Govt announces sugar subsidy to boost export

Govt announces sugar subsidy to boost export

The move will help offload the rising inventory of sugar and help the sugar mills to clear sugar cane arrears to farmers. (DH File Photo)

New Delhi, DHNS: In a major decision likely to benefit cane-producing states of Maharashtra and Haryana ahead, the Centre on Wednesday announced a Rs 6,268 crore subsidy for export of 60 lakh tonne sugar from the country.

The move will help offload the rising inventory of sugar and help the sugar mills to clear sugar cane arrears to farmers.

The decision was taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi, which also announced an export subsidy of Rs 10,448 per tonne for 2019-20 to expedite exports.

"We have taken an important decision in the interest of sugarcane farmers. The cabinet has approved export subsidy for 6 million tonnes for 2019-20," Information and Broadcasting Minister Prakash Javadekar told reporters after the Cabinet meeting.

This will benefit millions of farmers in Uttar Pradesh, Maharashtra and Karnataka as well as other states, he added.

The Indian sugar glut in the global market is expected to push the prices to decade-low, according to experts.

India's sugar subsidies has already reached the World Trade Organisation, which has set up an adjudication panel after rival producers Australia, Brazil and Guatemala raised their voices against India that it provided trade-distorting subsidies on sugar.

The amount incurred to provide subsidy will be transferred directly to the farmers accounts, a source said after the cabinet meeting, adding it would help curb pilferage. Analysts, however,said that the move will help the BJP connect with farmers in cane producing belt ahead of elections.

The announcement is expected to further cement BJP’s support base among farmers in Maharashtra, Jharkhand, Haryana and Delhi.

Director General of All India Sugar Mill, Abinash, however, said that the move will not only reduce the surplus sugar inventory next season but would also give an additional cash flow to the tune of Rs 18,000 crore including the subsidy amount.

This will help mills reduce their carrying cost and interest burden. He said it would also help them to pay cane price to farmers on time.

With an expected global deficit next year of around 40 lakh tonne, the timely announcement of export programme will enable Indian millers to export sugar on time.

The food ministry will allocate export quota to individual mills in due course.

Hailing the decision, National Federation of Co-operative Sugar Factories Ltd Managing Director Prakash P Naiknavare said, "there is an inventory of 43.5 million tonnes in the country. Unless exports takes place, there is no way out. Now the ball is in the court of the industry how best they utilize this."

He claimed the export subsidy for the current year was around Rs 11,000 per tonne, which was linked to crushing of sugarcane. However, the export subsidy announced for 2019-20 at Rs 10,448 per tonnes is linked to marketing and other expenses, which is WTO compatible.

India produced record sugar in 2017-18 and it is expected to produce more than that this year. Last year, sugar output was over 32 million tonnes. India's annual domestic demand is only 26 million tonnes.