Govt announces subsidy on sugar exports, industry welcomes move

New Delhi

The government has announced a subsidy of Rs 3,500 crore for the export of 6 million tonnes of sugar in the current sugar season 2020-21 (October-September) under the scheme of Maximum Admissible Export Quota (MAEQ) allocated to the sugar mills for the season. Sugar industry body Indian Sugar Mills Association (ISMA) has welcomed the decision, saying it would help reduce cane arrears.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on Wednesday approved the financial assistance of nearly Rs 3,500 crore for sugarcane farmers, said an official statement.

Briefing about the decisions taken by the Union cabinet, Information and Broadcasting Minister Prakash Javadekar said the CCEA has approved a subsidy of Rs 3,500 crore for the export of 60 lakh tonnes of sugar and the amount of subsidy would be directly transferred to the farmers.

He also said that a budgetary provision of Rs 5,361 crore for past subsidies has been made which will be directly transferred to the bank accounts of the cane growers.

Sugar production in the current season is estimated at nearly 31 million tonnes while the domestic consumption is nearly 26 million tonnes for the current year, therefore the domestic price is low, said the minister.

At present, there are nearly five crore sugarcane farmers dependent upon it across the country. In addition to this, there are nearly five lakh workers employed in the sugar mills, ancillary activities and their livelihood depends on the sugar industry, he added.

This decision would benefit five crore sugarcane farmers and their dependents, as well as five lakh workers employed in the sugar mills and related ancillary activities, said the statement.

Director General (DG) of ISMA, Abinash Verma, said, "The sugar industry welcomes the much awaited decision on the sugar export programme for the 2020-21 sugar season."

However, he said that at the current world prices and even if there is a small correction therein, sugar exports from India will be viable with the export subsidy of Rs 6,000 per tonne, therefore the subsidy amount is lower than last year but considering that the world sugar prices are higher as compared to what they were at the same period in the last season, the industry is confident to perform well again in 2020-21.

According to Verma, even though two-and-a-half months of the current season is over, considering that several large importing countries have been enquiring about Indian sugar and also considering that the drop in sugar production in Thailand gives an opportunity for India to export to their traditional markets like Indonesia, Malaysia etc., the Indian sugar industry should be able to fulfil the target of 6 million tonnes of sugar exports in 2020-21.

"This will help reduce the sugar stocks and from an opening balance of 10.7 million tonnes as on October 1, we should be able to reduce the carry forward into the next season on October 1, 2021 to 9.6 million tonnes," he added.

The ISMA DG said that 6 million tonnes would give the industry Rs 18,000 crore from exports and subsidy, which will help reduce cane price arrears. Also, the budgetary allocation of Rs 5,300 crore for past subsidies will further help the sugar mills to clear their cane price arrears, he added.