Indian govt allows exports of 4 million tonne of raw sugar

Indian govt allows exports of 4 million tonne of raw sugar

Indian govt allows exports of 4 million tonne of raw sugar

Our bureau
New Delhi, Jan 16:

An informal group of ministers (GoM), headed by India’s Agriculture Minister Sharad Pawar, today approved incentives to the loss making sugar industry for exports of up to 4 million tonne of raw sugar during next two years.

The PM-constituted panel was set up to address the financial problems being faced by the sugar industry.

In line with the panel’s recommendations, the Centre has already announced interest subsidy on bank loans to be availed by sugar mills for paying cane farmers.

“We have decided to give incentives to promote raw sugar
as a new product. Incentives will be given for export of up to
40 lakh tonnes for two seasons,” Food Minister K V Thomas said  after the meeting.
The quantum of incentives would be worked out soon, taking
inputs from the Finance Ministry, he said.  This proposal may come for discussion in the next Cabinet meeting, he added.

Thomas said the policy of incentives is compatible with
WTO norms and would be reviewed constantly.   Incentives would be given per tonne raw sugar basis from the Sugar Development Fund of the Food Ministry.
Besides Thomas, Finance Minister P Chidambaram and Civil
Aviation Minister Ajit Singh were present at the meeting.
According to sources, the Food Ministry has proposed an
incentive of Rs 2,390 per tonne on raw sugar with the burden
to be shared by both the Centre and state governments.
However, the panel is believed to have disfavoured and
asked to rework the quantum of incentives, they said.

Indian Sugar Mills Association has suggested an incentive
of Rs 3,500 per tonne.

Export of raw sugar presently would lead to a loss of Rs
4,500 per tonne because global prices are ruling lower at Rs
22,500 per tonne as against the production cost of Rs 26,500
per tonne, sources said.
Traders are of the view that an incentive below Rs 3,500
per tonne is not viable for sugar mills to undertake raw sugar
exports at current global prices.

Sugar mills are facing cash crunch as sugar prices have
come down below the cost of production in view of surplus
availability. They are also saddled with huge cane arrears.

Sources said an incentive of Rs 2,390 per tonne as suggested by the Food Ministry would cost the government around Rs 1,000 crore for two years.

If incentive is raised to Rs 3,500 per tonne, it would cost the exhequer Rs 1,400 crore for export of 40 lakh tonnes in two years.

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