INDIA: Government officially implements raw sugar export subsidy

March 5, 2015
Sugaronline |

The government on Thursday notified fixed subsidy of INR4,000 (US$65) a tonne for export of up to 1.4 million tonnes of raw sugar in the ongoing 2014/15 marketing year (October-September), according to the Press Trust of India. 

Last month, the Cabinet Committee on Economic Affairs (CCEA) had approved extension of subsidy on raw sugar export for the current year to help boost millers' cash flow and enable them payment of sugarcane arrears to farmers that have crossed INR145 billion so far. 

According to the notification issued by the Food Ministry, "For the sugar season 2014/15, the incentive shall be available for a fixed quantity of 1.4 million tonnes. ...The incentive shall be INR4,000 per tonne." 

Millers should utilise the incentive for making payment to farmers within three months of its receipt and utilisation to this effect should be submitted within one month through Sugar commissioner or Cane Commissioner, it said.

To ensure the incentive amount is used for making cane arrears, millers have been asked to open a separate no-lien bank account and furnish details of the same at the time of submission of the subsidy claim, it added. 

Other conditions will remain the same, as were last year except that in case of mills having alcohol production capacities, the incentive would be available if they offer to supply ethanol to Oil Marketing Companies (OMCs) under the Ethanol Blending Programme (EBP) up to 25 per cent of their annual production level of alcohol, the notification said.

That apart, sugar factories would also be entitled for such incentive for raw sugar supplies against import invalidation of advance authorisation license under Advance Authorisation scheme provided that such domestic supplies of raw sugar is refined and exported within 90 days of the supply, it added. 

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 as the new government did not extend for the current marketing year. 

The quantum of subsidy fixed at INR4,000 per tonne for this year is much higher than INR3,371 per tonne fixed last year for August-September period.

In the previous year, sugar mills had exported about 7.5 lakh tonnes of raw sugar under the export incentive scheme entailing INR2 billion subsidy burden on the exchequer. 

Cane price arrears for the current 2014/15 season across the country stood at INR14,547 crore as on February 15, as per the government data. 

Industry body ISMA estimates sugar production at 26 million tonnes in the current marketing year, against last year's 24.3 million tonnes. The demand is seen at 24.8 million tonnes for this year.