India extends duty free sugar imports

NEW DELHI: Top global sugar consumer India extended Wednesday duty-free imports of the commodity until the end of next year as it warned domestic output would fall way below demand.

The government prolonged duty-free imports of refined sugar to December 2010 from an original date of November 30, 2009, to help check prices of the sweetener, whose production has been hit by bad weather.

Total "sugar production this season is likely to touch 16 million tonnes (in the current crop year that began in October) so the situation is tight," Food and Agriculture Minister Sharad Pawar told reporters in New Delhi.

But "the requirement (for sugar) will be met," Pawar said.

India needs about 23.5 million tonnes of sugar to meet its needs this year.

Global sugar prices recently surged to near 30-year highs amid a warning from the International Sugar Organisation that worldwide supplies are expected to fall far short of demand.

India's government has said it will use a combination of imports and buffer stocks to tackle the domestic shortfall.

"(Duty-free) refined sugar imports have been extended till December 2010," Pawar said. No change was announced in the March 31 duty-free period for the raw variety.

India may be forced to import a record six million tonnes of sugar in 2009-10 to bridge the gap in supply, after importing around five million tonnes last year, analysts have forecast.

The government began permitting duty-free sugar imports in February.

India produced 26.4 million tonnes of sugar in the 2007-08 season but output slipped in the past year to an estimated 14 million to 15 million tonnes.

Retail sugar prices have nearly doubled in India from a year ago to 33 rupees (70 US cents) a kilogramme during this year's religious festive season in which sweets are hot-sellers.

India's driest monsoon in nearly four decades initially hit sugar output before flooding in key growing areas did further damage. Some farmers also have begun switching to better paying wheat and rice.