The SEP Act was repealed by an Ordinance in 1997. This Act gave ISGEC, a body of the sugar industry, the sole right to export sugar. All the profits and losses incurred in the process of exports by ISGEC were shared equally by the participating sugar mills. Now as the Act stands repealed and the global prices of sugar are ruling low, the sugar industry is finding difficult to export.

The government after hiking the import duty on sugar to 60 per cent in February this year has been able to bring the imports almost to a negligible level. Now that the government has succeeded in stoping the imports of sugar, it is interested in disposing of the surplus sugar in the country amounting to about 91 lakh tonne by encouraging exports. As a first styep in this direction, the government, recently allowed 10 lakh tonne of sugar to be exported. It announced that the sugar mills will be exempted from levy obligations on the quantity earmarked for exports.

The government will also consider allowing more sugar for exports, keeping in view the global demand scenario in future.

Speaking to The Financial Express, the Union minister for consumer affairs and public distribution, Shanta Kumar said that exemption of levy obligation on quantity meant for exports will help the sugar mills to get certain amount of financial returns which can help the mills to undertake exports.

This is an incentive given to sugar mills to promote exports as the government is not in a position to extend export subsidy which is given in other countries. As the restoration of the erstwhile Sugar Export Promotion Act of 1958 will take some time, this incentive in form of levy exemption will be helpful to the industry to promote exports.

He said that the proposed export of 10 lakh tonne of sugar will help to bring down the accumulated stock of 242 lakh tonne. He said that against the stock of 242 lakh tonnes, the domestic requirement for consumption is only 151 lakh tonnes, indicating a surplus of 91 lakh tonne. The carryover stock from the previous year was 67 lakh tonne and the estimated production in the current year is about 175 lakh tonne. This makes the total stock of 242 lakh tonne. With the mills being exempted from the mandatory levy obligation of 30 per cent on the quantity exported there are chances of Indian sugar finding buyers in a few countries where production shortfalls have been reported, he said.

At present the global prices of different grades of sugar is ruling between $ 190.50 to $ 216.50 a tonne, while the sugar ready-M Variety is sold in the domestic market at $ 337 dollars a tonne.

The industry sources said that despite the international prices of different grades of sugar ruling at a low of $ 192 to $ 216 dollars per tonne, Indian sugar even after exemption of levy obligation was likely to be priced around $ 240 dollars a tonne, the industry sources said.On the possibilities of exporting sugar to Pakistan, the industry associations said that there were exploring the option as the neighbouring country had recently started imports on the commodity and India would enjoy the benefits of low cost of transportation.