The government also decided to extend till September the export subsidy for giving relief to the sugar industry, which owes Rs11,000 crore to cane growers largely in Uttar Pradesh
In a move that could lead to rise in the price of sugar, the Indian government on Monday decided to hike the import duty to 40% from 15% and to provide an additional interest- free loan of upto Rs4,400 crore to sugar mills for paying dues to cane growers.
At a high-level meeting convened by Food Minister Ram Vilas Paswan, it was decided that the import duty will be raised to 40% from 15%.
It was also decided that the export subsidy will be extended till September this year to give relief to the sugar industry, which owes Rs11,000 crore to cane growers largely in Uttar Pradesh.
Efforts will be made to implement mandatory 5% ethanol blending with petrol and subsequently achieve 10% blending.
The meeting held at the instance of Prime Minister Narendra Modi's direction was attended among others by Transport Minister Nitin Gadkari, Commerce Minister Nirmala Sitharaman, Principal Secretary to the PM Nripendra Misra and Cabinet Secretary Ajit Seth.
"We have taken four key decisions. We have decided to extend the interest-free loan given against excise duty paid by sugar mills for five years instead of three years," Paswan told reporters after the meeting.
Industry Body Indian Sugar Mills Association (ISMA) hailed the decision saying this will improve cash-flow of millers and help clear cane arrears.
"There is a need to improve the sugar prices to allow mills to at least cover their cost of producing sugar," ISMA Director General Avinash Verma said in a statement.
While history suggests that the Union Budget's influence on the market's short-term performance is declining, the next Budget could still leave a trail of impact, says Morgan Stanley
Even as finance minister Arun Jaitley is busy meeting stakeholders in preparation for this years Budget, its influence on the stock market, according to history, is declining since the 1990s when it was the platform to announce reforms. "This is where this year's Budget could mark a difference from recent history. However, the market is up against really strong history," says Morgan Stanley.
According to the research note, while history suggests that the Union Budget's influence on the market's short-term performance is declining, expectations (measured by pre-Budget performance) are still important in deciding what the market does after the Budget. "If the pre-Budget returns are positive, there is a 90% chance that the post- Budget returns are negative. As the Budget is on 10th July, the index level from where pre-Budget one-month performance is being measured is 25,474. Whether the Budget proves to be an inflexion point or not only time will tell, but one thing is almost certain – the market participants will have to deal with a fair amount of volatility on Budget day," the report added.
Morgan Stanley says, 2006 was the only instance in history when both the pre- and post-Budget returns were positive. India has outperformed emerging markets (EM) on a pre- and post-Budget basis on only two occasions–2006 and 2010. Again, attributing these to the Budget may be difficult, the report said.
The upcoming Budget could be important because of where India is placed cyclically, what the mandate for the government implies, and given that this is the first non-Congress government in a decade, Morgan Stanley said.