SUGAR EXPORTS, meant to help mills generate liquidity and reduce the glut in the domestic market, has not generated much response from the industry. To date, 12 lakh tonne of sugar have left Indian shores with industry sources estimating that the final figure of exports could touch around 25 to 30 lakh tonne by the end of September.
Last year, in view of the bumper crop, the central government gave a target of 50 lakh tonne of exports to reduce the glut and help mills clear their dues to farmers.
Mills have been apprehensive about exports from the beginning of the crushing season in September-October. To start with, a majority of the mills pointed out the gap of Rs 10 to 11 per kg between the cost of production and the international prices. Millers said this was non-conducive for exports.
While the transport subsidy was meant to cover it, most mills were unable to export as banks insisted on prepayment of the gap amount before releasing sugar for exports.
Maharashtra State Cooperative Bank (MSC) Bank, the apex cooperative bank for the state, had given its nod for exports by allowing mills to avail a loan at 14 per cent interest for the gap amount, but scheduled commercial banks did not follow suit.
Of the 12 lakh tonne of sugar that left the country, Maharashtra saw contracts of around 3 lakh tonne; 2.24 lakh tonne of sugar have already left the shores.
Sanjay Khatal, managing director of the Maharashtra state cooperative sugar factories federation, said more contracts will be executed once the Chinese market for raw sugar opens up for the country.
However, as the crushing season enters its last leg, production of raw sugar will almost stop. As on Thursday, five of the 193 mills have ended their operations. More mills in Marathwada are expected to close by the end of February, while those in Pune, Ahmednagar, Solapur and Nashik are expected to close by the end of March. Mills in southern Maharashtra districts of Sangli and Kolhapur started late so they are expected to end their operations by mid April. After the mills shut, most exports will be in white sugar.
Last November, distance-based transport subsidies were announced to push mills for exporting their sugar stock.
Mills located within 100 km were to get Rs 1,000 per tonne of sugar as subsidy; this was to be Rs 2,500 per tonne for mills located beyond the 100-km distance mark for coastal states.
The subsidy was raised to Rs 3,000 per tonne of sugar for mills located in non-coastal states such as Uttar Pradesh, Bihar and Punjab.