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INDIRECT TAXES
EGoM on food may allow sugar exports
Tue, 08 Mar 2011 01:00:45 GMT
NEW DELHI: A meeting of the empowered group of ministers (EGoM) on food this week will consider the issue of export of five lakh tonne of sugar under open licence.

With food inflation showing signs of easing and the high production expected this year, the EGoM could open exports.

BJP leader Gopinath Munde and others, including National Alliance of Farmers Associations (NAFA)'s Raju Shetti, met finance minister Pranab Mukherjee last week to press for a decision. One of them said the finance minister, who heads the EGoM, assured them that the EGoM would take a “positive” decision.

A notification allowing export of 5 lakh tonne of sugar under open general licence was issued by the food ministry last year, but was put on hold by the prime minister's office and the EGoM in the thick of apprehensions of soaring food inflation and a possible impact on retail sugar prices. However, it allowed export of sugar under the Advance License Scheme, or ALS, in the same period up to end March.

“What could actually influence the EGoM is that almost the entire stock of 11 lakh tonnes of pending sugar re-export obligations under ALS have now been issued RO (release orders), and relevant sugar mills have tied up firm contracts for exports," a government official said. The global sugar prices have fallen to about $740 a tonne from the peak prices of $850/tonne.

The food ministry was reluctant to approach the EGoM on the issue until the second advance estimates were released in February indicating firmer sugarcane acreage figures. The sugar output is pegged at around 24 million tonnes in 2010-11 sugar year, a million tonne more than the average domestic consumption.

In addition, there is a carry forward of 5 million tonnes sugar from the previous year. According to industry, around 2 million tonnes of sugar are available for export.

The government also fears that poor realisations by industry in view of stagnant sugar prices and slow demand in a year of high production will impact adversely the sugar mills’s payment to farmers , sending the sugar sector into a tailspin and forcing the Centre to coin a big bailout bill for the industry. In 2007-08 , the government had to spend about Rs 500 crore to help the industry.
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