Stocks of sugar companies gained as much as 8 per cent after the government today hiked import duty on both raw and refined sugar to 25 per cent from existing 15 per cent.
Shares of Dwarikesh Sugar Industries rallied 7.83 per cent, while Bajaj Hindusthan Ltd surged 5.32 per cent on the BSE.
Oudh Sugar Mills gained 4.64 per cent, Shree Renuka Sugars (4.44 per cent), Triveni Engineering & Industries (3.05 per cent) and Balrampur Chini Mills (2.21 per cent).
In a move that could lead to increase in sugar prices, the government today hiked the import duty on both raw and refined sugar to 25 per cent from the existing 15 per cent.
The increase in duty would make imports unviable and may lead to some jump in domestic sugar prices that could cause burden on consumers but would help revive the business of cash-starved mills who owe farmers around Rs 6,800 crore.
India has been importing sugar in small quantities taking advantage of lower global prices. According to the notification issued by the Central Board of Excise and Customs, import duty has been raised to 25 per cent on raw sugar and refined or white sugar.
Sugar mills are facing a cash crunch as domestic prices have slipped below the cost of production, hurting their profits.