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Several months into the sugar season, the Centre is yet to clarify on the applicability of export benefit to sugar supplied to a SEZ-based sugar refinery, effectively cutting out Parry Sugars Refinery India Pvt Ltd from accessing locally available raw material.
BusinessLine had reported on the lacuna in the sugar export notification last November. Following this, reports emerged quoting a senior government official that a clarification that would allow export subsidy, specifically on the freight component, on sale of sugar to a SEZ-based refinery was imminent.
Following overproduction of sugar and the drop in domestic prices that led to a cash crunch in the industry and caused dues to sugar farmers to mount, the Centre set a sugar export target of 60 lakh tonne for the 2019-20 sugar season (October-September) against 50 lakh tonne in the previous year. It also announced a subsidy of ₹10.40 a kg, including an ocean freight component of ₹2.70.
Senior officials at Murugappa Group, to which Parry Sugars Refinery belongs, rued the delay in the issue of clarification.
Till the previous season, the notification had been clear and sugar mills had sold to the refinery. It had bought over 2 lakh tonnes of sugar from local mills apart from importing 6 lakh tonnes from Brazil. This involves a freight cost of $15 a tonne.
But in the current season, sugar mills which have to export sugar are dependent on traders who aggregate the sugar from multiple small mills for export. Not only is the refinery losing out because it cannot source locally available stocks, but also the mills which can easily avail of the export opportunity available right at their door step, said the officials.
The whole idea of export was to enhance sugar mills’ liquidity so that they could pay the farmers, the officials pointed out.
There are two major refineries in the country: Parry Refinery is in Kakinada on the east coast and Renuka Sugar’s refinery in Kandla, a non-SEZ unit on the west coast. The notification is clear on the applicability of subsidy to the Domestic Tariff Area, the sources said.
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