The apex industry body for private sugar mills, ISMA, has urged the government to immediately allow exports of at least 20 lakh tonne of the sweetener to improve their cash flows for making payment to cane farmers.
The top officials of Indian Sugar Mills Association (ISMA) met Food Minister K V Thomas last week and made a presentation on the overall scenario of the sector.
In the presentation that touched upon export strategy, ethanol pricing and reforms in the sector, ISMA pointed out that cash flow situation is "very tight" in both private and co-operative mills and therefore "large export window was needed at the start of the (2011-12) season".
During 2010-11 marketing year ended last month, the government had allowed exports of 15 lakh tonne of sugar under Open General Licence (OGL) in three equal tranches.
"Export of over 40 lakh tonne is required (in the current 2011-12 marketing year). At least 20 lakh tonne OGL export permission is required immediately... Small tranches of exports will not help this time," the presentation said.
ISMA has even proposed to the government that additional exports could be allowed subject to a condition that mills would have to import similar quantities in case of shortages.
The industry body has noted that maximum cash would be required between November 2011 and March 2012 as during this period 90 per cent of sugarcane are being crushed and mills need fund to make payments to cane farmers.
India, the world's second largest sugar producer after Brazil, resumed exports of sweetener from last marketing year after the country's sugar output exceeded the annual domestic demand after a gap of two years.
Sugar production rose to 243 lakh tonne in 2010-11 marketing year from nearly 190 lakh tonne in the previous year. The annual domestic demand is 215 lakh tonne.
In the current 2011-12 marketing year starting this month, the sugar production is pegged at 260 lakh tonne based on the ISMA's projection and 246 lakh tonne as per the food ministry's estimates.
"At Government estimates of sugar production of 246 lakh tonne, there is still surplus of 33 lakh tonne," ISMA said, while making a case for allowing immediate exports.