Government tweaks guidelines to ensure sugar exports meet the target

Indonesia is expected to soon open the doors for Indian sugar, according to traders. Although sugar export has picked up this season, it is still not enough to meet the target set up by the government of India.

This has prompted the government to issue new guidelines directing the reallocation of export quotas from mills that haven’t been able to use them to those that have asked for higher quotas.

In a circular issued on Tuesday, the government warned mills that were not able to utilise their export quotas and don’t surrender or relinquish them that “such mills will not be entitled for their claims for third and fourth quarters for the sugar buffer stock they are maintaining”. The claims are for incentives given for maintaining buffer stock.

According to the Indian Sugar Mills Association (ISMA), a few mills have surrendered or will surrender minimum admissible export quantity (MAEQ) or exports quota that they cannot fulfill to the government.

ISMA and traders have estimated that exports would be about 5 million tonnes  this season, against 6 million tonnes of MAEQs issued by the government. Exporters say that about 1.6-1.7 million tonnes have been exported and about 3.2-3.3 million tonnes of export contracts have been signed.

When the season began in October, the initial realisation for export of raw sugar was Rs 21,000 per tonne against the minimum selling price of Rs 31,000 per tonne in the domestic market. However, exporters are now realising a price of Rs 24,000 per tonne, and can claim a government subsidy of Rs 10,480 per tonne.

This means mills in Maharashtra are realising Rs 31-32 per kg in domestic sales and Rs 34 a kg on average for exports, including the subsidy.

Added to this is the fact that some sources have said that Indonesia has finally decided to allow sugar imports from India, discussions for which had been going on for about two years. ISMA also said in a note issued Tuesday that “there is an estimated deficit of 8-9 million tonnes in 2019-20 sugar season in the global market and that Thailand’s exports are likely to be down by 3-4 million tonnes due to lower production there.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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