With the food ministry hesitant to permit shipments fearing price rise during the festive season, sugar mills may not be allowed to fulfill their export obligation of nearly one million tonnes till Diwali in November.

“Some millers have approached us demanding an export release order. At the moment, we cannot allow this as sugarcane availability and production estimate for the next season was yet to be firmed up,” a senior food ministry official said.

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Mills had imported 2.08 million tonnes of sugar in the 2004-05 crop year (October-September) under the Advance Licence Scheme (ALS) as there was a shortfall in production then. Mills are required to export an equal quantity by March 2011.

Of the sugar imported, export obligation of 967,000 tonnes is yet to be fulfilled. Mills cannot export the sweetener without a release order from the ministry.

Mills situated in southern India are demanding they be allowed to fulfill their export obligation as there was a good demand from Southeast Asia.

The official said that the government did not want to take any chance by allowing sugar export as prices of the sweetener had moderated only recently, owing to an improved domestic output of 18.5 million tonnes for 2009-10 against an earlier estimate of 16 million tonnes.

Retail sugar prices — which touched nearly Rs 50 a kg in Delhi in mid-January, have come down to Rs 30 a kg now. In December last year, the Cabinet Committee on Economic Affairs had decided to extend the deadline to meet the export obligation till March 2011, considering the low production of sweetener during the current season ending September. It also gave an option to the millers to pay customs duty as applicable during the relevant period and get exempted from the export obligation.

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