The government allowed export of two million tonnes of sugar until the end of the 2017-18 marketing year, in order to clear surplus stocks and improve cash flow to millers for making payment to sugarcane farmers.
Sugar mills owe Rs 13,899 crore to sugarcane growers as on March 21, according to official data.
In its latest order, the Food Ministry has allowed two million tonnes of export under the Minimum Indicative Export Quota (MIEQ) scheme for the 2017-18 marketing year.
“In view of inventory level with the sugar industry and to facilitate achievement of financial liquidity, mill-wise MIEQ has been fixed for the 2018-19 marketing year,” the order said.
Under the MIEQ, it is mandatory to export the fixed quota, failing which the mills shall be deemed to be violating the directives of the government, it said.
The export quota has been fixed taking into account average production of mills achieved in the last two years and up to February of this marketing year.
Mills can export the quota or get it exported by other mills on mutually agreeable conditions.
The export quota would be over and above the obligations under the Advance Authorisation Scheme, the order said.
In a separate notification, the Directorate General of Foreign Trade (DGFT) has allowed export of white sugar till September 2018 under the DFIA scheme.
As per official data, mills in Uttar Pradesh have maximum cane price arrear at Rs 5,136 crore, followed by Karnataka Rs 2,539 crore and Maharashtra Rs 2,348 crore as on March 21 of this year.
To stabilise domestic prices, the government has doubled import duty on sugar to 100 per cent, scrapped the export duty and also imposed stock limits on sugar mills for two months.
Sugar output is estimated to rise to 27.2 million tonnes in 2017-18 marketing year, as against the demand of 25 million tonnes. India had produced 20.3 million tonnes in the 2016-17 marketing year.