By Mayank Bhardwaj, Nigam and Prusty
NEW DELHI, Sept 26 – India’s cabinet on Wednesday approved incentives to encourage cash-strapped mills to export sugar in the 2018/19 season, a government statement said on Wednesday, part of efforts to trim bulging domestic stockpiles.
Prime Minister Narendra Modi’s cabinet will give transport subsidies of 1,000 rupees ($13.77) a tonne to 3,000 rupees a tonne to sugar mills, depending on their distance from ports, the statement said.
Also, the cabinet approved raising the price the government directly pays to cane growers to 138 rupees ($1.90) a tonne in the new season beginning October 2018.
Both measures would cost the government 55.38 billion rupees, the statement said.
The world’s biggest sugar consumer is trying to reduce a growing stockpile and the rise in shipments could add to pressure on global prices that are already trading near their lowest in a decade.
The food ministry would encourage sugar mills to export at least 5 million tonnes of sugar to cut massive stocks, two government sources who did not want to be identified said on Wednesday.
Reuters last week reported that India’s government was considering such a proposal for the 2018/19 season.
India could start the new season with inventories of over 10 million tonnes of sugar and could produce another 35 million tonnes in the season, the Indian Sugar Mills Association (ISMA) estimates.
Indians, known for their penchant for anything sweet, consume about 25 million tonnes of sugar a year.
Saddled with massive mounds of sugar and a fall in prices, mills have said they are unable to pay cane farmers the government’s fixed price on time.
Sugar companies owe about 135 billion rupees ($1.85 billion) in the current season to cane growers.
Ahead of a general election due by May next year, Modi’s government is keen to help mills clear the money owed to the cane farmers, who form a large voting bloc. ($1 = 72.63 rupees) (Reporting by Nigam Prusty and Mayank Bhardwaj; Editing by Malini Menon and Christian Schmollinger)