NEW DELHI – The Indian Sugar Mills Association, in a letter to the Prime Minister's Office, has urged the government to "urgently" announce the sugar export policy for 2020-21 (Oct-Sep) as mills are unable to sign new contracts, an industry source said.
"The new sugar season has started on 1st October (Oct 1) and there are a lot of enquiries for Indian sugar from countries like Malaysia, Indonesia, Bangladesh, Sri Lanka, Middle East countries, East African countries etc," the source told Cogencis.
"…October to April is an opportune time for India to export because Brazil does not produce sugar in this period, and, therefore, the export policy is urgently required."
The government is likely to have delayed the export policy announcement for this season due to its poor state of finances amid the raging COVID-19 crisis.
The state of government finances is so dire that the Centre has been able to pay only 10% of the promised subsidy on sugar exports for this season. It is also yet to pay some export subsidy dues from 2018-19.
Due to the absence of any clear export policy for this season, mills are also hesitant to start production of raw sugar as they are unsure of the quantity and future deals that can be signed.
Typically, the government announces the sugar export policy for the next season in advance, after which mills start signing deals and produce raw sugar as per export demand.
The food ministry had floated a draft Cabinet note for subsidy of 10.5 rupees per kg on export of up to 6 mln tn sugar, similar to the previous year. However, it is still waiting for comments from the finance ministry, a senior government official said today.
Instead of subsidising exports, the government is in favour of ethanol and has been encouraging mills to go for the biofuel and reduce production of the sweetener.
"For ethanol to become a significant alternative to surplus sugar, which is currently estimated at 6-7 mln tn, it will take at least 2-3 years. Hence, till such time, we will need to export the same to reduce the surplus inventory, generate revenue and cash flows, and pay cane price to the farmers and repay the bank loans," the source said.
In September, the Prime Minister's Office had said that the government aimed to reduce export of subsidised sugar by 20% every year to help meet World Trade Organization rules on phasing out such sops.
Beyond 2023, India will not be entitled to give subsidies on transportation, freight, marketing, handling and processing, under the World Trade Organisation Agreement on Agriculture.