Government may extend sugar export subsidy to mills by a year

Mumbai: The government is likely to extend the export subsidy given to sugar mills by another year amidst expectations of record production next season.

"There are some countries which have objected to this (export subsidy). This particular subject is before WTO. We are trying to convince some of the countries which have objected and simultaneously finding some solutions," agriculture and food minister Sharad Pawar told reporters on the sidelines of an FICCI seminar.

"Last year we had provided certain facilities. This year also we will have to take that decision," he said adding that the government will take an early decision on providing assistance on sugar exports.

"If you have to liquidate stocks there is a limitation in the domestic price. We have to enter international market. If we are not competitive because of transport and other cost, government has to look into the matter to find some solutions," Pawar said.

In April this year the government extended an export subsidy (in the form of defraying freight cost) of Rs1,350 per tonne to the mills located in the coastal regions and Rs1,450 a tonne for mills in the interiors, for a year.

The government also planned to create a buffer stock of 50 lakh tonnes to bail out the industry and help the mills pay cane arrears to farmers.

Sugar production in the country is estimated at over 28 million tonnes in 2006-07 season ending this month. With domestic consumption at 19 million tones, this will create a glut situation in the market.

The output in the next season is expected to go even higher, reaching 30 million tonnes.