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India Levies 60% Tax On Sugar

by Mary Swire, Tax-News.com, Hong Kong

06 January 2011


A 60% tax on imports of sugar has been levied by India, the world’s second-biggest producer behind Brazil, as supply is forecast to exceed demand for the first time in three years, a government official said. The tax came into effect on January 1, after the zero-duty period ended.

A previous 60% tax on sugar was dropped in 2009 when there was an acute domestic shortage in supply because of the worst drought in 40 years. Production dropped 45% to 14.5 million tonnes in the year ended September 30, 2009, according to the Indian Sugar Mills Association.

Rising prices and favorable weather have, however, encouraged farmers to plant more sugar cane since then, and so boosting supplies. It has been estimated that India will produce 24.5 million tonnes of sugar this season, up from 18.8 million tonnes in the previous year.

The expectation of higher output led the government in mid-December to allow the export of 500,000 tonnes of sugar. There may be some hope for the market to open further in the future, however, with the government asking sugar mills across the country to register for the Open General Licence in order to increase transparency.

TAGS: tax | India | Brazil | import duty

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