The Cabinet Committee on Economic Affairs (CCEA) is expected to discuss a proposal to increase the Fair and Remunerative Price (FRP) of sugarcane for 2014-15 crushing season starting from October by Rs 10 per quintal to Rs 220 in a meeting scheduled on Thursday. 

 

Officials in the know said that the CCEA is also expected to discuss another proposal to provide Rs 3,500 per tonne cash subsidy on export on raw sugar. 

 

"There was a meeting between food and agriculture ministry officials today following which a proposal was made  to hike the subsidy component to Rs 3,500 per tonne as against earlier proposed Rs 2,000 per tonne," a senior official said. 

 

The CCEA had on Tuesday, deferred a decision on granting a cash subsidy for export of 4 million tonnes of raw sugar because of difference over the quantum of subsidy. 

 

The food ministry had proposed a subsidy of Rs 2,000 per tonne which would have cost the exchequer Rs 800 crore, while a subsidy of Rs 3,500 per tonne would cost the exchequer Rs 1,400 crore. 

 

Both the subsidies would be adjusted from the Sugar Development Fund (SDF) over a period of two years. Accretions  and deletions  from  SDF is maintained in the Budget. 

 

On FRP, officials said a Rs 10 per quintal increase has been suggested based on the suggestions of the Commission For Agriculture Costs and Prices (CACP)  

 

The subsidy for export was part of the relief package finalised by a high-powered Informal Group of Ministers (iGoM) chaired by Agriculture Minister Sharad Pawar.

 

In 2007-08, too government had given subsidy of Rs 1,450 per tonne to export six million tonnes of sugar. The current incentive is being worked on the same lines, sources said.     

 

The industry body Indian Sugar Mills Association (ISMA) has also suggested an incentive of Rs 3,500 per tonne on raw sugar export in view of weak global prices.     

 

India, the world's second biggest sugar producer, manufactures very small quantity of raw sugar. It largely consumes sugar in white form.

 

Last month, the cabinet committee on economic affairs (CCEA) cleared a proposal to allow mills access Rs 6,600 crore of interest-free loans. The interest-free loans will be disbursed to mills through a separate bank account to ensure its strict monitoring.

 

The entire interest burden estimated at Rs 2,750 crore over the next five years will be borne by the government from the SDF. The Rs 80,000-crore sugar industry has been facing a cash crunch due to higher cost of production and lower selling prices in the wake of surplus output over the past few years.