India says working on plan to boost sugar exports

NEW DELHI (Reuters) - India is working on a multi-year plan to boost sugar exports to deal with local oversupply, a government official was quoted as saying by an industry group, targeting markets in Africa, China and neighbouring countries in a move that could weigh on international prices.

Apart from boosting farm exports, government-backed overseas sales of sugar could also help mills clear billions of dollars they owe to 50 million cane growers -- a group equivalent in size to the population of Spain and concentrated in politically heavyweight states such as Uttar Pradesh and Maharashtra.

India is the world's largest sugar consumer and biggest producer after Brazil, and with various state governments trying to out-do each other in providing incentives to their sugar cane growers, it has been producing more than it needs for the past five years. The trend is likely to continue.

"The government has decided to put in place a perennial sugar export policy not only for Africa and China but also for countries surrounding India," the food ministry's new top bureaucrat, Vrinda Sarup, was quoted as saying by the PHD Chamber of Commerce and Industry on Friday.

Details were not provided.

Food ministry spokesman N.C. Joshi declined immediate comment.

Reuters quoted sources last month as saying India was likely to bring in rules to make it compulsory for sugar mills to export millions of tonnes of surplus supplies to support local prices, following a directive by Prime Minister Narendra Modi to boost sales.

India consumes 24-25 million tonnes of sugar a year and mills there are expected to produce 28 million tonnes in the next season starting Oct. 1, when inventories are expected to climb 37 percent to 10.3 million tonnes.

A drought this year could, however, trim yields of recently sown sugar cane, affecting sugar output to some extent in the season after next. That could support world raw sugar prices that touched a 7-year low of 10.13 cents per pound last month.

($1 = 66.5300 rupees)

(Reporting by Krishna N. Das; Editing by Mark Potter)