Just a month after announcing a Rs 65,000-crore booster for the fertiliser industry, clearing all pending subsidy bills, the Centre on Wednesday unveiled a similar package for the sugar sector. Mills will receive Rs 5,361 crore as payments that were due to them as incentive for exporting sugar during the last 2019-20 season (October September).
The Cabinet Committee on Economic Affairs, which met on Wednesday, also approved an incentive for export of up to 60 lakh tonnes (lt) of sugar for the 2020-21 season. This lump-sum assistance – towards expenses on marketing, internal transport, port handling and ocean freight – has been fixed at Rs 6,000 per tonne and will entail a fiscal outgo of about Rs 3,500 crore.
The timing of the decision is significant, as it comes amidst the ongoing protests against the three Central farm laws. The agitation, mainly led by Punjab and Haryana farmers, has seen lukewarm participation from Uttar Pradesh so far, even as the Yogi Adityanath administration is under pressure to raise its state advised price (SAP) of sugarcane.
Since taking over in March 2017, the Adityanath government has increased the SAP by just Rs 10 per quintal – from Rs 305 to Rs 315 for general, and from Rs 315 to Rs 325 for early maturing varieties. The additional liquidity to mills from the clearance of export subsidy dues could, however, present an opportunity to raise the SAP for the first time since the 2017-18 sugar season.
UP has not announced the cane price for the current 2020-21 season, despite mills commencing crushing operations from October-end. “The government has been waiting for the protests to get over. Given the financial position of mills, only a small hike, if at all, was on the cards. But that would have made farmers restive, adding fuel to the agitation fire. The Centre’s announcement now should give some flexibility to the state government,” sources said.
The Centre had, in September 2019, provided an incentive of Rs 10,448 per tonne for mills to export up to 60 lt of sugar in the 2019-20 season. The industry almost met the target, shipping out a record 57 lt that would have entitled them to payments of around Rs 5,950 crore. However, the delay in release of the dues against exports led to mills defaulting in cane payments to farmers.
“Today’s decision will provide much-needed relief and liquidity to the industry,” said Prakash Naiknaware, managing director of the National Federation of Cooperative Sugar Factories Ltd.
According to Abinash Verma, director general of the Indian Sugar Mills Association which represents private sugar millers, the export incentive for 2020-21, although lower than last year’s, should still help the industry ship out the sweetener. “International prices are higher than last year. Although more than two months of the current season are over, many large importers have been enquiring about Indian sugar, especially given the drop in production from Thailand. We should be able to fulfill the 60 lt target for 2020-21,” he said.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines