NEW DELHI (Reuters) - India will consider initiating preliminary talks with neighbouring Sri Lanka and Bangladesh to seek lower import duties for its sugar exports to prevent a glut next season, a top government official said.
In the current 2017/18 season sugar mills in India, the world’s biggest consumer of the sweetener, is expected to produce just enough to meet its annual consumption of about 25 million tonnes.
However, output is expected to jump next season, which starts in October, raising the possibility of a drop in domestic prices. That could make it difficult for mills to pay millions of cane farmers on time, just as Prime Minister Narendra Modi prepares for a national election in early 2019.
Preparing for the potential glut, the Indian government will ask both Sri Lanka and Bangladesh to lower their import tariffs for sugar exports from India, said the official, who asked to remain anonymous because he is not authorised to talk to media.
About half a dozen Bangladesh refineries, which turn raw sugar into refined, or white, sugar could be interested in securing supplies from India, said Abinash Verma, director general of the Indian Sugar Mills Association (ISMA).
Bangladesh, which currently imports raw sugar from Brazil, the world’s biggest producer, will find it easier and more economical to import from neighbouring India, Verma said.
Sri Lanka, which allows duty-free sugar imports from Pakistan, could also be keen to import white sugar from India, he said.
“Between Sri Lanka and Bangladesh, India can look at exporting about 3 million tonnes, provided Colombo and Dhaka agree to India’s request of concessional tariffs,” Verma said.
India, the world’s biggest sugar producer behind Brazil, is likely to churn out more than 25.1 million tonnes in the current marketing season, according to the ISMA.
However, plentiful rains in western and southern India are expected to boost 2018/19 output.
“We’ll get some concrete sense about next year’s production in July,” Verma said.
India is likely to start the new marketing year on Oct. 1, with an opening stock of 4 million tonnes of sugar, almost unchanged from a year ago, he said.
Verma played down talks of large-scale imports from Pakistan into India.
“Since there is hardly any price parity, we do not foresee bulk imports from Pakistan, with barely 2,000 tonnes shipped into India so far,” Verma said.
Reporting by Mayank Bhardwaj; Editing by David Goodman