OGL) scheme.
The domestic prices have also softened to Rs 30-32 per kg in the national capital from nearly Rs 50 a kg in the middle of January 2010.