 "Govt plans cash incentive for raw sugar exports")
Officials said discussions on the incentive had started and a final decision would be taken in consultation by the food and agriculture ministries. The incentive is in line with the recommendation of an informal group of ministers chaired by Agriculture Minister Sharad Pawar. The panel had recommended the government provide an incentive to export four mt of raw sugar on a per-tonne basis, which would be adjusted from the Sugar Development Fund (SDF).
According to a PTI report, Food Minister K V Thomas met Pawar here on Tuesday to discuss additional relief measures for the sugar sector. These included steps such as banning imports and incentives for producing raw sugar. "In a meeting with the agriculture minister today (Tuesday), we discussed additional incentives to sugar mills. We also discussed other recommendations of the panel, especially on incentivising raw sugar production," Thomas said.
In 2007-08, the government had provided subsidy of about Rs 1,450 a tonne to export six mt of sugar. Though the current incentive is being worked on the same lines, it will only be applicable for raw sugar exports. Traditionally, India produces only white sugar, which is widely consumed on the country.
Sources said if the incentive was provided at the right time, India could export about two mt of raw sugar in the international market, largely to Indonesia, Iran, Sri Lanka, and West Asia.
"Currently, the cost of producing raw sugar is Rs 26.5-27 a kg, while the free-on-board price in Mumbai is Rs 21-22 a kg. So, without the incentive, no mill will be position to export raw sugar," an official said.
Industry players said unless the government helped export some of the excess stock, mills would be saddled with huge surplus. According to various assessments, India is expected to have about four mt of surplus stock by the end of the 2013-14 sugar-crushing season (October-September). With the 2014-15 season expected to be a bumper one, there could be another glut in the market, experts say.
Last month, the Cabinet Committee on Economic Affairs cleared a proposal to allow mills to avail of Rs 6,600 crore of interest-free loans. To ensure strict monitoring, these loans will be disbursed to mills through a separate bank account. The entire interest burden, estimated at Rs 2,750 crore through the next five years, will be borne by the government from the SDF.
The Rs 80,000-crore sugar industry in India has been facing a cash crunch due to high production cost and low selling prices in the wake of surplus output through the past few years.
Apart from interest-free loans and incentives to export raw sugar, the Pawar-led panel had also recommended a buffer stock be set up and ethanol blending in petrol be doubled to 10 per cent.