MUMBAI – The government is likely to release 10 bln rupees over the next two weeks, which is a part of the subsidy payable to sugar mills on exports in 2018-19 (Oct-Sep), a senior government official said.

The disbursal will come as a respite to many mills who have slowed down their exports in the current season due to tight finances coupled with a delay in receipt of previous year's subsidy.

The government had fixed an export target of 5 mln tn sugar exports last season, offering a subsidy of 45 bln rupees.

However, the country was able to export only 3.8 mln tn sugar in the last season, which entitles mills to receive subsidies worth 29-30 bln rupees.

Of the total amount, 10 bln rupees have already been transferred to mills and another 10 bln rupees would be given soon, the official said.

"The balance amount of 9-10 bln rupees is most likely to be paid before the end of this financial year," the official said on the sidelines of All India Sugar Trade Association Sugar Conclave 2020 late Sunday.  

For the current sugar year, the government is providing 62.7 bln rupees as subsidy to mills to export 6 mln tn sugar. Each kilogram of sugar exported is entitled to subsidy of 10.45 rupees.

With rise in global sugar prices to multi-month highs over 14 cents a pound on Friday, it is a very good opportunity for mills to ship sugar out of the country at better prices, National Federation of Cooperative Sugar Factories Managing Director Prakash Naiknavare, said.

Release of subsidies of the previous season's exports would further encourage mills to push exports, Naiknavare said.

For 2019-20, mills have so far signed deals for 2.8 mln tn sugar exports, of which 1 mln tn is likely to have been shipped.  End

US$1 = 70.87 rupees