Extension of export subsidy on raw sugar sought

Industry burdened with massive surplus stock

January 24, 2015 10:17 pm | Updated 10:17 pm IST - MUMBAI

The sugar industry, which is burdened with a massive surplus stock and alarmingly low prices, is eagerly awaiting the government’s announcement on the continuation of the export subsidy on raw sugar exports.

According to manufacturers, this will help the industry reduce its huge stocks.

The opening stock on October 1, 2014, was at 7.5 million tonnes — one of the highest ever recorded by the industry. “This must be viewed in light of the fact that the industry realisations are low and the current ex-mill prices are the lowest in three years,’’ Indian Sugar Mills Association (ISMA) Director-General Abinash Verma told this correspondent. A study by ISMA showed that the industry’s debt had gone up to Rs 36,500 crore in 2012-13 from Rs.11,500 crore in 2008-09, he said. “It represents only 75 per cent of the industry and the burden is on interest outgo,’’ he added.

In Maharashtra, the major sugar producing State, the commodity is priced at Rs.2,450 a quintal against the cost of production of Rs.3,000 a quintal while in Uttar Pradesh, the ex-mill price is at Rs.2,750 (cost of production Rs.3,500 a quintal). Under the sugar subsidy scheme introduced in February, 2014, raw sugar exports up to 40 lakh tonnes received a subsidy of Rs.3,300 a tonne. Valid for two months, this was last revised to Rs.3,371 a tonne for the August-September, 2014, period. “This revision is awaited, and the industry wants the subsidy revised to Rs.4,000 a tonne. Raw sugar is exported to China, Indonesia and the Middle East, and used by standalone refineries there,’’ said Pallavi Munankar, analyst, Geofin Comtrade, a commodity trading firm.

India exported seven lakh tonnes of raw sugar in the marketing year ending October, 2014. According to Mr. Verma, sugar mills need to plan raw sugar production, and are getting increasingly desperate as only 2-3 months remain for the crushing operations to end.

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