Govt sets 4 mt sugar export target

The government has set a target of exporting four million tonnes of sugar for mills for the marketing year ending September 2016 as cane arrears have mounted to Rs 14,000 crore because of a glut.

"The export quota of four million tonnes of all grades of sugar has been fixed for sugar factories for the 2015-16 marketing year," the food ministry said in a circular on Friday.

Quotas will be tradable among sugar mills on mutually agreeable terms. The sugar sector, however, might ask the government for help because it reckons exports are unviable.

India's sugar output has exceeded demand for the fifth consecutive year, resulting in lower prices and millers being unable to clear cane arrears.

"In view of the inventory levels with the sugar industry and to facilitate achievements of financial liquidity and enable the industry to achieve long run viability, minimum indicative export quotas are being specified for the 2015-16 sugar season from October 1," the circular added.

The quota had been set taking into account the average sugar production of the current and last two sugar seasons, it added.

Last month, Food Minister Ram Vilas Paswan had said the Centre was considering a proposal to allow barter export of four million tonnes of sugar for other farm commodities.

Ex-mill sugar prices have fallen below Rs 20 a kg in the country while the cost of production is around Rs 30 a kg.

Sugar output is estimated at a record 28.3 million tonnes in the marketing year ending September 2015, up from 24.3 million tonnes in the previous year.

Annual demand is pegged at 24.5 million tonnes.

The government's resolve to export sugar was reflected in its statement that sugar mills failing to meet their quotas would be deemed to be violating its directives, said Abinash Verma, director-general, Indian Sugar Mills' Association.

He added sugar exports from India continued to remain unviable and the sector would seek assistance from the government.