Ahead of the committee of secretaries meeting, the sugar industry has requested the release of 10 lakh tonnes (lt) of additional export quota to mills, as well as the reinstatement of export under the "free" category beginning October 1. According to sources, even if the government does not approve the entire 10 lt, a significant amount is likely to be cleared.
The committee of secretaries, led by the Cabinet Secretary, is expected to make a decision on the issue this week after considering the potential impact on the domestic market, according to sources. Aditya Jhunjhunwala, President of the Indian Sugar Mills Association (ISMA), is believed to have conveyed the industry's demands in a letter to Food Secretary, citing better sugarcane availability in the next season (October-September) as mills in Maharashtra are likely to begin crushing in October itself.
He also stated that despite a record export of 86 lt between October and May this season, average ex-sugar mill prices have not increased and continue to hover around 32-35/kg, which is below the cost of production. "Therefore, there is no reason to believe that the current season's sugar export of 10 lt will have an impact on the domestic market," Jhunjhunwala said.
According to Consumer Affairs Ministry data, the all-India average retail price of sugar in the previous six months ranged between 40.96 and 41.73 per kg.
ISMA president told that the opening balance as of October 1 will be sufficient to meet demand for two and a half months, and by that time, sugar from the new season will be available According to a notification issued on May 24 by the Directorate General of Foreign Trade, sugar export (raw, refined, and white sugar) was placed under restricted category on June 1 and is valid until October 31. (DGFT). It only permitted export through permits and set a maximum quantity of 100 lt for the entire season.
The Food Ministry issued a notification in the first week of June allocating 10 lt of quota on a pro-rata basis to those exporters who had applied for permits. However, after accounting for the amount in transit, the mills were given 8 lt to sell to these exporters.
According to Jhunjhunwala, sugar mills applied for 17 lt of export quota based on contracts already signed, but the government only granted 8 lt. As a result, the 6-7 lt of raw sugar lying with mills became stuck, he explained, because mills plan raw sugar production in advance based on export demand. He has urged the government to consider the industry's demand while keeping in mind these stocks, which cannot be refined or shipped out without permits.
As per Agriculture Ministry figures, India's sugarcane acreage was 53.31 lakh hectares (lh) as of July 15, down from 53.7 lh the previous year. The total acreage for the entire season last year was 54.97 lh.
The ISMA president has also requested that 80 lt of sugar be placed under open general licence (OGL) in the upcoming season, which runs from October to April. He stated that now is the appropriate time to review the sugar export policy and announce it for next year, as it will assist millers in entering into future contracts and planning their production in advance.
He also stated that the government may reconsider its export policy after April, based on actual/estimated production and export, while reintroducing the Maximum Admissible Export Quota (MAEQ) system, which was last used in the 2020-21 season.
(Source: Business Line)
