NEW DELHI (Feb 20) -- Indian Sugar Mills Association has sought New Delhi’s assistance to export 1 million ton-to-1.2 million tons of surplus sugar ahead of an expected notification to scrap export tax on the sweetener as demanded by the industry that is hobbling under bumper yield, the director general of the trade body said. "If I look at 261 lakh tons (26.1 million tons) of production and we are talking about 250 lakh tons (25.0 million tons) of consumption, then obviously we clearly have 10 lakh tons-12 lakh tons (1 million tons-1.2 million tons) of surplus sugar...so that is what we have requested the government that it should actually help us export this surplus sugar," Abinash Verma told NewsRise in an interview. ISMA recently revised its sugar production estimate for the current season to 26.1 million tons from 25.1 million tons. "We are not very sure whether we will come out with a third estimate or not. We will try and visit the whole situation on the 7th of March and see whether we need to revise it (production estimate) or not," Verma said. Typically the trade body doesn’t revise its forecast, but this time it is receiving "indications" which are very different, he added. In an attempt to stabilise prices and ensure timely payment of cane bills to farmers, New Delhi earlier this month doubled the import tax on sugar and capped the amount of sugar that can be released by mills. Still, a scrapping of export duty may not actually help the local producers as global prices are trailing that of local market, Verma said. That means, shipping sugar even at zero per cent export duty will incur a loss, he added. But sucking excess sugar out from the local market through exports will help lift domestic prices at least by a rupee per kilogram, which will, in turn, offset any loss incurred from shipping the sweetener overseas, Verma said. “If (local) prices increase by 1.5 rupees-to-2 rupees a kilogram, one would have actually made a profit,” he added. Sugar prices in the local markets have gained three-to-four rupees a kilogram after declining by six rupees per kg. “Whether we are going to sustain at this level of improved prices or not…a lot will depend on the evacuation of this surplus,” Verma said. Meanwhile, the ISMA expects a scheme that the government had introduced in 2015-2016 by assigning a quota to each sugar mill will help stabilise prices in the market, Verma said. It has already proposed New Delhi to re-introduce it. "The scheme was successful…our domestic prices had increased by ten rupees. We have proposed the same scheme to the government" this time, he added. In 2015-2016 sugar season, the government had specified minimum indicative export quotas.
India can have a better chance to export next crop season (2018-19) as Brazil is expected to shift to ethanol on higher crude prices, while sugar associations of Pakistan hinted at not generating any surplus next year, Verma said.