The government on Monday notified the decision allowing free export of sugar, a move that will help industry ship surplus sweetener and clear cane payment arrears to farmers that have mounted to over Rs 10,000 crore (Rs100 billion).
The Food Ministry issued the notification more than a week after an inter-ministerial meeting, Chaired by Prime Minister Manmohan Singh, decided to eliminate ceiling on sugar exports by putting it under the Open General Licence (OGL).
According to the notification, effective from May 11, there would be no quantitative restrictions on sugar exports and producers are not required to obtain export release order from the Food Ministry under OGL in the 2011-12 marketing year (October-September) till further orders.
A trader who has imported raw sugar under the Advance Authorisation Scheme (AAS), under which mills are obligated to export the sweetener after processing, on 'grain-to-rain' basis are also not required to obtain export release order.
However, export release order is required for mills exporting sugar under AAS on tonne-to-tonne basis, it said. In 'tonne-to-tonne', mills are allowed to process imported raw sugar, undertake sale in local market and fulfil obligation of exporting an equal quantity later.
Whereas in 'grain-to-grain', mills are allowed to process imported sugar and export. Such sugar was not available for domestic market.
The Centre had allowed import of raw sugar at zero duty between 17 February, 2009 and September 2009 through AAS.
The Food Ministry said that export of sugar for which release orders have already been issued are excluded from the purview of this order.
This means, exports of one million tonnes of shipments permitted by the Empowered Group of Ministers (EGoM) on March 26 would also be under the OGL.
As per the notification, exporters are asked to upload details about quantity of sugar shipments through online facility to the Food Ministry within three working days. They are also asked to give details of physical exports.
Before deciding to free sugar exports, the government had permitted 2 million tonnes of shipments in equal tranches as sugar output is estimated at 26 million tonnes in 2011-12 marketing year, higher than the annual domestic demand of about 21.5-22 million tonnes.
Industry body Indian Sugar Mills Association (ISMA) said India could export another two million tonnes in the remaining five months of the current marketing year as country would have a comfortable surplus of around 4 million tonnes for exports from this year's production.
Till April, physical shipments of 1.6 million tonnes of sugar were undertaken. During the 2010-11 marketing year, physical exports had stood at 3.1 million tonnes.