Sops finalised to boost raw sugar output & exports

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Govt wants 4 million tonnes of raw sugar exports in two years

To combat the glut of refined sugar and arrest the slide in price, a ministerial group has decided to offer incentives to increase production and export of raw sugar. It wants four million tonnes of raw sugar to be exported in the next two years.

Details of the incentives will be worked out soon and presented to the cabinet for approval, food minister K V Thomas told reporters after a meeting of the ministerial group, headed by agriculture minister Sharad Pawar, on Thursday.

Indications are that the incentive could be Rs 2,400 a tonne on raw sugar, and not Rs 3,500 demanded by the Indian Sugar Mills Association. It will be shared by the centre and state governments.

Sugar producers fear that export of raw sugar will lead to a loss of Rs 4,500 a tonne due to falling global sugar prices, which are around Rs 22,500 a tonne now. This is lower than the production cost of Rs 26,500, the industry claims.

The finance ministry is understood to be looking at increasing the import duty on sugar as well. Thomas said export incentives would be WTO compatible.

Till the end of December sugar mills produced 5,50,000 tonnes of raw sugar. Export of both white and raw sugar was about 5,30,000 tonnes, the association said in a statement.

Indian mills usually export white sugar, but a global glut plus higher capacity in Asia and Africa have made exports difficult. In India sugar production saw a 21 per cent dip to 8.55 million tonnes from April till January 15.

The cause was delays in crushing after a standoff between mill owners and cane growers over cane price.

Exports of raw sugar from India, the world’s biggest consumer of sugar, will cut into the shares of top suppliers Brazil and Thailand.

The ministerial group was set up to address the financial problems of the sugar industry. Based on its recommendations the government has already provided an interest subsidy on bank loans taken by the mills for payment to growers, who protested a couple of months ago against low prices for cane.

The quantum of export incentives will be worked out soon, taking inputs from the finance ministry, Thomas said, adding that the central portion of the incentive would be met from the sugar development fund.

Apart from Pawar and Thomas, the meeting was attended by finance minister P Chidambaram and civil aviation minister Ajit Singh.

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