Indian sugar mills NSE 3.48 % have contracted for export of 2.5 lakh tonnes of white and raw sugar for delivery between November and January, said merchant exporters, millers and sources from trade houses. Driven by fiscal incentives from the central government and lack of storage space for excess sugar, even sugar mills from Uttar Pradesh, the top sugar producer, are likely to export sugar in a big way.
“The sentiments are positive for exports. About 2.5 lakh tonnes of sugar have already been contracted for export till January. With ex-mill rate of Rs 18.50/kg to Rs 19/kg and, including assistance from central government, mills are getting about Rs 31/kg for exported sugar,” said Rohit Pawar, chief executive officer of Baramati Agro and president designate of ISMA. While most of the contracts have been done for white sugar, raw sugar has also been contacted. “The FOB price offered for white sugar is $310 per tonne to $330 per tonne, while the offer for white is $290 per tonne,” said an executive of a private sugar mill from Maharashtra.
Sugar mills will get subsidy up to Rs 11/kg of sugar exported, including production assistance of Rs 1,388/tonnes for growers and transport subsidy of up to Rs 3,000/ tonnes for sugar exports. India has produced 322.5 lakh tonnes of sugar in 2017-18, and private industry body Indian Sugar Mills Association (ISMA) has estimated a production of 355 lakh tonnes in 2018-19. The country has a carry forward stock of 100 lakh tonnes in 2018-19.
Uttar Pradesh, which normally doesn’t produce raw sugar due to its distance from India’s ports, is likely to experiment with it.
“For the first time, incentives have been given for export of raw sugar. There is a distinct possibility that the sugar mills from UP will experiment with production of raw sugar. The quantities of total export will depend on how the global and domestic markets respond,” said Tarun Swaney, promoter of UP-based Triveni Engineering and Industries NSE 2.52 %.
Another executive from a private sugar mill from UP said that he expects the state to export at least 1 million tonne of sugar in 2018-19. India will give incentives for export of 5 million tonnes of sugar. However, cash flow constraints could hamper the total export volumes, said industry executives, as subsidies will take time to reach the mills.
Source: economictimes.indiatimes.com