Govt proposes 50 per cent customs duty on sugar import

Kathmandu, November 28

The government is mulling over hiking import duty on sugar to 50 per cent to support sugarcane farmers and prop up sugar price in the domestic market.

Arguing that domestic sugarcane farmers and their produce are likely to be adversely affected by the recent global decline in sugar price, the Ministry of Agricultural Development has urged the Ministry of Finance to hike customs duty on sugar with immediate effect. At present, the country levies only 15 per cent import duty on sugar. The MoAD’s move intends to discourage import of low-cost foreign sugar and prevent the price of domestically produced sugar from dropping significantly.

“Sugar price has been plummeting constantly in the global market, including in India. In such circumstances, domestic sugar mills may not purchase sugarcane from farmers if imported sugar is available at a cheaper rate in the market,” explained MoAD Secretary Suroj Pokhrel. He added that import duty hike on sugar would make foreign sugar costlier while promoting domestically produced sugar at the same time.

To meet part of the annual demand of 220,000 tonnes of sugar in the country, the government imports an average of 25,000 tonnes of sugar from India every year. However, the government had to import 50,000 tonnes of sugar in 2016-17 to control fluctuations in the price of sugar.

Moreover, India in July had also increased the import duty on sugar from 40 per cent to 50 per cent in a bid to safeguard domestic sugar industry following decline in sugar prices in the international market.

Maniratna Aryal, senior agriculture economist at MoAD, opined that hike in import duty on sugar was necessary as domestic sugar production could sustain the market demand.

“Sugar mills and farmers in the country are at odds over fixing reasonable price for sugarcane every year. A proper mechanism to fix sugarcane price and improve relationship between sugar mills and farmers will encourage farmers to grow sugarcane, thereby increasing domestic sugar production,” opined Aryal.

According to Aryal, sugarcane farming has higher scope in Nepal as per capita consumption of sugar in the country is less than 4.5 kg per annum while per capita sugar consumption in other countries exceeds 20 kg per annum.

Sugarcane farmers too have been encouraged by the sweet news of the government’s plan to increase import duty on sugar, which they say will promote the domestic sugarcane industry. “The country will soon be self-sustained in sugar production if farmers get good price for sugarcane. Sugar mills and the government should introduce a mechanism to fix sugarcane rate as per the actual production cost of sugarcane,” said Kapil Muni Mainali, president of Nepal Sugarcane Producers Federation.