The Centre has allowed export of 5 lakh tonnes (lt) of sugar under the open general license (OGL). This was a decision that had already been taken in mid-December, but was kept on hold on account of food inflation worries.

But with food prices softening in recent weeks and in the face of heavy lobbying by industry, an Empowered Group of Ministers (EGoM) under the Finance Minister, Mr Pranab Mukherjee, has decided to lift the curbs with regard to export of the earlier approved 5 lt quantity.

The EGoM's go-ahead, at a meeting here, has been welcomed by millers, despite white sugar prices in London easing significantly from their $ 850-a-tonne levels breached in early February. The May delivery contract is currently trading at around $ 705 a tonne.

“The $ 705 price is for refined sugar of 45 ICUMSA grade. Indian sugar will fetch a discount of $ 30-35, which comes to $ 670-675 or Rs 30,150 a tonne. From this, if Rs 2,000 is deducted towards freight from mill and port handling charges, the ex-factory realisation is Rs 28,150 a tonne. But that is still higher than the Rs 26,000-27,000 a tonne from domestic sales,” said a Maharashtra-based miller.

The 5-lt exportable quantity is likely to be distributed among all factories, pro-rated to their average production in the last three sugar seasons. This exercise had already been undertaken in early-January by the Directorate of Sugar just before the decision to keep the exports on hold and refer the issue to the EGoM.

The EGoM's meeting on Tuesday was preceded by the Agriculture Minister, Mr Sharad Pawar, writing to Mr Mukherjee to relax the suspension on exports. Mr Pawar cited problems of cash flow faced by mills, which, he warned, could lead to a build up of payment arrears to cane farmers.

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