NEW DELHI: The government may allow an additional one million tonnes of sugar exports in the 2011-12 marketing year, which started in October, to improve cash flows for mills and enable timely payment to cane farmers.
With estimates of sugar production exceeding annual domestic demand, the government had permitted the export of one million tonnes of the sweetener in the current marketing year.
"Mills are demanding up to two million tonnes of (additional) export. But practically, only one million tonnes can go out of the country," sources said.
An Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is scheduled to meet on February 7 to discuss further sugar exports, among others proposals.
According to sources, the Food Ministry has circulated an EGoM note giving the status of India's sugar supply-demand situation and explaining the possibility of further exports in view of rising cane arrears amid a liquidity crisis being faced by millers.
To expedite the process of export, the ministry may also suggest different methods to the EGoM for allocating the additional one million tonnes for export to millers.
Currently, the ministry allocates the sugar export quota between mills based on their average production over three years.
Sources said the ministry is mulling a change in the system to speed up the export process and improve the liquidity of mills to prevent delayed payment to farmers for their cane. The final call on this issue will, however, be taken by the EGoM, they added.
Industry bodies Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) have been demanding the additional export of 1-2 million tonnes of sugar in the current marketing year (October-September).
They also said that current global prices are favourable for exports.
Sugar production in India, the world's second-largest producer and biggest consumer, is estimated at 24.5 million tonnes in the 2O11-12 marketing year. However, the industry has pegged sugar output at 26 million tonnes.
India exported 2.6 million tonnes of sugar in the 2010-11 marketing year, out of which 1.5 million tonnes was through open general licences (OGL).
Source : economictimes.indiatimes.com