The government on Wednesday announced a Rs. 6,268 crore subsidy for export of 6 million tonnes of sugar during the next marketing year starting October to offload surplus domestic stock and help mills clear huge sugarcane arrears of around Rs. 15,000 crore.
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, approved the food ministry's proposal in this regard.
"We have taken an important decision in the interest of sugarcane farmers. The cabinet has approved export subsidy for 6 million tonnes for the 2019-20 marketing year (October-September)," Information and Broadcasting Minister Prakash Javadekar told reporters after the cabinet meeting.
A lump-sum export subsidy of Rs. 10,448 per tonne will be given to sugar mills during the next marketing year which is estimated to cost the exchequer Rs. 6,268 crore, he said.
This will benefit millions of farmers in Uttar Pradesh, Maharashtra and Karnataka as well as other states, he added.
Even in the ongoing marketing year, the Centre is providing a subsidy of around Rs. 11,000 per tonne for export of 5 million tonnes of surplus sugar. This doleout has been objected to by other sugar producing nations like Brazil and Australia at the World Trade Organisation (WTO).
In a statement, the government, however, asserted that the export subsidy on sugar is WTO compatible and as per the Agreement on Agriculture (AoA).
The lump-sum export subsidy will be provided to millers to meet expenses on marketing costs including handling, upgrading and other processing costs as well as international and internal transport and freight charges.
Meanwhile, the Indian Sugar Mills Association (ISMA) said the move will not only reduce the surplus sugar inventory next season, but will also give additional cash flows to the tune of around Rs. 18,000 crore, including the subsidy amount.
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