The Hindu Business Line : Tighten sugar import contract registration

Mumbai, Aug. 13 It is by now common knowledge that after the Finance Ministry issued notification bearing number 84/2009 – Customs allowing refined or white sugar up to an aggregate quantity of 10 lakh tonnes of total imports during the period up to November 30, 2009 – the world sugar market sensed panic and prices got a booster dose.

For determining the aggregate quantity of 10 lakh tonnes, the quantities imported between April 17 and July 30, 2009 at zero duty shall be included. In addition, import contracts entered into by traders will have to be registered with Agricultural and Processed Food Products Export Development Authority (APEDA).

It is a tragedy, currently, no one has any idea what quantities have been contracted for. Industry officials openly talk about purchases made by some importers much before July 31 on the basis of speculation that the Government would be forced to permit duty-free import of white sugar. Some resourceful traders had contracted for such imports through Government trading agencies such as STC and MMTC, it is believed.

Today, not only the Government but also the industry and trade are groping in the dark about the quantities contracted and timeframe of likely arrival.

The Finance Ministry notification does not specify any time limit for registration of contract with APEDA. Importers can register the contract even as late as the time when the vessel arrives. This is sure to lead to information vacuum and encourage speculation. The system of registration and import monitoring needs to be tight and fool-proof. Otherwise, it is not likely to serve anyone’s purpose except the speculators. The Government needs to know real time details such as quantity arrived so far, quantity in voyage, quantities yet to be shipped and when they would be shipped, and of course latest information on contracts as and when they are entered into.

Without these details and updates thereon, monitoring of imports would be on paper and futile. Already the Government’s freedom to contain galloping prices is limited. Decisions made without relevant trade information are sure to go awry.

Indeed, the Government must cast a duty on the importers to register the contract within three days of signing it.

Unless all contracts are promptly registered, it would not be possible to monitor imports and take effective measures to ensure supplies and contain price rise. There should be a penalty for contracts not performed.

The purpose of registration of contract is not merely to ensure that refined or white sugar imports are restricted to a quantitative ceiling of 10 lakh tonnes. The registration details will also provide clue to the arrival programme which will help policymakers respond to emerging situations.

The Finance Ministry’s concern may be restricted to ensuring import of up to 10 lakh tonnes of white sugar duty-free. But the Government as a whole has much greater responsibility towards consumers, the industry and others.

Having imposed an administrative procedure, the Government must utilise it to the fullest extent to respond to the price situation.

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