Govt may extend export subsidy for sugar to cash in on bumper production

The government is reconsidering extension of sugar export subsidies as India has got good opportunity to sell the sweetener in the international market during November-April of the 2019-20 season that commenced this month, according to Food Secretary Sudhanshu Pandey.

India, the world's second-largest sugar-producing country, had to offer export subsidies during the last two years in order to reduce surplus stocks and help cash-starved sugar mills clear cane payment to growers.

Sugar mills exported 5.7 million tonnes of sugar against the mandatory quota of 6 million tonnes set for the 2019-20 season (October-September), as per official data.

Speaking to PTI, Pandey said: "Thailand's production is expected to be down this year, while Brazil's crushing will only start in April 2021. From now till April, there is good export opportunity for India."

"This is the opportunity the industry has to encash upon, we are doing our best given that India is expected to have a bumper sugar production this year," he added.

According to official sources, the food ministry is working on a proposal for seeking cabinet approval for extension of the existing sugar export policy for about 6 million tonnes in the 2020-21 season.

On October 30, Food Minister Piyush Goyal had said the government was not considering extension of the export subsidy policy, but after several rounds of consultation with stakeholders and policy makers, a fresh thought is being given to the proposal, sources said.

Industry experts are of the view that India needs to export more than 5 million tonnes of sugar this year to ensure domestic rates do not fall below the cost of production and make it difficult for mills to pay cane growers on time.

The surplus stock situation is expected to continue this season as well because domestic sugar production is pegged at 31 million tonnes, well above the annual demand of 26 million tonnes.

To avoid sugar glut-kind of situation, Pandey said the government is encouraging mills to produce ethanol instead of sugar as the former can be used for blending with petrol under the National Biofuel Policy.

The subsidised loans are being given to millers for distilleries capacity expansion in order to achieve the ethanol production of over 360 crore litres and meet the ethanol blending with petrol target of 10 per cent by 2022 and 20 per cent by 2030, he added.