India may allow duty free imports of sugar

India, the world's biggest consumer of sugar, may allow mills to import the raw sweetener duty free in two weeks to ease a local shortage and prevent an increase in domestic prices before elections in 2009.

The government plans to allow refiners to buy sugar from overseas for processing and sale in the local market without paying a 60 percent duty, said an industry association official, who did not want to be named as the proposal has not yet been approved by the Cabinet. The mills will need to export the same quantity within two years, he said.

Prime Minister Manmohan Singh, who is seeking re-election, wants to curb the cost of commodities including food grains, sugar and edible oil. In 1998, the Bharatiya Janata Party lost power in the capital Delhi when a shortage of onions sent prices soaring. Increased imports by the south Asian nation may boost global sugar prices that have fallen 14 percent in six months.