Sugar prices stayed nearly steady in the key physical markets of Mumbai, Delhi and Muzaffarnagar on Monday amid selling pressure increased due to GST. The GST council has announced 5 percent tax on sugar in the taxation system scheduled to be kicked in from July.
Presently, sugar attracts only Rs. 71 per quintal as excise duty at mill gate and Rs. 124 as cess. The existing excise duty is nearly 2 percent of the current mill gate prices, but it will vary in GST regime as per the movement in prices. That’s the reason sugar traders held a one-day strike on last Thursday to protest 5 percent tax on sugar in GST system.
As per the trader sources, current demand for the sweetener is down while selling pressure is mounting.
Mean while, sugar miller have demanded the government to increase duty on raw sugar to restrict imports as international prices of the sweetener are down.
It should be noted that sugar attracts 40 percent import duty currently and traders were previously urging the government to lower the duty to increase supply from overseas as measure to keep prices under control as sugar output is considerably down this year in the country.
However, the government kept the duty unchanged and allowed import of 5 lakh tonnes raw sugar duty free. As per the millers, in addition to the import of nearly 5 lakh tonnes of raw sugar allowed by the central government, nearly 3 lakh tonnes of raw sugar is on its way to the country as international raw sugar prices have crashed.
ISMA president T Sarita Reddy wrote in the letter that "another 2.96 lakh tonnes of raw sugar has been loaded in Brazil from June 1 and has either sailed or will be sailing from Brazilian ports by June 15 for India". The millers body has urged the government to increase import duty on sugar to 60 percent.
According to Bombay Sugar Merchant Association rates, S-grade sugar was priced at Rs. 3,782-3,881/100kg and M-grade at Rs.3,842-4,022/100kg in Mumbai.
Naka delivery rates for S-grade sugar were at Rs. 3,780-3,815/100kg and for M-grade sugar at Rs. 3,820-3,915/100kg.
Kolhapur ex-mill rates for S-grade sugar were at Rs. 3,650-3,710/100kg and M-grade at Rs. 3,710-3,810/100kg.
Arrivals were around 29-30 truck loads while demand was estimated around 28-29 truck loads in Mumbai. Hence, supply exceeded demand which pressured on prices, said Girish Mehta, a local trader.
In Delhi, spot prices for M-grade sugar were offered at Rs. 3,850-3,940/100kg as ex-mill rates were around Rs. 3,530-3,645/100kg.
At Muzaffarnagar market, S-grade sugar was priced flat at Rs. 3,800/100kg and M-grade at Rs. 3,850/100kg.