Indias decision to end a monopoly in sugar exports has met with only limited success, but foreign sales could pick up as private traders familiarise themselves with the world market, officials said on Tuesday.
The Agricultural and Processed Food Products Export Development Authority (Apeda) has released 66,000-67,000 tonnes of sugar for exports out of 250,000 tonnes authorised by the government, N R Seshadri, a senior Apeda official told Reuters.
The response is not bad, Seshadri said. But it is not very encouraging because international prices are low.
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The government in February authorised the export of 250,000 tonnes of sugar in the 1996/97 (October-September) season through Apeda, an agency functioning under the Commerce Ministry. It was the first export authorisation since January when the government ended an export monopoly enjoyed by the Indian Sugar and General Industry Export-Import Corporation (Isgiec), a private company set up by the sugar milling industry.
All exports were so far funnelled, or canalised, through the Isgiec.
The government decision on exports was considered an important step towards freeing the sugar industry from a decades-old system of licensing, pricing and distribution geared to balance the interests of producers and consumers. India began abolishing licences needed to take up manufacturing in many industries under an economic liberalisation programme launched in 1991.
The government has not abolished licensing for sugar mills, but has substantially eased the criteria for giving licences and relaxed restrictions on trade.
After Prime Minister H D Deve Gowda took office in June, his centre-left United Front coalition vowed to do away with a licensing system. The decision to allow more firms to export was seen as a preliminary step. But Industry officials say deregulation could lead to competing mills undercutting on export prices, and could lead to exports drying up as traders were exposed to mounting losses.
The quality of exports could also suffer, they say. Very little sugar has moved in 1996/97, said Vimal Jain, secretary of the Indian Sugar Mills Association. Decanalisation will affect exports. India exported a little more than one million tonnes of sugar in 1995/96. V M Bhatnagar, a senior official with the National Federation of Co-operative Sugar Factories said applications for export of less than 100,000 tonnes of sugar had been received by Apeda, against the offer of 250,000 tonnes. (Reuter)
But Seshadri said it was the first experience with sugar exports and sales would pick up in due course.
It takes time for private exporters to understand the sugar market. It is very new, Seshadri said.
He said the export quota of 250,000 tonnes was available until the end of the current season. Exporters also needed time to get in touch with importers, he added.
Seshadri said nearly 64,000 tonnes of sugar, out of 67,000 tonnes released by Apeda, was bound for Pakistan.
India produced an all-time high of 16.4 million tonnes of sugar in 1995/96 (October-September) and the new season started with stocks as high as 8.1 million tonnes, government officials said.
India expects output of about 14 million tonnes in 1996/97.