With domestic sugar prices in the wholesale market quoted at around Rs 39 a kg, imported sugar continues to remain cost-effective in southern states even with a 25 per cent duty. In Tamil Nadu, sugar is priced Rs 1.50-2 a kg more than that in Maharashtra due to supply shortage. The southern state faces huge supply deficit this year due to three-four years of subsequent drought resulting into lower local production. Worryingly, the drought continued this year too, which prompted policy makers to allow raw sugar import of 300,000 tonnes at 25 per cent of import duty against the prevailing duty of 50 per cent.