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India cuts export subsidy on sugar by one third; exports to continue due to strong demand say traders

The central government today slashed the amount of subsidy given for sugar export by one third from Rs 6000/tonne to Rs 4000/tonne. As the industry has completed export of 95% of the sugar export quota of 60 lakh tonnes, the decision will not have any major adverse impact on the country’s sugar exports. The industry is confident about continuing exports under the open general license (OGL) category thanks to better realisation from exports.

The central government of India had announced a scheme on December 29, 2020 to provide marketing assistance to the sugar mills to facilitate export of sugar enabling them to clear cane price dues of farmers for the sugar season 2020-21. The financial assistance was provided to sugar mills for expenses on marketing costs including handling, upgrading and other processing costs and costs of international and internal transport and freight charges on export of sugar.

“There will not be any major impact on the ongoing sugar exports as agreements for 57 lakh tonnes of sugar exports have been executed till May 19. The OGL exports will begin now. There will not be any impact on domestic prices as these are controlled by the monthly release mechanism,” said Praful Vithalani, chairman, All India Sugar Traders Association (AISTA). According to trade estimates, the government will be able to save an outgo of Rs 60 crore of the sugar export subsidy.

India has been able to take advantage of good demand for Indian sugar in the international market to reduce the surplus stocks in the country.

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