Govt announced Incentive for Mills Exporting Sugar

Central government announced an incentive for sugar mills on August 19, 2021.

Key Points

  • Incentive will be provided in form of an additional domestic sales quota to those exporting sugar and diverting commodity towards ethanol making, in the new 2021-22 season.
  • Sugar mills have also been advised to take advantage from firm global sugar prices and plan for export of raw sugar in advance in new (October-September) season.
  • It indicates that, government is unlikely to extend export subsidy from new season because it will be easier for domestic mills to sell sugar abroad considering the firm global prices.

Why India was offering export subsidies?

India is the world’s second-largest sugar-producing country. It had to offer export subsidies in past two years, in order to reduce surplus stocks. It was meant to help cash-starved sugar mills in clearing cane payment to growers.

Significance of the move

According to food ministry, Sugar mills that will export sugar and divert sugar to ethanol will also be provided with incentive in the form of additional monthly domestic quota in order to sale in the domestic market. Export of sugar and diversion to ethanol will also help in improving liquidity of mills and enable the sugar mills to make timely payment of cane dues of farmers. It will help in stabilising ex-mill price of sugar in domestic market.

How quota is fixed for sale of sugar?

Currently, government fixes monthly quota for sale of sugar in domestic market. Around 21 lakh tonne quota is fixed, on an average, for monthly sale in the mills.

Global Sugar Prices

Global sugar prices have increased in past one month. As a result, there is a huge demand for Indian raw sugar. Thus, government has asked domestic sugar mills to plan production of raw sugar in order to export them in new season. Ministry also urged mills to sign “forward contracts” with the importers in order to take advantage of high international prices of sugar and global deficit.

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