There has been no word on raw sugar export subsidy for April and May which should have been announced about a week ago. The subsidy of Rs 3,300 per tonne was announced for February and March and had to be revised every two months, based on the prevailing exchange rate of the rupee.
Industry veterans fear a delay in physical movement of sugar meant for exports may not firm up domestic prices, which have seen a consistent rally since February.
The Union government announced on February 28 an incentive scheme for raw sugar production for the 2013-14 and 2014-15 sugar seasons. It was meant to help the sugar industry reduce its inventory, improve cash flows and make timely payment to cane farmers.
"The delay in exports can also affect the cash flow of sugar mills and in turn their cane payment," said a private sugar miller from Uttar Pradesh. With the crushing season almost coming to an end, very few new contracts for raw sugar exports are being signed.
Physical shipments of the contracts entered into till now will continue till the rainy season sets in. In the current sugar year from October to November, India has exported about 19 lakh tonne including about 8.5 lakh tonne of raw sugar.
The total shipment in the current season is expected to be 25 lakh tonne, of which raw sugar export is expected to be 11 lakh tonne to 12 lakh tonne. When the incentive was announced on February 28, the rupee was trading at 62.44 against the dollar but has since become stronger.
Although the subsidy works out to be more than Rs 3,300 per tonne due to the appreciation of the rupee, the ministry cannot increase it without cabinet approval. The subsidy for April and May is most likely to remain stable at Rs 3,300 per tonne. Millers, especially the small co-operatives, want clarity about it.
"According to the new exchange rate, the subsidy works out to be Rs 3,800 per tonne. We are happy with Rs 3,300 per tonne but need clarity about it," said an industry source. After remaining subdued for almost a year, domestic prices have improved to Rs 32 per kg from their lowest level of Rs 25 per kg in February. Higher exports will help keep domestic prices firm.
The sugar industry has accused the government of a half-hearted approach while implementing schemes for the sugar sector. "The schemes, it has announced to help the sugar industry, are not fully getting implemented.
As a result, the sugar industry and cane farmers continue to suffer," said a sugar miller from Uttar Pradesh adding, "Only about half of the interestfree loan against the excise duty announced by the government has been disbursed due to the tough conditions included in the scheme."
Source:- economictimes.indiatimes.com
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