With sugar prices showing signs of moderation, the government is planning to allow mills to export sugar without the requirement of any release order for another few months.
The proposal was expected to come up for review after the one-month extension, granted to mills to export without the obligation of a release order, which ended on October 30.
?Though this year the sugar production is expected to be less than last year?s more-than 26-million tonne level, there is a carry-over stock in excess of 11 million tonne and this should take care of all demand. Hence, we feel that there is no need for imposing the release order mechanism on exports,? a senior government official said.
As per the release order for exports, the government fixes the quantum of sugar that each mill can export just like it does for domestic production each month. This helps in monitoring the movement of sugar outside the country and also curtails any excess exports.
In July 2007, government discontinued the release order mechanism to allow mills to export freely because of bumper production. However, as the order ended on September 31, there was some talk among millers that the procedure of release order for exports could be re-introduced in view of the drop in output in the current crop season that started in October. ?
The release-order mechanism delayed the whole process of export by more than 4-5 days which led costly delays,? a senior industry official said.
In 2007-08 (October-September) Indian sugar factories exported more than 4.0 million tonne of sugar, of which 80% was raw sugar because of the strong global demand.
The government has also discontinued the incentive for sugar export after it expired on September 1. The subsidy scheme, under which the government provided financial aid Rs 1,350 per quintal for mills situated near ports and an assistance of Rs 1,450 per quintal for mills located in the hinterland, was to end on March 31. This was extended by another six months because exports did not pick up and local prices began to drop.
Earlier, in order to increase supplies and also to check prices during the festivals, the government had dismantled a buffer stock of 5.0 million tonne of sugar that it had kept with mills and directed them to sell it in the open market by September. It also issued show-cause notice to 252 sugar mills for failing to file returns on dismantling buffer stocks.
According to official sources, sugar in the crop year that started in October is expected to fall to around 22 – 23 million tonne.