India plans to more than double sugar export aid

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India, the world's top sugar producer after Brazil, is considering a proposal to provide 45 billion rupees (S$845.2 million) assistance to sugar mills to boost exports and cut domestic surplus next year.

[NEW DELHI] India, the world's top sugar producer after Brazil, is considering a proposal to provide 45 billion rupees (S$845.2 million) assistance to sugar mills to boost exports and cut domestic surplus next year.

The government plans to provide a subsidy of 13.88 rupees per 100 kilograms of cane to sugar mills in the year starting Oct. 1, compared with 5.5 rupees in the 2017-18 season, according to two people familiar with the matter. It is also considering to reimburse transport and handling charges between 1,000 rupees and 3,000 rupees per ton to move the sweetener from mills to ports, the people said, asking not to be identified citing rules.

The food ministry's spokeswoman declined to comment.

The assistance will enable mills to boost exports, help cut reserves and support domestic prices amid bumper harvests. Output in the country will likely reach a record for a second straight year in 2018-19 as higher cane prices prompted farmers to increase the area under high-yielding varieties, Abinash Verma, director general of the Indian Sugar Mills Association, said in July.

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A bigger crop in India is potentially swelling global supplies. Sugar prices in New York have tumbled 23 per cent so far this year, reaching a decade-low in August.

Export Quota

The proposal is likely to be considered by the cabinet on Wednesday, the people said. The government may allocate a total of 5 million tons of sugar export quota to mills in 2018-19, the people said. The incentives will help mills to part clear 135.67 billion rupees of cane arrears that millers owed to farmers as of Sept. 17.

The government allocated 2 million metric tons of sugar exports for 2017-18 under a quota system and later extended the deadline by three months. India switches between being a sugar importer and exporter, depending on local output. Exports totaled about 400,000 tons during October-August, according to data from the association. The country shipped 46,000 tons in 2016-17 and a record 4.96 million tons in 2007-08, data showed.

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