Cabinet Committee on Economic Affairs (CCEA) has approved a subsidy amount of Rs. 3,333 per tonne for export of 4 million tonne of raw sugar for February and March, government sources said. 

 

The subsidy amount has been calculated on the basis of the current exchange rate. “The current subsidy amount would be reviewed in April with respect to the then exchange rate,” a source said. 

 

The food ministry has suggested an incentive of Rs. 2,000 per tonne in the cabinet, while the agriculture ministry has recommended Rs. 3,500 per tonne. Sugar industry, which is struggling because of high cane price and low sugar price, has also demanded the subsidy. 

 

“Market sentiments should now improve and the domestic sugar prices will stop falling helping the sugar mills to reduce some of their losses. Though not much time is left for producing raw sugar in the balance crushing period during this season, we expect that this will give some of the much required liquidity to the sugar mills,” said sugar industry representative body, Indian Sugar Mills Association (ISMA). The informal group of ministers headed by Agriculture minister Sharad Pawar had earlier this month approved the incentives for export of over 4 million tonnes of raw sugar over a period of two years. Though there have dispute over the amount of subsidy. ISMA also said that the subsidy push would help clear off a part of the cane price arrears of the farmers, which has already crossed Rs. 10,000 crore and is feared to touch Rs.15,000 crore in the next couple of months. The Rs. 80,000 crore industry has been facing a cash crunch due to higher cost of production and lower selling prices in the wake of surplus sugar. The PM had appointed an informal group of ministers in November last year, to look in to the issues of sugarcane farmers and sugar industry. The Finance Minister P Chidambaram, civil aviation minister Ajit Singh, petroleum minister Verappa Moily and food minister are a part of the PM appointed panel. 

 

As per the WTO recommendation for marketing and promotion of a new product in the global market, the Indian government has recommended the assistance to raw sugar sector. CCEA has already approved financial assistance of Rs.6,600 crore to the sugar industry.