Best News Network

Govt announces import relief for edible oil; cut in sugar exports next



With retail inflation touching nearly an eight-month high of 7.79 per cent in April 2022, the government Tuesday exempted customs duty and agri cess on import of 2 million tonnes of soybean and sunflower oil per year and was looking at curbing sugar exports as anti-price rise measures.


The current effective duty on crude palm oil, crude soybean, and sunflower till now was 5.50 per cent, which will come down to almost zero after today’s reduction for the two oils up to a fixed quantity.





This is just after an unprecedented ban on wheat exports imposed on May 13, which has been further tightened over the week to ensure that the maximum amount of the grain stays within the country.


On sugar, sources said that India for the first time in six years plans to restrict exports at about 10 million tonnes to prevent a drawdown in its stocks and surge in domestic prices in the months to come.


The country, which is the world’s biggest sugar producer and the second biggest exporter, behind Brazil, has already contracted around 8.5 million tonnes of sugar in the 2021-22 season that started in October, of which some 7.1 million tonnes have been shipped till May 15 (see chart).


“The limited aim of the government is that by the time the 2021-22 sugar season ends in September, India will have adequate stocks to meet its three-month consumption requirement (till December). Otherwise it may have to import sugar, which will be embarrassing and inflationary,” a senior industry official aware of the move said.


He said with the current estimated production of 35.5 million tonnes, which is more than previous estimate of 31 million tonnes, the country will not have 6-6.5 million tonnes of closing stocks in hand by September 2022 after providing for ethanol blending, unless exports are capped at 10 million tonnes.


India per month consumes around 2-2.5 million tonnes of sugar.


“The limited objective of this move is to ensure that the country has adequate stocks at the end of the season and there is no need to import at high prices,” another official said.


He said that once exports reach 9 million tonnes, up from the contracted 8.5 million tonnes, the government might call for registrations from traders so that outbound flows can be tapped.


Market participants said that in the immediate aftermath of the ban, prices of sugar might soften by at best Rs 0.50 per kilogram before coming to their usual levels.


Average ex-mill price of S-grade sugar presently is around Rs 32-33 per kilogram while that of M-grade sugar is around Rs 34-35 per kg.


Shares of sugar companies like Shree Renuka Sugars Ltd tumbled by 14 per cent and Balrampur Chini Mills Ltd slumped 10 per cent on Tuesday on the news of plans to curb exports. Sugar futures traded in London added as much as 1 per cent.


“The move to limit the export of sugar to 10 million tonnes is not very surprising. It comes on the backdrop of rising inflation and is made to keep on the rising domestic food prices. This is in line with the centre’s decision of limiting the export of wheat. Limiting exports will impact the global sugar supply as India is the second-largest exporter of sugar after Brazil. However, it is too soon to say if this restriction will have an impact on the pricing in India,” D.R.E Reddy, CEO and Managing Partner, CRCL LLP said.


CRCL LLP is the largest domestically managed contractual food services company in India.


Meanwhile, on import duty on edible oils, agencies reported that the government is considering cutting an import tax on soybean and sunflower oils also to cool down prices.


The government as per news agency Bloomberg was deliberating on whether to reduce the agriculture infrastructure and development cess, which is currently 5 per cent, or abolish it.


A final decision may be taken this week, said the person, who asked not to be identified as the information is private, Bloomerg said.


In fact, since Feb’ 21, the Indian Government reduced the duty on edible oils six times to control the domestic prices. The last reduction was done in February 2022.


Since January 2020, the landed price (Carriage, Invoice and Freight, CIF) of RBD Palmolein in India has gone up by 132 per cent, Crude Palm Oil by 135 per cent, Soya by 131 per cent and Sunflower Oil by 163 per cent, due to hike in international prices and rupee depreciation by 7 per cent in last two years.


The local prices moved in tandem with increase in CIF prices of imported oils.


Edible oil prices in India, which relies on imports for 60 per cent of its needs, have surged this year along with international prices following Russia’s invasion of Ukraine that choked the supply of sunflower oil from the Black sea region.


Added to that was concern about production levels in Malaysia, and a recent surprise move by Indonesia to temporarily ban palm oil exports, before replacing it with a domestic sales quota. EoM
























Sugar exports (October to September)

Year

Exports (in million tonnes)

2016-17

0.05

2017-18

0.46

2018-19

3.8

2019-20

5.95

2020-21

7.1

2021-22*

8.5

*contracted till May 15 and around 7.1 million tonnes have been shipped out of the country

Source: Millers

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! NewsAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.