Riding on a surplus production, India is getting ready to export at least two million tones of sugar to foreign countries.

Even though international prices are not "comfortable," Agriculture Minister Sharad Pawar said that the surplus production of sugar has prompted the the country to export nearly two million tones of the commodity.

Sugar production in 2006-07 was provisionally estimated to be over 25 million tonnes and there was a carry over surplus of last season of 4.4 million tones. The estimated consumption stood at 19 million tones.

Pawar told Commodity Online that while the global prices were "not comfortable to us", about 1.5 million tonnes were likely to be exported. "However, this will depend on global market conditions," he said.

He said the government has decided to create buffer stock of two tonnes and provide assistance to defray internal transport and freight charges which had gone up substantially.

Already, the government has declared sops to sugar sector for exports. As per the incentives, 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.

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