"A cabinet proposal to extend export subsidy on raw sugar for 2014-15 marketing year (October-September) has been sent for inter-ministerial views. The Food Ministry has proposed a cap on quantity at 1.4 million tonnes," sources said.
Last year, the Centre had announced a subsidy for exports of raw sugar up to 4 million tonnes in order to help the cash-starved industry clear sugarcane arrears to farmers. The subsidy scheme ended in September 2014.
It had reviewed the quantum of subsidy every two months. The Food Ministry had first fixed subsidy at Rs 3,300 per tonne for February-March, and later reduced it to Rs 2,277 for April-May. The same was reinstated at Rs 3,300 for June- July before hiking it to Rs 3,371 for August-September period of last marketing year.
The sugar industry is seeking extension of the export subsidy for this year as mills are facing liquidity crunch to make cane payment in the wake of depressed local prices due to higher production in the last few years.
Also Read
Indian Sugar Mills Association (ISMA) said that domestic sugar prices are substantially below the cost of production and it has become difficult for mills to even pay the cane price to farmers.
Sugar production in India -- the world's second biggest producer after Brazil -- has increased by 27.3 per cent to 7.46 million tonnes in the first three months of the current 2014-15 season, according to the ISMA.
During 2013-14 season, the country had produced 24.4 million tonnes sugar and exported 2.11 million tonnes.