The food ministry is mulling a subsidy scheme of up to 6 mln tn sugar exports for 2020-21 (Oct-Sep), which is similar to the one for 2019-20, two government officials close to the development said.
This comes after the finance ministry in June had asked the other departments to avoid seeking approval for any new schemes for the current financial year, they added.
The industry, on the other hand, was lobbying for an increase in subsidised quantum of exports to 7 mln tn.
"Internal proposal for 6 mln tn sugar exports has been forwarded by CD (chief director) sugar to the food minister. After the minister approves it, CCEA (Cabinet Committee on Economic Affairs) note will be circulated," one of the officials told Cogencis.
In June, the finance ministry had asked all departments to abstain from seeking approvals for new schemes and suspended implementation of new proposals, including those which received in-principle nod by the government, till Mar 31.
In the current sugar season, the Centre is offering a total subsidy of 10.45 rupees for every kg of sugar exported, and has decided to give assistance even if mills export half of their allotted quota.
The government is also likely to stick to the current subsidy amount as it is within the ambit of World Trade Organization rules.
The subsidies India gave in 2018-19 on the export of sugar were challenged by Brazil, Australia and Guatemala in the World Trade Organization, on the grounds that they distorted the global market.
The European Union, Australia, New Zealand, Brazil, Canada, and Russia too had raised questions on India's sugar policies at the WTO Committee on Agriculture.
According to the WTO's Agreement on Agriculture, India can give subsidies on transportation, freight, marketing, handling and processing of sugar till 2023.
The government has been subsidising exports of sugar to help clear the surplus in the domestic market and support domestic prices.
Without government support, it is impossible for Indian sugar to make way into global markets due to the gap between domestic and international prices.
The Indian Sugar Mills Association has pegged the closing stocks as on Sep 30 at 11.5 mln tn.
At a time when the economy needs attention more than ever and every penny seems to matter to the government, it will be interesting to see how far can the Centre support an industry sustain that has become used to crutches.
The current sugar season is about to end in less than four weeks, and the government has been able to pay only 10% of the promised subsidy on sugar exports so far. More so, some export subsidy dues from 2018-19 have also not been paid. End