December 17, 2020 5:51:37 am
The Cabinet Committee on Economic Affairs, which met on Wednesday, also approved an export incentive of up to 60 lakh tonnes (lt) of sugar for the 2020-21 season.
Just one month after announcing a Rs 65,000 crore boost for the fertilizer industry, liquidating all pending subsidy bills, the Center unveiled a similar package for the sugar sector on Wednesday. The mills will receive 5,361 crore as payments owed to them as an incentive to export sugar during the final 2019-20 season (October September).
The Cabinet Economic Affairs Committee, which met on Wednesday, also approved an export incentive of up to 60 lakh tonnes (lt) of sugar for the 2020-21 season. This lump sum assistance (for marketing, inland transport, port handling and ocean freight costs) has been set at Rs 6,000 per ton and will entail a tax expense of approximately Rs 3,500 crore.
The timing of the decision is significant, as it comes amid ongoing protests against the three core farm laws. The turmoil, led mainly by farmers from Punjab and Haryana, has seen tepid participation from Uttar Pradesh so far, even as the Yogi Adityanath administration is under pressure to increase the state recommended price (SAP) of sugarcane.
Since taking office in March 2017, the Adityanath government has increased the SAP by just Rs 10 per quintal, from Rs 305 to Rs 315 for general, and from Rs 315 to Rs 325 for early maturing varieties. However, the additional liquidity for mills from the liquidation of export subsidy quotas could present an opportunity to increase the PAE for the first time since the 2017-18 sugar season.
UP has not announced the price of the cane for the current 2020-21 season, despite the fact that the mills began crushing operations in late October. “The government has been waiting for the protests to end. Given the financial situation of the mills, only a small increase was expected, if at all. But that would have unsettled the farmers, adding more fuel to the stirring fire. The announcement of the Center should now give the state government some flexibility, ”the sources said.
In September 2019, the Center had provided an incentive of Rs 10,448 per ton for mills to export up to 60 liters of sugar in the 2019-20 season. The industry nearly hit the target, shipping a record 57 liters that would have entitled them to payments of around Rs 5,950 crore. However, the delay in releasing export quotas led the mills to default on sugarcane payments to farmers.
“Today’s decision will provide much-needed relief and liquidity to the industry,” said Prakash Naiknaware, managing director of the National Federation of Cooperative Sugar Factories Ltd.
According to Abinash Verma, CEO of the Indian Sugar Mills Association, which represents private sugar millers, the export incentive for 2020-21, although less than last year, should help the industry distribute the sweetener. “International prices are higher than last year. Although more than two months of the current season have ended, many large importers have been asking about sugar from India, especially due to the drop in production from Thailand. We should be able to meet the goal of 60 lt by 2020-21, ”he said.
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