Sugar exim corp to give $15 a tonne incentive for exports

The Indian Sugar Exim Corporation (ISEC) has decided to give an incentive of $15 (about Rs 615) a tonne for the export of 500,000 tonnes of sugar to encourage higher exports and stabilise domestic prices, which have been slipping steadily amid high output estimates.

"ISEC will give a $15 a tonne subsidy for export of about 500,000 tonnes of sugar...It is the maximum we can afford," an industry official said.

The incentive will be in addition to the government's export subsidy of Rs 1,350 a tonne to mills in coastal areas and Rs 1,450 for mills in non-coastal areas. The subsidies, which began mid-April, are valid till April 18, 2008.

Indian mills have exported only about 600,000-700,000 tonnes of sugar since the beginning of this year, though they obtained permits for the export of over 1.5 million tonnes due to weakening international prices.

After touching a multi-year high of over $500 a tonne in June last year, international prices have been steadily falling in the wake of higher global output. Prices have eased to around $317-320 a tonne, making exports difficult.

Exports from India have not picked up despite the incentives as buyers have been asking Indian mills to pass on the subsidy to them.

The official said ISEC will give the subsidy only after the sugar is shipped out of the country and mills prove they did not pass on the incentive to buyers.

The government and industry bodies are keen on mopping up excess sugar from the market to stabilise prices, which have fallen below Rs 1,300 per 100 kg.

The country is likely to have a surplus of over 10 million tonnes of sugar this year, including a carryover from last year, as output is seen over 26 million tonnes.