1 million tonne sugar export allowed; stock limit removed

The government today allowed one million tonnes of sugar export and removed curbs on traders to hold stocks of the sweetener-- a decision the industry said would help improve their cash flow and enable them to make timely payment to cane growers.

An Empowered Group of Ministers on Food (EGoM), headed by Finance Minister Pranab Mukherjee, approved exports as the country's sugar production is expected to exceed the domestic demand by 3-4 million tonnes in the 2011-12 marketing year.

"The EGoM has approved one million tonnes of sugar export under the Open General License (OGL) scheme. In case of stock holding limits, it has been lifted on sugar," Food Minister K V Thomas told reporters after the meeting.

The EGoM felt that it would be safer to allow exports of one million tonnes, though the demand was for three million tonnes, the minister added.

The stockholding limit is valid till the end of this month. Asked if permitting exports could affect retail prices, Thomas said: "Farmers want export. We have to balance the request of farmers as well as consumers."

In the 2010-11 marketing year (October-September), the government had allowed 2.6 million tonnes of exports, out of which 1.5 million tonne was through OGL in three tranches.

Sugar production in India -- the world's second largest producer and biggest consumer -- is estimated at 25-26 million tonnes in this marketing year.

Although the industry has been demanding sugar export from the start of this marketing year, the Food Ministry was reluctant to give permission as it was fearing price rise during the festival season, when generally demand is higher.

Reacting to the decision, Indian Sugar Mills Association Director General Abinash Verma said, "The exports will help in improving our cash flow. We will be able to make timely payment to farmers in this crushing season."