The Directorate-General of Foreign Trade (DGFT) has launched a probe into sugar exports from India to Maldives under a bilateral treaty being diverted to Sri Lanka, trade sources said.
On October 25, businessline reported that some exporters allegedly misused a part of the 64,494.33 tonnes of sugar allocated by the Centre for exports to Maldives under a bilateral agreement between the two countries. Following this, the DGFT launched a probe and trade sources said sugar exports to Maldives have come to a halt.
The sources said at least seven parcels of sugar set to be exported to Maldives have been detained at the Nhava Sheva port on the suspicion that it was being diverted to some other origin.
Bilateral pact
On the other hand, Sri Lankan Customs officials have detained about 70 containers of Indian sugar diverted to Colombo after an alert following the businessline report.
On April 5, 2024, the DGFT issued a notification under a bilateral agreement with Maldives permitting rice, wheat flour, dal, sugar, eggs, potatoes and onions, besides stone aggregate and river sand.
Though India did not allow sugar exports in the 2023-24 season (September-October) because of a decline in production, it allowed shipments of limited quantities to a few countries such as Maldives.
Later on April 15, 2024, the DGFT said the exports of commodities under the bilateral treaty would be permitted only through Mundra, Tuticorin and Nhava Sheva sea ports besides the Inland Container Depot, Tughlakabad.
At standstill
Following the launch of the investigation into the diversion, exports of sugar to Maldives have almost come to a standstill. Trade sources said Sri Lanka officials have stopped clearances at Colombo. They have begun a separate probe against the buyers based in Lanka.
Over 80 container loads of sugar from the country, permitted for exports to Maldives, landed in Colombo, Sri Lanka, until mid-October.
A copy of the bill of lading dated September 30, 2024, made available to businessline, showed that shipments of 270 tonnes were made from the Nhave Sheva port with the final port of destination as Colombo.
The bill claimed that the cargo was in transit to Male, Maldives, at the consignee’s risk. The bill had a curious note asking the buyers to return the empty containers to the “carriers nominated depot in Colombo on consignee account”.
The Male port is not a minor port that requires containers to be returned to Colombo. The sugar consignments were reportedly made available to Lankan traders, sources said.
Invoices switch-over
The invoice raised for the shipment revealed a cost and freight payment of $580/tonne totalling $1,56,600 to be paid by a Colombo-based firm to a UAE-based shipper. The consignee was “to be advised”.
Another invoice dated September 23, 2024, showed a Dubai-based firm selling another 270 tonnes at $585/tonne totalling $1,57,950 to an unmentioned consignee. It, however, wanted a Colombo-based company to be notified.
Traders alleged that invoices have been switched to show the destination as Colombo and the buyer as a Sri Lanka trader. Sources said the practice for such shipments is to generate documents for exports and customs clearance for the country to which shipment is permitted.
Once the cargo is out of customs’ charge, they get the bill of lading switched to the destination to which it is to be diverted and substitute the invoice. Some consignments have even gone to Port Klang in Malaysia from Nhava Sheva port.
