Sugar trade to pick up post-GST; prices not to rise: Govt

New Delhi: Sugar supplies and prices in the retail and wholesale markets will not be affected by the initial teething problems that traders may face in the coming days due to GST, a senior government official said today.

The government is keeping a close watch on the situation as more sugar traders take up the registration number of Goods and Services Tax (GST) which comes into effect from today.

The GST on sugar is five percent. It is not applicable on traders whose business turnover is below Rs 20 lakh.

"Post-GST, sugar trade will definitely pick up. Traders will face teething problems initially, but those will be resolved. But the GST will not affect sugar supply in the market nor lead to increase in prices," the official told PTI.

Wholesale sugar traders are watching how GST will work because they are not sure how to pass the tax burden on small retailers. Once these things are clear, more traders will come forward to register, he said.

This will not create any disruption in the sugar supply as there is adequate availability in the domestic market. Moreover, the sugar industry has been asked to ensure a smooth supply and that prices do not rise, the official added.

As per the government data, retail sugar prices are ruling in the range of Rs 40-50/kg, while the wholesale rates are at Rs 35-38/kg.

Sugar production in India, the world's second largest producer, is estimated to be lower at over 21 million tonnes this year, from 25 million tonnes in 2015-16 season (September-October).

The annual demand is 24-24.5 million tonnes. The country has previous year's sugar stock as also imported 5 lakh tonnes to meet the shortage.