No more sops for export of raw sugar as of now

The government has shelved plans to dole out extra incentives to mills for raw sugar exports, a government official said today.

"The proposal was discussed in the Cabinet...the government has decided not to offer any subsidies (on raw sugar export) for the time being," the official said.

The raw sugar export subsidy proposal was part of the total Rs 850 crore bailout package for the ailing sugar industry. An incentive of Rs 440 a tonne was proposed for raw sugar export.

Sugar mills, however, do not produce raw sugar in huge quantities, and consequently, the commodity is usually not exported.

Raw sugar is the coarse granulated solid, obtained on evaporation of clarified sugar cane juice. Raw sugar is processed from the cane that is further processed in order to produce white or refined sugar.

Besides the proposed raw sugar export subsidy, the package also included an export freight subsidy of Rs 1,350 a tonne for sugar mills in coastal areas, and Rs 1,450 a tonne for those in non-coastal regions.

The package, approved by the Cabinet Committee on Economic Affairs on March 24, was however stuck, awaiting the Election Commission's approval. The model code of conduct is in force due to the ongoing assembly polls in Uttar Pradesh, a major sugar producer.

It was earlier reported that the Election Commission on Friday approved the Rs 850 crore bailout package for sugar mills.

As part of the package, a sugar buffer stock of 2 million tonne was also proposed to be created by the government for two years.

"The financial assistance would come from the Sugar Development Fund maintained by the Centre," the official said, adding the subsidies are likely to be initially valid for one sugar season.

The official said, the fund was set up for defraying expenditure for the purpose of building up and maintenance of buffer stock of sugar with a view to stabilising price of sugar." Later, it was amended to also allow expenditure on internal transport and freight charges to the sugar factories on export shipment of sugar with a view to promoting its export, the official said.

Mills pay a certain amount of cess on the sale of sugar, which goes to the Sugar Development Fund.

The package comes at a time when the domestic industry has been reeling under rising output projections and falling prices of the commodity.

According to latest estimates, the country's sugar output is seen topping 26 million tonne in the current season to September, up a whopping 35 per cent from last year.

Wholesale prices in the country have fallen from over Rs 2,100-2,200 a quintal in October to Rs 1,400-1,500 now.

Meanwhile, Muzaffarnagar has recorded the highest sugar produce for the current season and by the end of the season, it might rank first among the sugar producing districts in the state, official sources said today.

Uttar Pradesh Sugarcane Development Department sources said the 11 sugar mills in the district had produced a total of 90.45 lakh quintal sugar from 9.56 crore quintal sugarcane till April 13.

With crushing season to continue till the end of this month, it is estimated that the total sugar produce will reach 16 crore quintal by the end of the season, making it the highest producer in the state, they added.