Relief unlikely on sugar export obligation period

The commerce and industry ministry is not in favour of extending the export obligation period for sugar, according to a government official.

The commerce department has also pointed out that banning export of sugar could invite litigation since it tantamounts to interfering in the commercial decisions of the trade.

The Committee of Secretaries is looking into the matter and a final decision would be taken shortly. At present, companies are required to meet their export obligation within two years.

Companies such as Renuka, Dhampur, Sakthi, EID Parry and Thiru Arooran among others had imported about 26 lakh tonne of raw sugar between 2002-03 and 2004-05 season (October-September) under the advance licence (AL) scheme.

Under this scheme, companies have to re-export one tonne of white sugar against every 1.05 tonne of raw sugar imported within a period of two years. Selling sugar outside India fetches a price that is higher by about Rs 2,000 a tonne compared with domestic prices.

Of the total amount, about nine lakh tonne has been exported. In case the ban gets revised, this would lead to the export of the remaining amount as it would fetch higher profits for companies.

Countries like Pakistan, Bangladesh and Thailand are facing a sugar shortage. The Indian Sugar Exim Corporation has already exported two lakh tonne sugar to Pakistan on behalf of various sugar companies.

In case the ban stays, the huge stocks of sugar would have a bearing on the domestic prices, according to industry sources. The prices may come down to Rs 1700-1800 range.

"The sugar industry is keen to export. The production for the next season is projected to grow to 220 lakh tonne as against 191 lakh tonne this year. After meeting the domestic demand a huge surplus would remain and it must be exported," said Indian Sugar Mills Association president C S Nopany.

Previously, due to higher domestic prices, the companies had delayed exports. However, when the international sugar prices firmed up companies got eager to export and realise better price.

Figures show that various companies together have exported more than six lakh tonne in the period between April and June this year. However, the government banned the exports of sugar till March 31, on the recommendation of the Cabinet Committee on Prices (CCP).

On July 16, Union Food and Agriculture Minister Sharad Pawar said the government was planning to lift the ban on sugar exports from the beginning of the next cane-crushing season in October this year.

He also said the government was considering the industry's proposal to allow those sugar mills, which had imported raw sugar to export earlier than October.