India's sugar mills, refiners seen importing just half of duty-free quota

Mumbai: Indian sugar mills and refiners are set to import roughly half of the 1 million metric tons of duty-free raw sugar permitted by the government, according to industry officials. The world's largest consumer of sugar recently permitted duty-free imports until October 31 to counter record-high prices, which are expected to peak during the festival season when demand for traditional sweets typically surges.

However, domestic ex-mill prices have dropped by nearly 20% since last week's record high. Rahil Shaikh, managing director of MEIR Commodities India, a Mumbai-based trader, conveyed that imports appeared appealing last week when prices were strong and rising. But the recent sharp price decline has diminished the allure of imports for sugar mills.

Shaikh emphasized that the import margin is minimal and there is no assurance it will persist upon delivery, which is about two months away. The prospect of imports is unlikely to surpass 500,000 tons, with refineries likely to utilize the majority of the volume. Domestic supplies, expected to increase from mid-October, will be the primary supplier of sugar due to the start of the new crushing season.

Indian authorities have directed sugar mills to commence sugarcane crushing by October 15 to bolster supply. The government has only permitted the import of raw sugar, which must be processed before being sold domestically. There is a demand to allow duty-free imports of white sugar alongside raw sugar to swiftly enhance supply, as noted by the Mumbai-based dealer.