In a bit of a disappointment for the sugar industry, the Food Ministry although in favour of extending export subsidy, will only do it to the extent of 1.4 million tonnes of raw sugar in the ongoing 2014-15 marketing year. Last year, the Centre had announced a subsidy for exports of raw sugar up to 4 million tonnes in order to help the cash-starved industry clear sugarcane arrears to farmers. However, the subsidy scheme ended in September 2014.
The sugar industry has been seeking extension of the export subsidy for this year as mills are facing liquidity crunch to make cane payment in the wake of depressed local prices due to higher production in the last few years. Sugar production in India, the world's second biggest producer after Brazil, has increased by 27.3 percent to 7.46 million tonnes in the first three months of the current 2014-15 season, according to the ISMA.
The industry is estimated to have incurred losses to the tune of Rs 3000 crore, resulting from imbalance between input costs and the output since cane prices continue to be regulated by government, while sugar prices continue to remain market determined.
So far, the food ministry has reviewed the quantum of subsidy every two months. While, first fixed subsidy at Rs 3,300 per tonne for February-March, it has been later reduced to Rs 2,277 for April-May. Nevertheless, the same has been reinstated at Rs 3,300 for June- July before hiking it to Rs 3,371 for August-September period of last marketing year. Sugar mills have exported about 750,000 tonnes of raw sugar in 2013-14 marketing year (October-September) with an incentive of about Rs 200 crore.
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