Following the Central government's decision to give sops to sugar sector for exports, the commodity's exports are likely to touch 2 million tonnes this year, twice the initial forecast.

The government will pay exporters up to Rs 1,400 a tonne to help meet the transportation costs to the ports. The sugarcane-crushing season ends in September.

The subsidy has made Indian sugar very competitive and the country is all set to export 2 million tonnes this year. Moreover, exports can cross 3 million tonnes next year.

An increase in shipments from India may compound a global surplus and lower the chances of a recovery in sugar prices that have slumped 29 per cent in the past year.

World output is headed for the first surplus in four years after price gains in 2004 and 2005 led growers in Brazil and Asia to boost plantings.

Lower prices have reduced profits on exports from India and companies have shipped 350,000 tonnes since the government ended a six-month ban in January.

Sugar prices in India have fallen by more than a fifth the past year amid forecasts of a bumper crop.