Maharashtra, India's top sugar producing state, on Friday exempted sugar exporting mills from paying cane purchase tax for the 2015/16 marketing year that started on Oct. 1, the state's finance minister said.

The cane purchase tax will be exempted for mills exporting sugar according to government guidelines, Sudhir Mungantiwar said in his budget speech.

The state levies 3 percent purchase tax on sugarcane, which works around 9 rupees per 100 kg, said an official with Maharashtra State Cooperative Sugar Factories Federation.

The cane purchase tax exemption and other incentives provided by the federal government will encourage mills in raising exports, said a Mumbai-based dealer at a global brokerage.

India, the world's second-biggest sugar producer, is likely to export 1.9 million tonnes to 2 million tonnes of sugar in the 2015/16 marketing year started on Oct. 1, a leading trade body said in a statement on Friday.