Sugar exports under the Merchandise Export from India Scheme (MEIS) till July end were less than 20% and it is quite unlikely that sugar mills will be able to meet the target of 20 lakh tonnes by September 30, according to industry body Indian Sugar Mills Association (ISMA).
As there is a huge difference in the domestic and export prices of Sugar, the loss to be incurred on each kg of Sugar to be exported is around Rs 10-11 whereas the government’s financial assistance, through the cane price route, works out to around Rs 7.7/kg.
As a result, a large number of mills are not releasing sugar, and exporters, in turn, do not have sufficient quantities available for shipping, the association said.
“The current policies do not encourage Sugar exports. Domestic prices are artificially up as the government has put a cap on quantity of Sugar sold in the market,” ISMA said. While the demand for Sugar ahead of the festival season is estimated to be around 21.5-22 lakh tonnes, the quota fixed by the government for August is about 17.5 lakh tonnes. This was 16.5 lakh tonne in June.
“Only 20-30 per cent of the mills are meeting their export quota. It is important that the government ensures all mills fulfil their quota,” ISMA said.
The industry also asked the government to cap the minimum price of sugar at Rs 35-36. “Once this is done, there may not be any need for giving financial incentives for meeting exports requirements. The mills will then be in a position to bear the losses as they can make it up from the domestic market,” the ISMA said.