Currently, mills would incur losses of Rs 1,000 per tonne more if they choose to export refined sugar instead of selling it in the domestic market
The government is considering to allow sugar exports through barter deals with interested nations in exchange of farm imports. The move would reduce the glut of the sweetener in the domestic market and help in clearing cane arrears, food minister Ram Vilas Paswan said on Thursday.
“We want to allow the export of four million tonnes of sugar to those countries where there is demand for it. We want to export sugar under the barter system against the import of agricultural commodities like edible oils,” Paswan told reporters.
A source said details are being worked out and will be placed before Prime Minister Narendra Modi, who is expected to convene a meeting to discuss the sugar sector crisis.
FE reported on August 5 that the food ministry was exploring options, including barter deals, to push exports.
Modi last week directed ministries concerned to look for ways to step up sugar exports and also make the proposed blending of ethanol—a cane by-product—with petrol at a 10:90 ratio a reality soon—both aimed at improving the ability of cash-starved mills to clear arrears worth R18,112 crore (until the end of June).
However, exporting huge quantities of sugar is easier said than done without subsidies, even if the government or the industry find some takers for such deals. This is because globally, sugar prices have been hovering around six-and-a-half-year low and the Indian price is more expensive than the sweetener from other competing nations, including Brazil.
The minister said the sugar industry needs to explore various options of getting into barter deals with other nations in exchange for other farm commodities. He added that raising the import duty on sugar to 40% from 25% earlier didn’t help much in the sense the fall in domestic prices hasn’t been halted.
Currently, mills would incur losses of R1,000 per tonne more if they choose to export refined sugar instead of selling in the domestic market.
Still, realisations from domestic sales are R10,000-R13,000 lower than the cost of production, according to an industry source.