India, the world's second largest sugar producer, is unlikely to import sugar in the near future despite expectations of a lower cane crop because of good stocks and high import tariffs, traders said on Tuesday.
India's sugar production is forecast to fall to 15.5-16.0 million tonnes in 2003/04 (October-September) from 20.1 million tonnes a year ago due to poor rains and a pest attack in key growing areas.
Traders said although Indian sugar was priced higher than global rates, high freight rates and a customs duty of around 60 percent made sugar imports unliveable.
But in London several traders talked of purchases by Indian millers of some 50,000 to 100,000 tonnes of sugar last week. Confirmation of the deal was not immediately available.
"It is not viable to import sugar at the current levels of local prices and there are sufficient stocks to keep domestic rates under check," an official with an international trading house told Reuters.
Dealers said India's domestic prices need to touch 17,000 rupees ($384.9) a tonne from 15,500 rupees a tonne for imports to be viable.
"Right now, there is no parity in importing raw and selling here or even buying raw for exports after refining," Gagman Guilty, a leading Ahmedabad-based trader, said.
Officials and traders said the country was not expected to face an immediate shortage with stocks estimated at 10 million tonnes on October 1, 2004.
"Domestic prices are under control with more quota being released and the government is unlikely to reduce duties because of high stocks," Guilty said.
The government, in a move to keep prices stable, last week released 1.6 million tonnes of sugar for sale in the domestic market for May, which was 200,000 tonnes higher than April.
But many millers and traders said they were keeping a close watch on the international market because the country might need to buy sugar if output dipped in the crop season beginning in October this year.
"If we have another bad year of cane production then we will surely be in the market to buy sugar," a leading trader said from Bombay.
The country's sugar output next year would depend on monsoon rains, which the India Meteorological Department has forecast to be normal.
India consumes around 18 million tonnes of sugar a year but domestic sales this year are expected to grow by eight to 10 percent because of higher rural incomes on the back of good monsoon rains.
While most parts of the country witnessed the best rains in more than a decade in the 2003 monsoon season, traders say some cane-growing regions got scanty showers.