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Ram Vilas Paswan (pictured), Union minister for Consumer Affairs, Food and Public Distribution, has said the export subsidy on raw sugar might be extended for sale of up to 1.4 million tonnes (mt) in the 2014-15 crop marketing year (October-September).
The Department of Food and Public Distribution has proposed a subsidy of around Rs 4,000 per tonne of export, which will be finally decided by the Union Cabinet.
“A Cabinet note has already been circulated. But a final decision has not yet been taken on the issue. Our Department’s view is that export subsidy should be given for up to 1.4 mt sugar,” Paswan told reporters here on Wednesday.
According to Paswan, 1.4 mt of sugar exports can be undertaken during the year as there would be surplus quantities even after meeting the domestic demand of 24.8 mt.
The food and public distribution department’s proposal says that only those mills that have sold ethanol from crushing sugarcane will be eligible for the subsidy.
Although the sugar output is pegged at 25 mt in the 2014-15 marketing year, it could surpass the target, he added.
Last year, the Centre had announced a subsidy for exports of raw sugar of up to four mt 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 department had first fixed subsidy at Rs 3,300 a tonne for February-March, and later reduced it to Rs 2,277 for April-May. The figure of Rs 3,300 was reinstated for June-July, before increasing it to Rs 3,371 for the August-September period of the last marketing year.
Sugar mills exported about 750,000 tonnes of raw sugar in the 2013-14 marketing year with an incentive of about Rs 200 crore.
The sugar sector has sought export subsidy extension for this year as well. Mills say they are under financial crisis in the wake of depressed local prices as a result of higher production in the past few years.
According to Indian Sugar Mills Association (ISMA), domestic sugar prices are below the cost of production and that it has become difficult for mills to even pay cane price to farmers.
Sugar production in India, the world’s second-largest producer after Brazil, has increased by 27.3 per cent to 7.46 mt in the first three months of the current 2014-15 season, according to the ISMA.
ISMA estimates sugar production at 25-25.5 mt for the current season, while the government’s projection is at 25.05 mt.
During the 2013-14 season, India produced 24.4 mt of sugar and exported 2.11 mt, with consumption at 22-23 mt.
