Government announces more assistance for sugar industry

New Delhi – In yet another relief to the sugar industry, the government will provide financial assistance to manufacturers to export up to 40 lakh tonnes of raw sugar for two years. This is the second major incentive for the industry after the poll-bound UPA-2 announced Rs 7,600 crore interest free loans for sugar processors to pay cane farmers.

An informal group of ministers (GoM), headed by agriculture minister Sharad Pawar, on Thursday approved the incentive. The prime minister had constituted the group to address financial problems of sugar industry.

Announcing the decision, food minister K V Thomas said, “We have decided to give incentives to promote raw sugar as a new product. He added that the modalities and quantum of the incentives will be worked out after consulting the finance ministry. Incentives would be given per tonne raw sugar basis from the Sugar Development Fund, Thomas said.

According to industry sources, export of raw sugar presently would lead to a loss of Rs 4,500 per tonne because global prices are less. While the production cost is around Rs 26,500 per tonne sugar is selling at Rs 22,500 per tonne in the international market.

Sources said that the food ministry had proposed the incentive of Rs 2,390 per tonne on raw sugar and the burden will be shared by both the Centre and state governments. But the panel that includes finance minister P Chidambaram and aviation minister Ajit Singh has reportedly suggested that the proposal on quantum of incentives needs to be reworked.

Country’s apex millers body, Indian Sugar Mills Association, has suggested an incentive of Rs 3,500 per tonne. If government entertains this demand, it would have to shell out Rs 1,400 crore from public exchequer in two years.

Thomas said the new policy will be in compatible with norms of World Trade Organizations and would be reviewed constantly.