The issue of allowing wheat and sugar exports would be taken up by the cabinet committee on prices (CCP), which is expected to meet tomorrow, official sources told PTI.

With the food and agriculture ministries also favouring exports of wheat and sugar to help the domestic market tide over a situation of over-supply, the decision on allowing these exports is expected to be taken without any hitch, official sources said.

Asked how government proposed to allow exports of sugar and wheat when their domestic prices were higher than global prices, the sources said it would be left to international buyers to make a choice.

India had discontinued wheat exports since 1995-96 season (July 1995-June 1996) in order to meet domestic demand, while sugar exports were stopped in 1996-97crop year (October - September) due to shortage in indigenous production.

The food and agriculture ministries have asked commerce ministry to allow wheat exports in view of a record production of nearly 70.63 million tonnes. Sugar exports have also been recommended in view of a projected 150 lakh tonnes output this season and a stock of 108 lakh tonnes as on March 31.

Though wheat is generally not exported, government annually allows exports of one lakh tonnes of wheat products to cater to non-resident Indians abroad.Recently, commerce ministry gave licence to private traders to export 25,000 tonnes of wheat.

Though sugar can also be exported under licence, it is not taking place as global prices are far less than domestic prices.

In fact, domestic millers had burnt their fingers in 1996-97 when they undertook sugar exports.

``We will have to amend our trade policy to allow these export and this is what CCP will consider tomorrow,'' the source said.

Besides allowing wheat exports to Bangladesh,commerce ministry was currently taking up the issue of exports on a ``case to case basis,'' they said, adding recently permission was granted to export a ``small quantity'' of organic wheat to Germany.

As far as sugar is concerned, there were demands from Hong Kong and Mauritius.

``We can export at least one lakh tonnes to these countries,'' the sources added. Commerce ministry sources had earlier indicated that the ministry, which has to take a decision on allowing exports, would have no problem as the food ministry had itself recommended the measure.

Commerce secretary PP Prabhu had said if wheat exports were profitable then commerce ministry had no problem in allowing it.

One of the major problems on the export front would be that while landed price of imported wheat was 120 US dollars a tonne, that of domestic wheat at the ports would be 190 dollars a tonne. This is in view of the price support mechanism whereby a minimum support price of Rs 550 per quintal has been fixed for wheat for governmentprocurement.

Besides the record production, the food ministry has been loaded with mounting stocks with wheat procurement touching 135 lakh tonnes last week. Food ministry sources said government was already facing storage problems in Punjab.

Against the stipulated buffer stock norm of 40 lakh tonnes for foodgrains, the stock position as on April 1 was 90 lakh tonnes.

India's total foodgrain production in 1998-99 has been estimated to be over 200 million tonnes, a record output.

As far as sugar is concerned, besides abundant stocks the country is also faced with problems of cheaper imports flooding the country.

While customs duty on sugar has been raised twice this year, food minister Surjit Singh Barnala has asked cabinet to again consider steps to discourage imports by hiking the duty to 40 per cent.

Food ministry also proposed to provide a level-playing field to domestic sugar millers, who are bound by various statutory laws including giving 40 per cent of the total production to government forpublic distribution system at a price fixed by the centre.

The move could be by imposing quantitative restrictions on imports, food ministry sources said. Customs duty on sugar has been raised to 27.5 per cent since January this year from five per cent. Besides, sugar imports attract a countervailing duty of Rs 850 per tonne.

Domestic millers say the dual-pricing system, wherein sugar is sold at a lower price in ration shops and at a higher prices in open market, is preventing them from exporting the commodity.

Though a high-level committee has recommended ending of the control regime, government is yet to take a decision as state governments are opposed to such a move.

Since September 1997, at least 12 lakh tonnes of cheap sugar has come into the country till March 31 with 50 per cent of it from Pakistan.