CCEA may consider incentives on raw sugar export on Feb 4

The Cabinet Committee on Economic Affairs (CCEA) is likely to consider on February 4 a proposal to give a cash subsidy of Rs 2,000 per tonne for raw sugar exports.

The Food Ministry in a Cabinet note has proposed a cash incentive of Rs 2,000 per tonne to the beleaguered sugar industry for exporting four million tonnes of raw sugar in two years.

"The CCEA meeting has been scheduled on February 4. The proposal on raw sugar is on the agenda. There are differences of opinion among various ministries on the quantum of cash subsidy, which CCEA will take a final call," a source said.

The total subsidy outgo has been pegged at Rs 800 crore, spread over two years and the amount will be adjusted from the Sugar Development Fund (SDF).

The cash incentive is proposed as sugar mills are facing a cash crunch with prices coming down below cost of production. They are also saddled with huge cane arrears.

Besides, raw sugar exports are seen as unviable at present as global prices are ruling much lower than the domestic production cost of Rs 26,500 per tonne.

To improve cash flow of sugar mills, government had already announced interest subsidy on bank loans availed by mills for paying cane farmers. This has been done in line with the recommendation of the Pawar-headed panel.

Although the incentives proposed by the Food Ministry are in line with the recommendation made by a high-level informal group of ministers headed by Agriculture Minister Sharad Pawar, the Agriculture Ministry has a different view on the quantum of subsidy

According to sources, Pawar is in favour of an incentive not less than Rs 3,500 per tonne.

Last week, the proposal was listed on the CCEA agenda at last minute but it could not be taken up for discussion due to paucity of time, Food Minister K V Thomas had said.