Govt may release sugar subsidy payment for last season in two weeks

Mills seek urgent notification for enhanced export subsidy

Clearing the decks for raw sugar exports for the current season, the Ministry of Food is set to release export subsidy payment for the crushing season 2013-14 in two weeks. 

The government had announced a subsidy of Rs 3,300 a tonne to help mills export excess supply of the sweetener. But because of sustained fall in sugar prices in the global markets, mills managed to execute only 0.75 million tonne of export orders during the crushing season 2013-14.

At a time when mills are incurring losses to the tune of Rs 6-6.50 a kg, resulting into piling up of cane arrears to farmers, even a small payment release would be a big support.

The amount, though small, would come as a big relief for mills, said a senior official at one of the largest crushing mills in India.

A highly placed industry source, who held talks with the Ministry of Food, said, “The government will release the subsidy amount in two weeks.”

According to industry sources, the release of subsidy amount was held up because of incomplete claims of some mills. But the government has now decided to release the amount, which is around Rs 247 crore. Of this, sugar mills in Maharashtra are to get around Rs 136-138 crore. 

“The government has not yet released the subsidy payment of the last year despite applications made months ago. We were told that some mills’ papers are incomplete. We have written to the Ministry of Food once again seeking details of such claim applicatants. But, there has been no response yet (from the Ministry),” said Sanjiv Babar, managing director, Maharashtra State Federation of Co-operative Sugar Factories (Sugar Federation).

While the subsidy was extended until September 2014, mills hardly got any benefits as sugar prices kept falling in global markets. In February 2015, however, the government enhanced export subsidy amount to Rs 4,000 a tonne, with a quantity ceiling of 1.4 million tonne.

While a notification in this regard is yet to be issued, sugar mills in Maharashtra are apprehensive about considering exports. A senior industry official said 1.4 tonne of raw sugar export target looks ambitious mainly because of the delay in notification and uncertainty over release of last year's subsidy payment.

“The government announced export subsidy on priority (first cum first served) basis in 2006-07 under which nine sugar mills executed a large quantity of exports. But, the government did not release payment for that also. Mills have filed complaints in the Bombay High Court and the matter is pending yet,” said Babar.

Meanwhile, sugar mills in Maharashtra have crushed around 70% of cane available for crushing this season. However, mills are unable to pay even Fair and Remunerative Price (FRP) of Rs 240 a quintal, resulting into piling up of arrears around Rs 13,000 crore.

The Maharashtra government is set to announce Rs 1,000 per tonne grant for sugar mills, which may be announced in a couple of days, said Babar.