New Delhi: The government is considering extending subsidy on raw sugar exports for the ongoing marketing year 2014-15 by giving a higher incentive of Rs 4,000 per tonne to cash-starved mills.
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. The subsidy scheme ended in September 2014.
"A proposal to extend the subsidy on export of raw sugar for 2014-15 marketing year (October-September) is under active consideration. Based on the set methodology, the subsidy has been calculated at around Rs 4,000 per tonne considering the current global price situation," a government source said.
A Cabinet note has already been prepared and will be circulated for inter-ministerial consultation after approval from Food Minister Ram Vilas Paswan, another source said.
Last year, the Centre reviewed the quantum of subsidy every two months. It first fixed subsidy at Rs 3,300 per tonne for February-March, which was reduced to Rs 2,277 for April-May and the same was reinstated at Rs 3,300 for June- July before hiking it to Rs 3,371 for August-September.
Sugar mills exported about 7.5 lakh tonnes of raw sugar in 2013-14 marketing year (October-September) with an incentive of about Rs 200 crore.
The sugar industry is 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.
Indian Sugar Mills Association (ISMA) said that domestic sugar prices are substantially below the cost of production and it has become difficult for mills to even pay the cane price to farmers.
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.
ISMA estimates sugar production at 25-25.5 million tonnes for this season, while the government's projection is 25.05 million tonnes for the same period.
During 2013-14 season, the country had produced 24.4 million tonnes sugar and exported 2.11 million tonnes.
