To export about four million tonnes (mt) of raw sugar, the central government is working on a cash incentive for mills. Based on the current market price of raw sugar, the scheme may be to the tune of about Rs 1,200 crore.

Officials said discussions on the incentive had started and a final decision would be taken in consultation by the food andagriculture ministries. The incentive is in line with the recommendation of an informal group of ministers chaired by Agriculture Minister Sharad Pawar. The panel had recommended the government provide an incentive to export four mt of raw sugar on a per-tonne basis, which would be adjusted from the Sugar Development Fund (SDF).

According to a PTI report, Food Minister K V Thomas met Pawar here on Tuesday to discuss additional relief measures for the sugar sector. These included steps such as banning imports and incentives for producing raw sugar. "In a meeting with the agriculture minister today (Tuesday), we discussed additional incentives to sugar mills. We also discussed other recommendations of the panel, especially on incentivising raw sugar production," Thomas said.

In 2007-08, the government had provided subsidy of about Rs 1,450 a tonne to export six mt of sugar. Though the current incentive is being worked on the same lines, it will only be applicable for raw sugar exports. Traditionally, India produces only white sugar, which is widely consumed on the country.

Sources said if the incentive was provided at the right time, India could export about two mt of raw sugar in the international market, largely to Indonesia, Iran, Sri Lanka, and West Asia.

"Currently, the cost of producing raw sugar is Rs 26.5-27 a kg, while the free-on-board price in Mumbai is Rs 21-22 a kg. So, without the incentive, no mill will be position to export raw sugar," an official said.