According to a senior official of the Food Ministry, the Center has so far authorized Rs.1,800 crore in subsidy to sugar mills for undertaking a mandatory exports to the sweetener for 6 million tons in the 2020-21 season ending this month.
In order to reduce surplus stocks and enable cash-starved sugar mills to clear cane payments to producers, the government has to give export subsidies during the last three seasons. It offered export subsidies of a set sugar quota.
"For the current season, a budget of over Rs.3500 crore has been set aside for export subsidies. A total of Rs 1,800 crore has been spent on resolving subsidy claims" the official told PTI.
Once the funds are released from the finance ministry, the remaining subsidy would be given to mills soon, he added.
Mills have already exported the whole quota of 6 million tons allocated for the current 2020-21 season, according to the official. They've also exported sugar without subsidies, capitalizing on strong worldwide trends.
This has prompted mills to clear a total of 8,300 crores in cane price dues to farmers so far this season, against total payable due of 91,000 crores, he said, adding that the mills will settle the balance as well.
Exports went through without a hitch, despite the government slashing sugar export subsidies for the current season from 6,000 per ton to 4,000 per ton due to firm international prices.
According to the official, 5,000 crore of outstanding subsidy claims for the 2019-20 season have been processed thus far. In the next two months, the remaining 1,200 crore will be paid to mills.
The government has chosen not to give subsidies in the new season 2021-22, which will begin in October, because international sugar prices are expected to remain firm due to a projected shortfall of cane crop in the world's largest sugar producer, Brazil.
Sudhanshu Pandey, the Food Secretary, recently stated at a press conference that no subsidies are required for sugar exports in the 2021-22 season.
Sugar production in the country is expected to stay flat at 30.5 million tonnes in the upcoming 2021-22 season, according to the ministry, as more sugarcane is diverted for ethanol production.
In the 2020-21 season, sugar production is expected to exceed 31 million tonnes (October-September).
After Brazil, India is the world's second-largest sugar producer.
