EXPORT-IMPORT POLICY

1. EXPORT OF SUGAR:

Sugar is an essential commodity. Its sale, delivery from mills,

and distribution were regulated by the Government under Essential
Commodities Act, 1955. Till 15.01.1997, the exports of sugar were
being carried out under the provisions of the Sugar Export Promotion
Act, 1958, through the notified export agencies, viz. Indian Sugar &
General Industry Export Import Corporation Ltd. (ISGIEIC) and State
Trading Corporation of India Ltd. (STC).
Through an Ordinance, the Sugar Export Promotion Act, 1958,
was repealed w.e.f. 15.01.1997 and thus the export of sugar was
decanalised. Under decanalised regime, the export of sugar was being
carried out through the Agricultural and Processed Food Products
Export Development Authority (APEDA), under Ministry of Commerce
& Industry. Thereafter, the sugar export was undertaken by the
various sugar mills/merchant exporters, after obtaining the export
released orders from the Directorate of Sugar.
During the surplus phase of 2006-07 and 2007-08 sugar seasons,
the sugar exports were permitted without release orders vide
notification dated 31.07.2007. Subsequently, the necessity of
obtaining release order was reintroduced from 01.01.2009, in view of
drop in sugar production. However, due to surplus production during
2010-11 sugar season, Government permitted exports under OGL on
the strength of the release order.
The phase of surplus production continued and the Government
vide Notification No.1059(E) dated 11.05.2012 has again dispensed
with the requirement of export release orders. Thereafter, the export
of sugar was allowed free subject to prior registration of quantity with
DGFT. Subsequently, w.e.f. 07.09.2015, the requirement for prior
registration (RC) was dispensed.
Further, custom duty @ 20% was imposed on export of sugar
vide Department of Revenue’s notification no. 37/2016 dated
16.06.2016. Keeping in view the surplus production of sugar, the
Government of India has withdrawn the custom duty on export of
sugar vide notification no. 30/2018 dated 20.03.2018, which is still in
vogue.
2. IMPORT OF SUGAR
Import of sugar, which was placed under Open General License
(OGL) with zero duty in March, 1994, continued with zero duty in March,
1994, continued with zero duty upto 27.04.1999.The Government
imposed a basic customs duty of 5% and a countervailing duty of
Rs.850.00 per tonne on imported sugar w.e.f. 28.04.1998. The basic
custom duty was increased from 5% to 20% w.e.f.14.04.1999 in addition
to the countervailing duty. In the Union Budget for the year 1999-2000,
duty on imported sugar was further increased from 20% to 25% with
surcharge of 10%. The customs duty on imports of sugar was again
increased to 40% on 30.12.1999 and 60% on 09.02.2000 along with
continuance of countervailing duty of Rs. 950/- per ton (w.e.f.
01.03.2008) plus 3% education cess.

Sugar production in the sugar season 2008-09 had declined and in

order to augment the domestic stock of sugar, the Central Government
allowed import of raw sugar at zero duty under Open General License
(OGL) w.e.f. 17.04.2009 which was applicable till 30.06.2012.
Thereafter, a moderate duty of 10% was re-imposed w.e.f. 13.07.2012
which was subsequently increased to 15% w.e.f. 08.07.2013.

Due to surplus stocks of sugar in the country and in order to check

any possible imports, the Government increased the import duty from
15% to 25% on 21.08.2014, which was subsequently increased to 40%
w.e.f. 30.04.2015 and further increased to 50% w.e.f. 10.07.2017. In
order to prevent any unnecessary import of sugar and to stabilize the
domestic price at a reasonable level, the Central Government has
increased custom duty on import of sugar from 50% to 100% in the
interest of farmers w.e.f. 06.02.2018.

REVIEW OF EXISTING SYSTEM FOR DISTRIBUTION OF

SUGAR THROUGH PDS TO ANTYODAYA ANNA YOJANA (AAY)
FAMILIES:

Sugar was being distributed through the Targeted Public

Distribution System (TPDS) by the States/UTs at subsidized prices for
which the Central Government was reimbursing them @ 18.50 per kg.
The scheme was covering all BPL population of the country as per 2001
census and all the population of the North Eastern States / special
category/ hilly states and Island territories. The National Food Security
Act, 2013 (NFSA) is now being universally implemented by all 36
States/UTs. Under the NFSA, there is no identified category of BPL;
however, the Antyodaya Anna Yojana (AAY) beneficiaries are clearly
identified. The Government of India has reviewed the Sugar Subsidy
Scheme and has decided to give access to consumption of sugar as a
source of energy in diet, for the poorest of the poor section of the society
i.e. AAY families. Accordingly, it has been decided that the existing
system of sugar distribution through PDS may be continued as per the
following:-

(i) The existing scheme of supply of subsidized sugar through PDS

may be continued for restricted coverage of AAY families only, providing 1
kg of sugar per AAY family per month.
(ii) The current level of subsidy at Rs. 18.50 per kg provided by the
Central Government to States/UTs for distribution of sugar through PDS
may be continued for the AAY population. The States/UTs may continue to
pass on any additional expenditure on account of transportation, handling
and dealers’ commission etc. over and above the retail issue price of Rs.
13.50 per kg to the beneficiary or bear it themselves.
Presently 24 States/UTs are participating in the scheme.

