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The Centre has decided to allow export of an additional five lakh tonnes (lt) of sugar under the open general license (OGL).
The go-ahead, given by the Empowered Group of Ministers (EGoM) under the Finance Minister, Mr Pranab Mukherjee here on Thursday, will enable the domestic industry to take advantage of rising international prices.
White sugar in London is currently quoting at around $710 a tonne. Indian sugar of 100 ICUMSA, which is of less premium quality compared with the 45-ICUMSA refined whites traded in London, could fetch $ 10-15 more in destinations such as Sri Lanka, Yemen, Lebanon, Iran, Iraq, North Africa and Indonesia. There is demand for refined 45 ICUMSA sugar from India at $750 a tonne or more, trade sources told Business Line.
At $725 or Rs 32,575 a tonne free-on-board, the effective realisation for exports from Maharashtra, after deducting Rs 2,000 towards freight and handling expenses at JNPT or Mumbai port, would be around Rs 30,575. This is more than the prevailing ex-factory prices of Rs 25,000 a tonne on domestic sales in Maharashtra or Rs 27,000 in Uttar Pradesh.
The white sugar contract for August delivery at London, in fact, fell from Wednesday's closing price of $ 739.90 a tonne, following the news of India's permitting an additional five lt of exports – over and above a similar quantity for which the formal approval notification was issued on April 19. Out of the five lt quota permitted earlier, which included 51,500 to neighbouring countries, the Directorate of Sugar has already allocated 4.26 lt to individual factories and issued release orders for 4.21 lt.
With the first lot of five-lt OGL exports set to be exhausted soon, the EGoM's decision today is likely to be welcomed by the industry, even though it had sought clearance for an additional 15 lt of exports under OGL.
While the Union Agriculture Minister, Mr Sharad Pawar, has favoured a lifting of the current ban on shipments, his counterpart at Food and Consumer Affairs, Prof K.V. Thomas, has been advocating a more cautious opening up in view of the coming festival season.
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