Govt changes sugar subsidy structure

Under pressure from various sugar exporting countries for providing a direct subsidy to assist export of sugar, which does not comply with WTO norms, the government has changed its subsidy structure on sugar exports that was announced in March.

The government had earlier announced that all sugar exports (barring those under advance licence scheme) and including raw sugar done between the period from 19 April, 2007 and 18 April, 2008 would be eligible for transport subsidy at a flat rate of Rs 1,350 per tonne for mills located in coastal states and Rs 1,450 per tonne for mills in non-coastal areas.

However, amending the earlier structure, it has now been decided that subsidy on exports made by road or rail that does not involve movement by sea or ocean, will be made on the basis of actual expenditure incurred.

If the actual expenditure is higher than Rs 1,350-1,450 only then the latter will be reimbursed. And only those exports that are done through sea or ocean will be eligible for a fixed subsidy at a rate of Rs 1,350-1,450 per tonne.

"Countries like Thailand and Australia, which have also seen a bumper domestic sugar production this year and were losing certain export contracts, have been sending representations to the Indian government to rework the subsidy structure in accordance with WTO norms. Their argument was that exports to neighbouring through road or rail would be much cheaper than the subsidy and such exports would get an undue advantage," said an industry source.