Smuggled Indian sugar drives down local market price

Highlights 

• Sugar sold for Rs36-48 per kg  (Tk45-63) in India
• At Khatunganj, this smuggled sugar is sold for Tk118-120
• Loose sugar is Tk135 per kg and packaged ones Tk140 in retail
• Sugar sold at Tk4,590-4,600 per maund in wholesale

Due to an illegal influx of low-priced Indian sugar, the country's sugar market is experiencing a decline in prices. A month ago, sugar was at Tk133-134 per kg at wholesale, now it has dropped to Tk123 per kg.

For a long period, sugar prices in the country have remained considerably higher than international rates and almost double those in neighbouring nations. This discrepancy has led to a surge in sugar smuggling across borders, creating pressure on price decline in the local market. 

Traders at Chattogram's Khatunganj, one of the largest wholesale goods markets, said sugar sold at Tk4,590-4,600 per maund (37.32 kg) on Monday, compared to Tk4,900-5,000 in the third week of July, marking a Tk400 decrease in a month. 

Bakhtiar Uddin, a Khatunganj wholesaler at M/s Arafat Trading, highlighted a prolonged uptrend in sugar prices. Despite prices set by the government, importers did not comply, maintaining higher prices compared to international rates. This has given rise to concerns about price syndication among domestic importers. 

Since mid-July, the decreased sales of imported sugar has compelled importers to lower their prices. Smuggled Indian sugar is sold for Tk118-120 per kg while imported sugar sells for Tk123.

In response to these market dynamics, the Bangladesh Sugar Refiners Association announced a reduction of Tk5 per kg in sugar prices on 13 August. Consequently, the price of loose refined sugar dropped to Tk130 from Tk135 per kg, and the price of packaged sugar declined by Tk5 to Tk135.

However, retail prices of the sweetener had been on the rise for over five months, reaching Tk140 per kg for loose sugar and Tk145 per kg for packaged sugar. In the last month, wholesale and retail sugar prices have slightly decreased. 

"Currently, loose sugar is priced at Tk135 per kg and packaged sugar at Tk140 per kg. Notably, both imported and Indian sugar are sold at the same price at retail," said Nurul Absar, a grocer at Jannat Store on SS Khaled Road in Chattogram city.

Khatunganj sugar trader Aman Ullah reports that sugar was sold for Rs36-48 per kg  (which is 45-63 in Bangladeshi taka) in neighbouring Indian states. This has led to the smuggling of sugar into local markets near the border, where it is sold for Tk80-90. Upon reaching Khatunganj, this smuggled sugar is sold for Tk118-120. As per data from www.chinimandi.com, sugar was traded within the range of Rs36-48 per kg in various Indian states last Sunday.

SM Najer Hossain, vice president of the Consumer Association of Bangladesh (CAB), highlighted the issue of the illegal influx of sugar due to price disparities between the neighbouring countries. This practice deprives the country of revenue. To curb smuggling, importers must lower the prices of sugar.

Prodip Karon, DGM (Sales) of City Group, a prominent sugar importer and marketing company, said smuggling of Indian sugar has intensified recently, driving down domestic sugar prices over the past month. 

Importing companies, including City Group, have asked the Ministry of Commerce to halt the entry of Indian sugar across the border, he added. 

According to the Department of Food, the country's annual sugar demand is 18-20 lakh tonnes. Previously, state-owned mills produced 1.5-2 lakh tonnes, but 6 out of 15 mills have closed down in the last two years, reducing production to under 50,000 tonnes. This has shifted heavy dependence on the private mills. Furthermore, from numerous importers, control of sugar is now concentrated in 8-10 companies due to closures. ***