NEW DELHI: The Commerce Ministry has asked sugar mills to register their contracts with it before making exports -- with a cap of 10,000 tonnes -- a decision that industry said is restrictive and against the spirit of decision taken at the Prime Minister's meet in early May. 

In a notification dated May 14, the Directorate General of Foreign Trade (DGFT) said the export policy for sugar would be 'free' but prior registration of quantity is mandatory. It has said that exporters can submit one application for registration certificate (RC) for up to 10,000 tonnes. 

The notification comes after the Food Ministry issued yesterday a formal order allowing sugar export without any quantitative restrictions. 

The food ministry had also said that mills would not be required to obtain export release order (RO). 

Reacting to the development, Indian Sugar Mills Association (ISMA) President Gautam Goel told PTI that "the content of the DGFT notification is against the spirit of what was decided in the PM's meeting." 

The Food Ministry's notification announced freeing up of sugar export and removal of restrictions on shipments, while the conditions mentioned in DGFT notification are restrictive in nature, he added. 

"The DGFT should monitor export and not put restrictions. They should implement the decision taken in the PM's meeting in letter and spirit. We are going to make representation to the concern authority," Goel said, while expressing displeasure over the DGFT notification. 

Even senior officials of many sugar mills were surprised with the DGFT notification and were trying to seek clarification with both the ministries. 

An inter-ministerial meeting headed by Prime Minister Manmohan Singh had decided on May 2 to free sugar exports to help mills ship surplus sweetener and pay cane arrears that have mounted to Rs 10,000 crore. 

After the meeting, sources had said the government wants to expedite sugar exports and therefore it was decided to withdraw the condition of taking ROs from the Food Ministry. 

Before this decision, the government had allowed 2 million tonnes of sugar export in the 2011-12 marketing year. 

In a separate circular, the DGFT said that export against the RCs should be completed within 30 days from the date of issuance of such certificate. "Failure to export the allowed quantity within the stipulated time would invite debarment from further registration," it added. 

The government has permitted export as the country's sugar production is expected to touch 26 million tonnes in 2011-12, higher than the annual demand of 21.5-22 million tonnes.