The freight assistance for sugar mills is scheduled to end on September 30.
The government would not extend export freight assistance to sugar mills beyond September, Union Agriculture and Food Minister Sharad Pawar said today.
On August 29, Finance Minister P Chidambaram had said the government must end assistance to sugar exporters since enough sugar had been exported out of the country.
The assistance, of Rs 1,350 a tonne for coastal mills and Rs 1,450 a tonne for non-coastal mills, is scheduled to end on September 30. It was aimed at providing support to the industry, which was reeling as record output induced a 35-40 per cent crash in prices and caused huge losses.
Shares of sugar companies took a beating at the Bombay Stock Exchange today with Bajaj Hindusthan losing 7 per cent to close at Rs 162.80, while Renuka Sugars lost 5.68 per cent to end the day at Rs 117.15.
The country is estimated to have shipped a record 4.5 million tonnes (mt) of the sweetener in the 2007-08 sugar season (October-September).
The food ministry has, in consultations with the cane commissioners of major producing states, arrived at a provisional sugar production estimate of 22 mt for the 2008-09 season, a 17 per cent decline from 2007-08. This has led to firm sugar prices.
Prices of the commodity gained nearly 25 per cent since July to Rs 1,800 a quintal (ex-mill in Uttar Pradesh). However, concerned over high inflation, currently at 12.1 per cent, the government released additional 500,000 tonnes to cool prices, which pulled down prices by 6-7 per cent.
