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Food Ministry suggests multiple options for sugar export

"We will present all the four options before the EGoM when it meets. We will implement whatever it approves," said a food ministry official.

, ET Bureau|
Updated: May 02, 2012, 02.49 AM IST
NEW DELHI: Union food ministry has suggested four options to expedite sugar exports after the panel of ministers on food sought a mechanism that allows faster shipments.

"We will present all the four options before the Empowered Group of Ministers (EGoM) when it meets. We will implement whatever it approves," said a food ministry official.

The options include allocating export quantity based on a company's past export performance; online registration of shipments at designated ports; fixing the quota on 'first come first serve' basis against a bank guarantee; and the existing licence regime with faster procedures.

According to a note prepared by the food ministry, the criterion of allowing exports to companies on past export performance will meet the targets of actual exports but it may end up patronising established players as in the case of 'first come first serve' model. "Comparatively, new players will start with heavy disadvantage," the note said.

The note also says that exports through designated ports will ensure quick disposal of sugar surplus in areas closer to the ports but it can affect the equitable allocation of export quota. "Producers away from the ports will be at a disadvantageous position. Moreover, tracking the quantity of sugar moved out of the mills will be difficult in view of their levy sugar obligation of 10%," said a ministry official.

Officials in the sugar directorate say that if consensus is not arrived at in any of the options, the quota-based existing mechanism itself can be improvised. "The delay in physical exports can be cut down by issuing release order based on the entitlement of the mills at the first stage itself. Thereafter, the mills may be permitted to trade as per their entitlements. The sugar directorate should be informed about from where the physical movement of sugar for exports has taken place," an official said.

This year, the government has so far allowed export of 3 million tonne in three equal tranche. While export of 2 million tonne has already been notified, the food ministry withheld the notification of third tranche in the absence of a definitive export mechanism. According to the sugar directorate, out of the notified 2 million tonne sugar, release orders for 1.9 million tonne have been issued. But, so far, only 9 lakh tonne have been physically shipped out. There is an export surplus of around 3.15 million tonne, while under non-levy, the excess is around 9 lakh tonne.

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