Cabinet okays Rs 3,500 cr sugar export subsidy

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New Delhi, Dec 16 (PTI) The government on Wednesday approved a subsidy of Rs 3,500 crore to sugar mills for the export of 60 lakh tonnes of sweetener during the ongoing marketing year 2020-21 as part of its efforts to help them clear outstanding dues to sugarcane farmers.

Briefing media after the meeting, Information and Broadcasting Minister Prakash Javadekar said the Cabinet Committee on Economic Affairs (CCEA) has approved a subsidy of Rs 3,500 crore on exports of 60 lakh tonnes of sweetener and the subsidy amount will directly be given to farmers.

The CCEA has approved the subsidy at the rate of Rs 6 per kg for the current year, much lower than about Rs 10.50 per kg in the 2019-20 marketing year keeping in view favourable international prices.

Javadekar said both 'sugar industry as well as sugarcane farmers are in crisis' because of high domestic production in the last two-three years. This year too, production is expected to be 310 lakh tonnes as against the annual demand of 260 lakh tonnes.

The decision will benefit five crore farmers and five lakh workers employed in sugar mills and related ancillary activities. Sugar mills will be able to earn Rs 18,000 crore revenue from the export, said Javadekar, who is also Union Environment Minister.

In a separate statement, the Food Ministry said farmers sell their sugarcane to sugar mills, however, farmers are not getting their dues from sugar mill owners as they have surplus sugar stock.

'To address this concern, the government is facilitating the evacuation of surplus sugar stock. This will enable payment of dues of the sugarcane farmers. Government will incur about Rs 3,500 crore for this purpose,' it said.

And this assistance would be directly credited into farmers’ accounts on behalf of sugar mills against cane price dues and subsequent balance, if any, would be credited to mill's account, it added.

The subsidy aims at covering expenses on marketing costs including handling, upgrading and other processing costs and costs of international and internal transport and freight charges on export of up to 60 lakh tonnes of sugar limited to Maximum Admissible Export Quota (MAEQ) allocated to sugar mills for sugar season 2020-21.

In the previous marketing year 2019-20 (October-September), the government provided a lump sum export subsidy of Rs 10,448 per tonne, costing the exchequer Rs 6,268 crore.

Mills exported 5.7 million tonnes of sugar against the mandatory quota of 6 million tonnes set for the 2019-20 season (October-September), according to official data.

India, the world's second-largest sugar-producing country, had to offer export subsidies during the past two years to reduce surplus stocks and help cash-starved sugar mills clear cane payment to growers.

Last month, Food Secretary Sudhanshu Pandey said the government is reconsidering extension of sugar export subsidies as India has got good opportunity to sell the sweetener in the international market.

'Thailand's production is expected to be down this year, while Brazil's crushing will only start in April 2021. From now till April, there is good export opportunity for India,' the secretary had said.

'This is the opportunity the industry has to encash upon, we are doing our best given that India is expected to have a bumper sugar production this year,' he added. PTI LUX NKD MJH MR