Centre Likely to Withdraw Sugar Export Subsidies from New Season

A top government official said that India is expected to remove sugar export subsidy from the new season that begins in October due to the sharp rise in global prices, making it easier for Indian sugar mills to sell sweeteners in the international market. 

Sudhanshu Pandey, a senior civil at the Ministry of Consumer Affairs, Food & Public Distribution, told media that "The government is currently not considering any subsidies for next year. Under the current circumstances, as we have seen the scenario, it seems that there is no need to support subsidies. If exports can happen on their own, then it would be better for the global market not to give subsidies." 

India is the world's largest sugar producer after Brazil and has been boosting overseas sales for three consecutive years, helping New Delhi to become a major and stable exporter of the commodity. 

Rival suppliers often oppose India's sugar export subsidies. Following protests from Brazil, Australia and Guatemala, the World Trade Organization (WTO) decided in 2019 to set up panels to rule on claims against India's sugar export subsidies. 

India claims that sugar export subsidies do not violate WTO rules. 

"We expect (global) prices to rise as demand for sugar in India increases. We may not need subsidies," Pandey said. 

New York's standard raw sugar price hit a 4-1/2- year high on Tuesday, supported by fund purchases against a backdrop of supply shortages. 

According to food trader Czarnikow, sugar production in Brazil's 2021/22 Center South (CS) is expected to decline to 32.5 million tonnes from the June forecast of 34.1 million tonnes as drought and frost damaged the sugarcane harvest. 

Taking advantage of the rise in sugar prices, Indian traders first signed export contracts five months before shipment, because Brazil's production may decline, prompting buyers to obtain supplies from India in advance. 

Indian sugar mills have signed an agreement to export approximately 75,000 tons of raw sugar and 75,000 tons of white sugar for shipment from November to January. 

Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories Ltd., said: “Overseas demand is very good as output in Brazil is being revised down. We can export 6 million tons next season.” 

From this year to September 30, 2021, India will export a record 7.1 million tons of sugar thanks to subsidies for overseas sales promotion. Over the past few years, higher sugar production has lowered local prices, undermined the financial health of milling, and made it difficult for the Sugar Baron to pay sugarcane farmers in a timely manner.