Extension likely for advance licence sugar exporters

The government is likely to provide some relief to the sugar industry by providing an extension to sugar companies that have an export obligation under the advance licence (AL) scheme.

"We have sent a proposal on extending the obligation period to the commerce ministry, which will take a final decision on it," said a senior food ministry official.

The government had imposed a ban on sugar exports in July last year and subsequently lifted it for AL exports on December 18 and for open general licence (OGL) on January 11. The AL exporters have already got a relaxation for the period for which the export ban prevailed.

Sakthi Sugars, Renuka Sugars, Simbhaoli Sugars and Eid Parry, among others, had imported 2.6 million tonnes duty-free raw sugar between 2002-03 and 2004-05 sugar seasons (October-September), with an obligation to re-export in two years. Of this, 1.9 million tonnes has been shipped, while another 700,000 tonnes remains to be exported.

Since they had imported the raw sugar duty-free, they are not being given the transport subsidy that the government had announced in March for sugar exports under the OGL.

However, exporting sugar under the AL has turned disadvantageous after the government came out with subsidy for OGL. The export subsidy of Rs 1,350 (for coastal mills) and Rs 1,450 a tonne (for non-coastal mills) is valid till April 18, 2008.

"We are unable to undertake exports under the AL at the moment simply because the AL export has to compete with subsidised exports of the OGL. The government should either provide subsidy to AL exports or provide an extension after the subsidy period ends," said Sanjay Tapriya, director, finance, Simbhaoli Sugars. The company is left with an export obligation of 30,000 tonnes and its obligation period for the same quantity is ending in September.

"Our company is left with an export obligation of 25,000 tonnes, which we need to undertake by August-September. However, at current rates of around $275 a tonne, exports are not viable. Therefore, we are seeking an extension of the obligation period," said P Rama Babu, managing director, EID Parry, and president, Indian Sugar Mills' Association.