NEW DELHI – The government is likely to release 20 bln rupees in September to sugar mills, which is a part of the subsidy payable to them on exports done during 2018-19 (Oct-Sep) and 2019-20, two senior government officials said.

"Budget for export subsidy may be allocated to DFPD (Department of Food and Public Distribution) by the end of first week of September. Currently, there are no funds available," one of the officials said.

EXCLUSIVE

The Centre currently owes 75 bln rupees to sugar mills as export and buffer subsidy from the 2018-19 and 2019-20 seasons.

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

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.

"Mills have done exports as per government order, and also submitted all papers in time. They had done deals on the basis of payments coming on time. All those calculations have gone wrong... mills are in distress," said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories.

But, money which will come in September will be useful to start the season, Naiknavare added.

The subsidy will go directly into farmers' bank accounts against payment of outstanding cane dues and the balance amount will be credited to accounts' of sugar mills.

So far, mills across the country have exported 5.3 mln tn sugar in the ongoing season.

For 2020-21, the industry has sought extension of export subsidy scheme to encourage mills to export the sweetener and reduce supply glut. Exports are unviable without government support as Indian sugar is expensive compared to its peers.