Tough road ahead for Indian sugar exports
Rating agency ICRA is of the opinion that given the subdued global sugar prices, achieving the target of 6 million tonnes of sugar exports this year will be a challenge. Last year too, while the government had set a target of exporting 5 million MT of sugar, it could only export around 3.2 million MT.
In order to avoid facing the same situation, the government announced a sugar export subsidy scheme with a capital of Rs 6,268-crore on August 28, 2019. Commenting on this measure, the agency’s senior vice president and group head, Sabyasachi Majumdar said, “The export subsidy comes in the wake of high opening sugar stocks of around 14.5 million tonnes for the 2019-20 season. Given the prevailing subdued international prices, the companies are likely to make losses on sugar exports.” He also added that these losses are likely to be counterbalanced by the subsidy of Rs 10.44 per kg of sugar exported. The compensation, however, is slightly lower than the cane production subsidy of 2018-19, which translated to Rs. 11.5 per kg of sugar exported.