Sugar imports lose appeal as domestic prices plunge below import parity

Pune: As domestic sugar prices continue to plummet, the appeal of importing 1 million tonnes of raw sugar to stabilize local prices is waning. With importers now facing prices that are pricier than local supplies, the import parity for refiners has been significantly eroded. Ex-mill sugar prices have plummeted to ₹44-50 a kg from around ₹65 in recent weeks, across various states.

Despite port-based refineries committing to import approximately 260,000 tonnes, the domestic market has only seen a trickle of sugar imports, according to industry officials. The situation seems to be pushing refiners to wait for local prices to rise to the level of import parity rather than incurring losses while selling. The challenges for imported sugar have been compounded by rising international prices, while domestic prices have fallen.

A prominent sugar importer noted that the imported sugar that has been sold and is currently at ports will eventually move inland. The central government met with sugar importers on Monday, urging them to increase imports. Last week, the government extended the window for the application of sugar imported under the advanced authorisation scheme to a one-time Tariff Rate Quota scheme, allowing port-based refineries to sell their processed produce in the domestic market under a specified quota.

The cost of white sugar made from imported raw materials now exceeds ₹55/kg, excluding logistics costs, as stated by another sugar importer. Domestic ex-mill sugar prices have dropped to ₹45-46/kg in Maharashtra and ₹48-50/kg in Uttar Pradesh. The only way to sell imported sugar is if there is parity in prices. Moreover, factory-level sugar prices have begun to rise since Monday, as a prominent sugar industry leader pointed out the fear of government action under the Essential Commodities Act and raids on shops has disturbed the supply chain, negatively impacting sugar prices.