Sugar mills may not be allowed to fulfill their export obligation of nearly 10 lakh tonnes till Diwali in November, as the Food Ministry is hesitant to permit shipments fearing price rise during the festive season.
"Some of the millers have approached us demanding export release order. But at the moment, we cannot allow... As the sugarcane availability and production estimate for the next season is yet to be firmed up," a senior Food Ministry official said.
The government might consider the millers' demand to export after major festivals like Diwali, the official said, adding that consumption of sugar is generally higher during the festive season.
Mills had imported 20.75 lakh tonnes of sugar in 2004-05 crop year (October-September) under the Advance Licence Scheme (ALS) as there was a shortfall in production then. Mills are required to export an equal quantity by March 2011.
Out of total imported sugar, export obligation of 9.67 lakh tonnes is yet to be fulfilled. Mills cannot export the sweetener without the release order from the ministry.
Mills situated in southern India are mainly demanding that they should be allowed to fulfill their export obligation as there is a good demand from Southeast Asia. They have an obligation of about 6-7 lakh tonnes.
The official said that the government does not want to take any chance by allowing export of sugar as prices of the sweetener have moderated only recently, owing to an improved domestic output to 18.5 million tonnes for 2009-10 from the earlier estimate of around 16 million tonnes.
Retail sugar prices, which touched nearly Rs 50 a kg in Delhi in mid-January, have come down to Rs 30 per kg now.
In December last year, the Cabinet Committee on Economic Affairs had decided to extend the deadline to meet the export obligation till March 2011, considering the low production of sweetener during the current season ending September.
It also gave an option to the millers to pay customs duty as applicable during the relevant period and get exempted from the export obligation.