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Food Ministry is likely to increase the export subsidy on raw sugar to Rs 3,371 per tonne during August-September period, compared to Rs 3,300 per tonne fixed for the previous two months.
In February, the previous government had announced a subsidy for export of raw sugar up to 4 million tonnes during 2013-14 and 2014-15 marketing years (October-September) in order to help the cash-starved industry to clear arrears to sugarcane farmers.
The Centre had fixed the subsidy at Rs 3,300 per tonne for February-March and decided to review it every two months.
However, the incentive on raw sugar exports was reduced to Rs 2,277 per tonne for April-May. The export subsidy for June-July was reinstated at Rs 3,300 per tonne by the new Food Minister Ram Vilas Paswan.
According to sources, the Food Ministry has calculated the rate of export incentive for August-September at Rs 3,371 per tonne by taking into account the average global raw sugar prices and exchange rate of rupee vis-a-vis dollar during last seven days of preceding month July.
Sources said the proposal has been sent to the Food Minister for the final approval.
Sugar industry has paid Rs 47,852 crore to cane farmers till July 31 of the current marketing year ending September while Rs 9,252 crore is still unpaid.
Out of Rs 9,252 crore arrears, Uttar Pradesh millers owe maximum to cane farmers at Rs 5,741.74 crore followed by Karnataka mills at Rs 1,794.68 crore and Tamil Nadu mills at Rs 504.40 crore.
The Sugarcane (Control) Order, 1966 stipulates payment of cane price within 14 days of supply, failing which interest at the rate of 15% per annum on amount due for the delayed period is payable. The powers for enforcing this provision lie with the States/UTs.
India's sugar production is estimated to rise by 4% to 25.3 million tonnes during 2014-15 marketing year starting October, despite a drop in cane area by 2%, according to industry body ISMA.
Sugar production of India, the world's second largest producer, is estimated at 24.3 million tonnes in the 2013-14 marketing year. The annual demand is about 24 million tonnes.
