The Indian government might extend freight subsidies for domestic sugar mills looking to export for another year beyond their planned expiry in April, the farm minister said on Friday.
The subsidies, valid for one year until April 2008, give mills located in coastal areas 1,350 rupees ($34.25) per tonne for exports, while in the north they receive 1,450 rupees per tonne. "These subsidies are valid for one year that will end in April," Farm Minister Sharad Pawar told reporters. "We may consider extending it by one more year."
Saddled with huge stocks, Indian mills aim to export 2.5 million tonnes of sugar in the crop year to September 2008, up from 1.7 million tonnes last year. The Indian Sugar Mills Association, representing private sugar producers, on Thursday said India was likely to produce 30-31 million tonnes, up from last year's record estimated output of 28.4 million tonnes.
India, the world's biggest sugar consumer and the No 2 producer after Brazil, consumes around 20 million tonnes of sugar annually. Mills have decided to export the sweetener without profit as part of efforts to trim huge domestic stocks of around 11-11.5 million tonnes on October 1 when the new sugar season began.
"Coupled with large stocks of sugar the world over, of which about 60 percent is believed to be held by India, the Indian sugar industry is today faced with a situation of very high stocks," Pawar said. India, one of the world's leading importers of edible oils, cut customs duty in July on palm oil to 45 percent from 55 percent and on soyoil to 40 percent from 45 percent to improve supplies and keep a lid on prices.