A Cabinet note on subsidy extension for up to 1.4 million tonnes of raw sugar exports has been circulated.

“A final decision is yet to be taken, the Department’s view is that the subsidy should be given for 1.4 million tonnes of raw sugar,” Union Food Minister Ram Vilas Paswan said on the sidelines of an Assocham event.

Paswan said his Ministry had considered the industry’s repeated requests to extend the export incentives on raw sugar for the current season.

Subsidy details During the 2013-14 season, the subsidy had been provided for up to four million tonnes of raw sugar, primarily to help mills clear cane arrears payable to farmers.

It was reviewed every two months since February when it was first instituted and the subsidy varied between ₹2,277/tonne and ₹3,371/tonne.

Mills exported about 750,000 tonnes under the scheme during the season, which runs between October and September.

Arrears swell With arrears already climbing past ₹11,000 crore this season, the sugar industry has been clamouring for extension of raw sugar export subsidy be put in place immediately, with crushing likely to end by April and domestic prices (which are already below the cost of production) unlikely to improve.

Sugar balance sheet India, the world’s second largest sugar producer, produced 13.48 million tonnes (mt) of the sweetener between last October and this January, according to the Indian Sugar Mills Association.

The association expects output in 2014-15 to hit 26 mt, up from 24.3 mt last season.

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