Proposal to seek CCEA nod on new sugar export subsidy formula

The Food Ministry has moved a proposal to seek CCEA's approval for ratification of a new formula to fix a subsidy on the export for raw sugar.

In February, the Cabinet Committee on Economic Affairs (CCEA) had approved a subsidy on the export of raw sugar for shipments of up to 4 million tonnes of raw sugar to bail out the cash-strapped industry. The subsidy was to be reviewed every two months considering the exchange rate.

"However, the ministry later felt that it was necessary to consider global sugar prices along with the exchange rate of rupee vis-a-vis dollar while arriving at a subsidy component. It began to fix the subsidy based on a new formula," a senior government official said.

Accordingly, the subsidy on export was fixed at Rs 3,300 a tonne for February-March, Rs 2,777 a tonne for April-May, Rs 3,300 for June-July and Rs 3,371 for August-September.

"The new formula has not been ratified by the CCEA. So, we are moving the proposal for its approval," the official said.

About 6-7 lakh tonnes of raw sugar is estimated to have been shipped taking benefit of the export subsidy scheme, which ends this month.

With global prices ruling down, exports have become unviable at present even with the subsidy support and the government is yet to take a call on whether to continue the scheme for the 2014-15 season starting next month.

According to Indian Sugar Mills Association (ISMA), sugar production in India is estimated to be 24.3 million tonnes in 2013-14 season, lower than 25.1 million tonnes in the last season (October-September).

For the 2014-15 season, sugar output has been pegged higher at 25.3 million tonnes in anticipation of higher yields from Maharashtra and Karnataka.