Sugar mills contract to export 20 lakh tonnes so far in 2018-19 out of 50 lakh tonnes quota

Indian sugar mills have contracted to export 18-20 lakh tonnes of the sweetener so far in the current marketing year ending September, out of the 50 lakh tonnes mandatory quota assigned by the Centre, a top industry official said.

Of the total contracts, about 8-10 lakhs have already been shipped overseas, Indian Sugar Mills Association (ISMA) Director General Abinash Verma said.

"Mills have contracted for exports of about 18-20 lakh tonnes of sugar, mostly raw sugar. Our traditional export markets are Sri Lanka, Bangladesh, Middle-East and some African nations," he told PTI.

Asked whether mills have contracted sugar exports to Iran, Verma said he is not aware of any such development.

Indian Sugar Exim Corporation Ltd (ISEC) MD and CEO Adhir Jha said it has exported 2 lakh tonnes of sugar so far in 2018-19 on behalf of mills and is exploring the possibility of exporting sugar to Iran, which is facing sanctions from the US.

ISEC was formed by the National Federation of Cooperative Sugar Factories Limited (NFCSF) and the ISMA to undertake exports.

Verma said the country is unlikely to achieve the mandatory export of 50 lakh tonnes set by the government as part of its effort to liquidate surplus stocks and enable mills to clear cane arrears to farmers.

Although sugar production is estimated to decline to 307 lakh tonnes in the 2018-19 marketing year (October-September) from record 325 lakh tonnes in the previous year, the output will be much higher than annual domestic consumption of 260 lakh tonnes. Moreover, mills had an opening stock of about 100 lakh tonnes of stock from previous year's production.

On cane arrears, Verma said it is about Rs 20,000 crore currently and will rise further as mills will operate till April end.

However, he said the government's recent move to increase the benchmark price of sugar at factory gate by Rs 2 to Rs 31 per kg will improve millers' liquidity by about Rs 5,000 crore and limit any sharp rise in cane arrears.

The Central government has taken a number of measures to bail out sugar mills as well as cane farmers in the last one and half years.

The steps include doubling of the import duty on sugar to 100 per cent and scrapping of the export duty.

In June last year, the government announced a Rs 8,500 crore package for the industry, which included soft loans of Rs 4,440 crore to mills for creating ethanol capacity. It is bearing an interest subvention of Rs 1,332 crore for this.

An assistance of Rs 5.50 per quintal of cane crushed was announced, amounting to Rs 1,540 crore to mills, for 2017-18. This has been raised to Rs 13.88 per quintal for 2018-19, costing over Rs 4,100 crore to the exchequer.

Around Rs 1,200 crore was allocated for the creation of 30 lakh tonnes of buffer stock of sugar.

That apart, the Centre is providing assistance worth Rs 1,375 crore to mills by compensating expenditure towards internal transport, freight, handling and other charges to facilitate 50 lakh tonnes export during the 2018-19 marketing year.