Government may curb sugar exports; complete ban unlikely

In a bid to control spiraling sugar prices, the government is contemplating a series of measures to curb exports and increase local availability.

According to official sources, the government is considering a plan to re-start the system that requires sugar exporters to seek release orders for export.

In July last year, the permit system was withdrawn because production rose to around 30 million tonne while local consumption remained at around 20 million tonne to 21 million tonne, leading to a sharp fall in local prices.

However, sugar prices, which had weightage of over 3.5% on the inflation-index, have risen by over Rs 350 to Rs 400 per quintal in the last few weeks forcing the government to consider re-starting the export permit system.

According to agency reports, the sugar industry has been informed of this decision well in advance so that they can devise strategies to compete in the global market. This year Indian sugar factories have exported more than 4.0 million tonne of sugar of which 80% was raw sugar because of strong global demand.

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Although, the government is contemplating measures to curb sugar exports, but it is unlikely that it will impose a total ban on exports.

Bloomberg news reported quoting food secretary T Nandakumar said that government is not contemplating banning exports at this stage.

"At this stage, no," he said, responding to speculation that the government may ban sales abroad to curb prices.

Meanwhile, reports said that the government is also not considering any extension of the sugar export incentive beyond its normal expiry period of September 1.

The subsidy scheme under which the government gives an export assistance of Rs 1,350 per quintal for mills situated near the ports and an assistance of Rs 1,450 per quintal for mills located away from the ports was to end on March 31, but was extended by another six months because exports were not picking and local prices were dropping.

"The government has urged the sugar industry that unabated export should be controlled and we are fully agreeing to it," a senior sugar industry official added.

Earlier, the government dismantled the sugar buffer stock of 5.0 million tonne and that it had kept with the mills and directed them to sell that sugar in the open market anytime by September. It also issued show-cause notice to 252 sugar mills for failing to file returns on dismantling of the buffer stocks.

source:financialexpress