Govt may release sugar subsidy payment for last season in two weeks

Clearing decks for raw sugar exports for the current season, the Ministry of Food is set to release export subsidy payment for the crushing season 2013-14 in two weeks.

The government had announced a subsidy of Rs 3300 a tonne to help mills export excess supply of the sweetener. But, because of sustained fall in sugar prices in the global markets, mills managed to execute only 0.75 million tonnes of export orders during the crushing season 2013-14.

At a time when mills are incurring losses to the tune of Rs 6-6.50 a kg of sugar production resulting into piling up of cane arrears to farmers, even a small payment release would provide a big support to them.

A highly placed industry source who held interaction with the Ministry of Food, said, "The government will release the subsidy amount in two weeks."

According to industry sources, the release of subsidy amount was held because of incomplete claims of some mills. But, the government held a considered view to release the amount to the tune of around Rs 247 crore. Of this, however, sugar mills in Maharashtra contribute to the tune of Rs 136-138 crore. Non-release of payment so far, however, created a panic among sugar mills to consider new quantity of sugar exports.

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"The government has not yet released the subsidy payment of the last year despite applications made months ago. We were told that some mills' papers are incomplete. We have written to the Ministry of Food once again seeking details of such claim applications and requisites thereafter. But, there has been no response yet (from the Ministry)," said Sanjiv Babar, managing director, Maharashtra State Federation of Co-operative Sugar Factories (Sugar Federation).

While the subsidy was extended until September 2014, mills hardly get benefit of the facility due to continuous fall in sugar prices in global markets despite having around 7.5 million tonnes of surplus quantity left in India. Early February 2015, however, the government enhanced export subsidy amount to Rs 4000 a tonne with a quantity ceiling of 1.4 million tonnes.

While a notification in this regard is yet to be issued, sugar mills in Maharashtra are apprehensive about considering exports. To contract for export orders, however, mills require at least 15 days. A senior industry official said, 1.4 tonnes of raw sugar export quantity looks ambitious mainly because of the delay in notification and uncertainty over release of payment of the last season.

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Govt may release sugar subsidy payment for last season in two weeks