The government is likely to extend the export subsidy given to sugar mills by one more year, a move aimed at encouraging overseas sale of the sweetener amid expectation that the country will produce a record sugarcane crop next season.
"There are some countries which have objected to this (export subsidy). This particular subject is before WTO. We are trying to convince some of the countries which have objected and simultaneously finding some solutions," agriculture and food minister Sharad Pawar told reporters on the sidelines of industry body FICCI seminar.
The minister said: "last year we had provided certain facilities. This year also we will have to take that decision (to provide assistance on sugar exports). And we will take the decision as early as possible."
The government in April this year extended an export subsidy (in form of defraying freight cost) of Rs 1,350 per tonne to the mills located in the coastal region, while Rs 1,450 a tonne for mills in non-coastal region. It was valid for one year. Besides export subsidy, it also decided to create a buffer stock of 50 lakh tonnes to bail out the industry so that they can pay cane arrears to farmers.
India's sugar production in 2006-07 season ending this month is estimated at over 280 lakh tonnes leading to a glut situation as the domestic consumption is about 190 lakh tonnes. The output in the next season is expected to go beyond to reach 300 lakh tonnes.
"If you have to liquidate stocks there is a limitation in the domestic price. We have to enter international market. If we are not competitive because of transport and other cost, government has to look into the matter to find some solutions," Pawar said.
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