In a bid to clear cane arrears of about Rs 14,000 crore to farmers, the government has given mills a target of exporting four million tonnes of the sweetener for the marketing year ending September 2016.
The export quota of four million tonnes (MT) of all grades of sugar has been fixed for sugar factories for 2015-16 marketing year, the Food Ministry said in a circular today.
India's sugar output has exceeded demand for the fifth consecutive year, resulting in lower prices in the domestic markets and creating liquidity crunch for millers, who are unable to clear cane arrears.
"In view of the inventory levels with the sugar industry and to facilitate achievements of financial liquidity and enable industry to achieve long run viability, minimum indicative export quotas (MIEQ) are being specified for 2015- 16 sugar season from October 1," the circular added.
The quota has been fixed by taking into account average sugar production of three years including the current and last two sugar seasons, it added.
The ministry said, "The quotas shall be tradable among sugar factories on mutually agreeable terms and conditions."
Last month, Food Minister Ram Vilas Paswan had said that the Centre is considering a proposal to allow export of four million tonnes of sugar through barter trade against import of farm commodities to help mills offload surplus stock.
Due to surplus sugar production, ex-mill sugar prices have fallen below Rs 20/kg in the country, while the cost of production is over Rs 30/kg.
Sugar production is estimated at record 28.3 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year, while the total annual demand is pegged at 24.5 million tonnes.
