(Reuters) - India has raised the import tax on sugar to 40 percent from 25 percent to help prop up falling local prices and protect local farmers who have not been paid by money-losing mills, the government said in a statement said on Wednesday.

India also slapped the tax on imports of raw sugar that refiners turn into whites, or refined sugar, to sell in world markets.

Five straight years of surplus output has led to a free fall in prices, hitting mills' financials. Sugar mills owe about 201 billion rupees ($3.18 billion) to farmers.