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Sugar industry suffered another jolt this week when the Central government dropped its plans to offer incentives to mills for raw sugar exports.
According to officials, the proposal was discarded after a discussion in the Cabinet and the Centre decided not to give any sops for raw sugar export.
The raw sugar export subsidy proposal was part of the total Rs 850 crore (Rs 8.5 billion) bailout package for the ailing sugar industry. An incentive of Rs 440 a tonne was proposed for raw sugar export.
Sugar mills, however, do not produce raw sugar in huge quantities, and consequently, the commodity is usually not exported.
Besides the proposed raw sugar export subsidy, the package also included an export freight subsidy of Rs 1,350 a tonne for sugar mills in coastal areas, and Rs 1,450 a tonne for those in non-coastal regions.
The package, approved by the Cabinet Committee on Economic Affairs on March 24, was however stuck, awaiting the Election Commission's approval.
The government's main aim to help out the sugar industry was to ensure votes in the ongoing Assembly elections in Uttar Pradesh, a major sugar producing state. The model code of conduct is in force due to the polls in Uttar Pradesh.
As part of the package, a sugar buffer stock of 2 million tonne was also proposed to be created by the government for two years.
The financial assistance would come from the Sugar Development Fund maintained by the Centre, officials said, adding the subsidies are likely to be initially valid for one sugar season.
Mills pay a certain amount of cess on the sale of sugar, which goes to the Sugar Development Fund.
The country's sugar output is seen topping 26 million tonne in the current season to September, up a whopping 35 per cent from last year.
Wholesale prices have fallen from over Rs 2,100-2,200 a quintal in October, 2006 to Rs 1,400-1,500 in April, 2007.
Muzaffarnagar has recorded the highest sugar produce for the current season and by the end of the season, it might rank first among the sugar producing districts in the state.
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