Cabinet Okays Rs 3,500-Crore Sugar Export Subsidy

India cut subsidy on sugar exports nearly by half for the ongoing marketing year amid a surplus as production of the sweetener surged after a good monsoon.

The government has allocated Rs 3,500 crore for 60 lakh tonnes for the marketing year 2020-21—October 2020 to September 2021, Prakash Javedekar, union minister of environment, information and broadcasting and heavy industries, said in a press conference after the cabinet meeting.

That’s about Rs 5.8 per kilogram. In 2019-20, the government provided a lump sum export subsidy of Rs 10,448 per tonne—or Rs 10.4 per kilogram.

The subsidy comes in a year when India’s sugar output has jumped by more than half over a year ago to 42.9 lakh tonnes till November. Indian Sugar Mills Association attributed higher production to early onset of crushing and higher acreages in Maharashtra and Karnataka on account of a good monsoon. Last year, crushing only began in November due to a drought.

With an estimated sugar production of 310 lakh tonnes, India will have another surplus year and needs to continue to export about 60-70 lakh tonnes during 2020-21 season, the industry lobby said in a November statement. Without significant exports, mill owners could stare at surpluses, reducing their ability to clear pending payments to cane farmers, ISMA said.

The cabinet also approved payment of subsidy. An amount of Rs 5,361 crore would be put in the bank accounts of the farmers within a week, said the minister.