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To help the sugar sector clear its cane dues, the food ministry is examining a proposal to raise the import duty from 15 to 40 per cent. It might also consider fixing the export incentive on raw sugar for two years against the current practice of revising it every two months.
Food Minister Ram Vilas Paswan said after an inter-ministerial meeting it could provide interest-free loans to millers of Rs 4,400 crore, over the granted Rs 6,600 crore.
The meeting was attended by Transport Minister Nitin Gadkari, Women and Child Development Minister Maneka Gandhi, Agriculture Minister Radha Mohan Singh and others.
Officials said the government had agreed to work on a mechanism to enable state governments to bear the burden of fixing a higher state advised price (SAP) over the price determined by the Centre.
An official said for May and June, the export subsidy on raw sugar could be fixed at Rs 3,300 a tonne."
The previous United Progressive Alliance (UPA) government had decided to give an export incentive of Rs 3,300 per tonne on raw sugar to bail out millers suffering losses due to the falling retail price and rising cane purchase cost. The incentive was part of a package determined by the previous government. It totalled Rs 6,600 crore.
According to sector estimates, sugar mills owe Rs 12,000 crore to farmers. The crushing season, which started in October, has almost ended.
"Of 4 million tonnes of raw sugar to be exported, only 400,000 tonnes have been shipped. So, to withdraw the subsidy at this stage will be wrong," a sector official said.
Officials said the ex-factory sugar sale price in Maharashtra was Rs 28-29 per kg, while the cost of production was Rs 31-32 per kg. In Uttar Pradesh, the ex-factory sale price was Rs 31-32 per kg, while the cost of production was Rs 35-36 per kg.
Sugar production of India, the world's second-largest producer and biggest consumer, is estimated to decline by four per cent to 24.2 million tonnes in the 2013-14 marketing year ending September. Still, the production is higher than the annual domestic demand estimated at 23-23.5 million tonnes.
