Government incentives to boost sugar exports

Besides providing a subsidy of Rs 4,000/ tonne to the sugar mills for exports of up to 1.4 MT, the government also asked states to liberalise restrictions on ethanol supplies in order to boost the financial strength to the sugar sector.

Sai Nikesh D | The Dollar Business Sugar-Industry-TheDollarBusiness The Government of India, in a move to improve the financial health of the Indian sugar sector, has taken steps to provide the incentives to the export of raw sugar, besides providing interest free loans for liquidation of the cane dues. According to the Indian Sugar Mills Association(ISMA) report, the government on Thursday has cleared a subsidy of Rs 4,000 a tonne to sugar mills for exports of up to 1.4 Million Tonnes(MT) of raw sugar in the 2014-15 crop year, that began last October and will last till September. Welcoming the move, the ISMA said, “Sugar mills will need to gear up to produce the 1.4 MT of raw sugar in the balance 1-1.5 months of crushing period remaining. At the current global and domestic prices, raw sugar exports from India is just about viable with the incentives.” Prior to this, the government in February, 2014, had announced an export subsidy of Rs 3, 300 per tonne for 4 MT. But only 750,000 tonnes were actually exported under the scheme, says the ISMA report. In its report, the ISMA further said that the industry still requires additional incentives for 1-1.5MT, out of the total existing surplus of 2.5MT. This is the only way for the industry to pay cane price even at the fair and remunerative price level this season, otherwise cane price arrears to farmers which are at Rs 12,300 crore will very soon cross the peak of Rs 13,000 crore, recorded in last season, says the ISMA report. Meanwhile as a major move, the Union Minister on Friday asked the States to liberalise restrictions on ethanol supply, with a view that the ethanol blending with petrol would help the sector financially. In a communication to the Chief Ministers of the States, the Union Minster of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan, said that the Government of India has taken this decision in view of the challenges being faced by the Indian sugar sector and the mounting arrears of the cane dues to the farmers. According to an official release, the government has also modified the Ethanol Blending Policy (EBP) so as to facilitate achieving of 5% blend with petrol. Remunerative prices have been fixed to encourage the industry to supply ethanol to the Oil Marketing Companies. However, significant transaction barriers have affected the smooth supplies of ethanol for blending. In this regard, the Union Minister asked the states to make sure that the interstate issues like NOCs from State Excise authorities for allowing supplies, dispatching at the states boundaries, will not affect the free flow of the ethanol supplies.  

This article was published on February 20, 2015.

The Dollar Business Bureau - Feb 20, 2015 12:00 IST