The Union Cabinet chaired by the Prime Minister, Narendra Modi, today gave its approval to increase import duty on sugar from 25% to 40%.
 
In order improve the price sentiments relating to sugar, the Government has decided to take four steps.

The duty on import of sugar under the Open General License  (OGL) shall be increased to 40%, as against the current level of 25%. 'This would prevent any imports in case international prices of sugar were to depress further,' the government said.

The ''Duty Free Import Authorization'' scheme (DFIA), for sugar would be withdrawn, it said. Under the DFIA, exporters of sugar could import duty free, permissible quantities of raw sugar for subsequent processing and disposal. To prevent leakage of sugar made from such duty free imports in the domestic markets, the DFIA scheme for sugar would be withdrawn.

Similarly, the period for discharging Export Obligations under the Advanced Authorization Scheme for sugar would be reduced to six  months, so as to prevent any possibility of any leakage into the domestic markets.

Removal of excise duty on ethanol supplied for blending. It has been decided that ethanol produced from molasses generated during the next sugar season and supplied for ethanol blending would be exempted from excise duty and the price benefit would be passed on the to the sugar mills/ distilleries. Presently 12.36 percent central excise duty is levied.
 
'These measures will significantly improve the adverse price sentiments in respect of sugar and would improve the liquidity in the industry, facilitating the clearing up of arrears of canedues to farmers,' the government said.