One-year extention to subsidy on sugar exports

Written by ASHOK B SHARMA | New Delhi, Sept 12 | Updated: Sep 13 2007, 05:09am hrs
The group of ministers (GoM) on sugar headed by the external affairs minister Pranab Mukherjee has decided to extend the subsidy being given for exports by one year.

At present, Rs 1,350 per tonne is rendered as support by the government to mills located along the coast for undertaking exports. Sugar mills located away from the coasts are being given Rs 1,450 a tonne.

Apart from Mukherjee, the GoM extended the export subsidy regime by one year till April 2009. The GoM was attended by agriculture minister Sharad Pawar, commerce minister Kamal Nath, finance minister P Chidambaram.

According to sources, export subsidy was actually not on the original agenda for discussion. The issue was brought in as the GoM failed to arrive at a consensus on the three listed issues, said a senior official

The meeting was slated to deliberate on deferment of payment of excise duty by sugar mills, bringing ethanol under the central sales tax (CST) regime and a national cane pricing policy. The finance ministry is opposed to the idea of deferment of excise duty payment by mills. The sugar industry has asked for a deferment after facing drought for two successive years in the major cane-growing regions. This year, they faced the problem of falling sugar prices on account of surplus production.

On the other two issues brining ethanol under the CST regime and a national policy for cane pricingthe GoM felt that more homework and consultations with states were needed.

The sugar industry wants ethanol to be brought under CST to avoid any state levy on it. On a similar line, they have demanded a national policy on cane pricing to prevent the state governments from announcing their state advised prices (SAPs).