The government on Wednesday approved an export subsidy of ₹10,448 per tonne of sugar up to a maximum of 6 million tonnes at an estimated cost of ₹6,268 crore, an official statement said.

The Cabinet Committee on Economic Affairs, which met here, approved payment of a lumpsum export subsidy to sugar mills which will cover expenses on marketing, handling, processing and transport charges, and the amount will be credited directly to farmers’ accounts on behalf of mills against cane price dues and if anything left, it will go to the mills directly.

Announcing the Cabinet decision, Information and Broadcasting Minister Prakash Javadekar said the export subsidy which will commence immediately is World Trade Organisation (WTO) compliant as subsidies are allowed up till 2022-23 under WTO norms.

This is important because countries like Australia, Brazil and Guatemala have been requesting the multilateral trade body to set up a dispute settlement panel against sugar subsidies given by India.

The decision was taken keeping in mind glut in sugar production that the sugar mills in the country are facing in the last two years. Last year too, the government offered to provide export subsidies to 5 million tonnes of sugar exported by India mills, even though they are yet to meet the target. According to sources, the mills have been able to export only 3.4 million tonnes of sugar till early this month.

“The export of 6 million tonnes will not only reduce the surplus sugar inventory next season but it will also give additional cash flows to the tune of around ₹18,000 crore, including the subsidy amount. This will help the mills reduce carrying costs and interest burden as well as help them pay cane price to farmers on time,” said Indian Sugar Mills Association Director-General Abinash Verma.

He said there is an expected global deficit of around 4 million tonnes next year.

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