Amid farm stir, Centre approves Rs 3,500-crore sugar export subsidy

Sugarcane farmers to get the amount directly into their bank accounts

The central government on Wednesday approved a subsidy of Rs 3,500 crore to sugar mills for the export of around six million tonnes (MT) in the ongoing 2020-21 marketing season that started in October.

It also cleared pending export subsidy of around Rs 5,360 crore, which will be passed on directly into the bank accounts of farmers through an escrow account in a week’s time.

Both the decisions are meant to enable mills to make timely payment to sugarcane farmers in the current year and clear their arrears, which according to government sources is estimated to be around Rs 3,574 crore as on December 10.

The approval comes at a time when thousands of farmers, many from sugarcane growing belts of western Uttar Pradesh, are protesting against the three farm Acts recently passed by the Centre.

The exports will help the industry generate around Rs 18,000 crore in revenues at current international prices, which will also help clear dues.

Both Prime Minister Narendra Modi and Food Minister Piyush Goyal welcomed the decision, saying it was taken in farmers’ interest.

The Cabinet Committee on Economic Affairs (CCEA) has approved the subsidy at the rate of Rs 6 per kg for the current year, much lower than the Rs 10.50 per kg in the 2019-20 marketing year, keeping in view favorable international prices.

Briefing reporters about the decision, Information and Broadcasting Minister Prakash Javadekar said both “sugar industry as well as sugarcane farmers are in crisis” because of high domestic production in the last two-three years.

This year, too, production is expected to be 31 MT as against the annual demand of 26 MT. The subsidy aims to cover expenses incurred on marketing, including handling, upgrading, and other processing costs and costs of international and internal transport and freight charges on export of up to 6 MT of sugar, limited to Maximum Admissible Export Quota (MAEQ) allocated to sugar mills for sugar season 2020-21.

In 2019-20, the government provided a lump sum export subsidy of Rs 10,448 per tonne, costing the exchequer Rs 6,268 crore. Mills exported 5.7 MT of sugar against the mandatory quota of 6 MT, according to official data.

Welcoming the decision, Abinash Verma, director general of Indian Sugar Mills Association (ISMA), said considering that several large importing countries have been enquiring about Indian sugar and with the drop in production in Thailand India has an opportunity to export to its traditional markets like Indonesia and Malaysia. 

“The Indian sugar industry should be able to fulfill the target of 6 MT of sugar exports in 2020-21. This will help reduce sugar stocks and from an opening balance of 10.7 MT as on October 1, we should be able to reduce carry forward into the next season to 9.6 MT,” Verma said.