Sugar mills in Maharashtra have completed contracts for export of raw sugar to the tune of 61 lakh quintals this season. They had signed contracts for 66 lakh tonne of raw
sugar, senior officials from Maharashtra State Cooperative Factories Federation (MSCFF) said.
Since the contracts have already been signed, a large quantum of exports had to be honoured in the absence of clarity on the export subsidy, Sanjeev Babar, MD, MSCFF said. There has been uncertainty regarding this issue, he said. “The federation has been seeking clarity on the issue of export subsidy and wanted the notification on the subsidy with retrospective effect in order to avoid losses to mills,” he added.
Letters have been sent to the new ministry and we now await measures from the new government, he said.
Senior industry officials said that withdrawing the incentives at this stage would be wrong. Currently, the ex-factory sugar sale price in Maharashtra stands at R28-29 a kg, while the cost of production is R31-32.
The UPA government had announced export subsidy of R3,300 a tonne on raw sugar to help the industry export excess stock and clear dues. The subsidy was for February and March. For April and May, the government had reduced it to R2, 277 a tonne, owing to change in dollar-rupee exchange rates.
According to Indian Sugar Mills Association, although exports have surged this year, a 31% cut in subsidy for raw sugar production for April and May from R3,300 per tonne offered in February and March has slowed the pace of exports.
They say the subsidy quantum for April and May should have been around R3,800 per tonne, factoring in the appreciation of the rupee, and not R2,277 per tonne, as decided by the food department. Maharashtra, the largest producer, has produced around 7.70 million tonne until May 15 this year, the same as the previous year.
Arrears to cane farmers across the country have mounted to about R10,000 crore from about R3,000 crore at the start of the current marketing year in October 2013. In December, the centre had approved a R6,600 crore interest-free loan to the sugar industry to help make payments to sugarcane farmers.