DE-REGULATION OF SUGAR SECTOR ON THE RECOMMENDATIONS

OF DR. C. RANGARAJAN COMMITTEE REPORT

The year 2013-14 was a water-shed for the sugar industry. The
Central Government considered the recommendations of the committee
headed by Dr. C. Rangarajan on de-regulation of sugar sector and
decided to discontinue the system of levy obligations on mills for sugar
produced after September, 2012 and abolished the regulated release
mechanism on open market sale of sugar. The de-regulation of the sugar
sector was undertaken to improve the financial health of sugar mills,
enhance cash flows, reduce inventory costs and also result in timely
payments of cane price to sugarcane farmers. The recommendations of
the Committee relating to Cane Area Reservation, Minimum Distance
Criteria and adoption of the Cane Price Formula have been left to State
Governments for adoption and implementation, as considered appropriate
by them. The gist of recommendations of the Committee and action taken
by the Government thereon is as under:

Implementation of Recommendations of Dr. Rangarajan

Committee

Issues Gist of Recommendations Status

Over a period of time, states States have been requested to
should encourage consider the recommendations
development of such market- for implementation as deemed fit.
Cane Area
based long-term contractual So far, none of the States have
Reservation:
arrangements, and phase out taken action, current system
cane reservation area and continues. There is no
bonding. In the interim, the reservation of area in
current system may continue. Maharashtra.
It is not in the interest of
States have been requested to
development of sugarcane
consider the recommendations
farmers or the sugar sector, and
Minimum Distance for implementation as deemed fit.
may be dispensed with as and
Criteria: So far, none of the States have
when a state does away with
taken action, current system
cane reservation area and
continues.
bonding.
Sugarcane Price : Revenue Based on an analysis of the data States have been requested to
Sharing available for the by-products consider the recommendations
(molasses and bagasse / for implementation as deemed fit.
cogeneration), the revenue- So far only
sharing ratio has been estimated Karnataka Maharashtra & Tamil
to amount to roughly 75 per cent Nadu have passed state Acts to
 of the ex-mill sugar price alone. implement this recommendation.
Levy sugar may be dispensed
with. The states which want to Central Government has
provide sugar under PDS may abolished levy on sugar produce
henceforth procure it from the after 1st October, 2012.
market directly according to their Procurement for PDS operation
requirement and may also fix the is being made from the open
Levy Sugar issue price. However, since market by the states/UTs and
currently there is an implicit Government is providing a fixed
cross-subsidy on account of the subsidy @ Rs. 18.50 per kg for
levy, some level of Central restricted coverage to AAY
support to help states meet the families only who will be
cost to be incurred on this provided 1 kg of sugar per
account may be provided for a family per month.
transitory period.
Regulated This mechanism is not serving
Release mechanism has been
Release any useful purpose, and may be
dispensed with.
Mechanism dispensed with.
Import and export of sugar is free
without quantitative restrictions,
but subject to prevailing rate of
As per the committee, trade custom duty. Import duty has
policies on sugar should be been enhanced from 25% to 40%
stable. Appropriate tariff w.e.f. 29.04.2015; and 50%
instruments like a moderate w.e.f. 10.07.2017 which has
export duty not exceeding 5 per further now been enhanced to
Trade Policy
cent ordinarily, as opposed to 100% w.e.f. 06.02.2018.
quantitative restrictions, should Keeping in view of production
be used to meet domestic of sugar, stock position and
requirements of sugar in an market price sentiments, the
economically efficient manner. Government of India has
withdrawn the custom duty on
export of sugar vide notification
no. 30/2018 dated 20.03.2018.
Department of Industrial Policy
and promotion has amended the
There should be no quantitative
I (D&R) Act, 1951 vide
or movement restrictions on by
notification No. 27 of 2016
products like molasses and
dated 14.05.2016. With this
ethanol. The prices of the by-
amendment, the States can
products should be market-
By-products legislate, control and/or levy
determined with no earmarked
taxes and duties on liquor
end-use allocations. There
meant for human consumption
should be no regulatory hurdles
only. Other than that i.e. de-
preventing sugar mills from
natured ethanol, which is not
selling their surplus power to any
meant for human consumption,
consumer.
will be controlled by the
Central Government only.
CONSTITUATION OF A WORKING COMMITTEE TO LOOK INTO THE
RECOMMENDATIONS OF TASK FORCE CONSTITUTED UNDER NITI
AAYOG AND CACP

The Central Government has been taking various measures from time to
time, however, a need was felt by NITI Aayog to find long-term solutions
for the sugar industry and sugarcane farmers. Accordingly, a Task Force
was constituted by NITI Aayog under the chairmanship of Prof. Ramesh
Chand, Member, NITI Aayog.
Some of the major recommendations of the Task Force include
adoption of revenue sharing formula, diversification towards less water
intensive crops, enhanced ethanol blending, revision in Minimum Selling
Price of sugar, redesigning of export incentives to make them WTO
compliant, discontinuation of buffer stocks, promotion of jaggery, etc.
Since sugar season 2016-17, CACP while recommending FRP of sugarcane
has also been recommending sharing the premium paid for higher
recovery between millers and sugarcane growers which is also required to
be examined.
In order to examine the recommendations of the Task Force and
CACP, and to evolve mechanism to implement these recommendations, a
WorkingCommittee has been constituted in DFPD comprising of
representatives from DFPD, MoPNG,Department of Agriculture & Farmers
Welfare, DFS, MSME,Department of Commerce, Department of
Expenditure and other stake holders. The Working Committee is in the
process of taking comments from the sugarcane producing States.