Chennai:
Sugar mills would be losing Rs 1,000 per ton of sugar exported during April-May period after the Union government in a sudden move reduced the incentive for raw sugar export from Rs 3,300 per tonne to Rs 2,277 per tonne.
As the industry and exporters are perplexed as how and what basis, rule and whose authority has the rate been been recalculated lower than the Gazette Notification issued on February 28, it is believed that four lakh tonnes of sugar exported or would be exported in April-May will adversely affect the returns of sugar mills.
The new incentive rate was issued by Ministry of Consumer Affairs , Food and Civil Supplies issued on May 7 which overrides the gazette notification issued on February 28, 2014. The rate of incentive was fixet at Rs 3,300 per tone of raw sugar exports payable as per date of shipments.
A Vellayan, executive chairman of Murugappa Group has threatened that unless the move is reversed, the industry will have no option but to go to the court.
“From the moves made, it would appear that there is no respect for the decisions taken by Cabinet committee and any officer can overrule it,” said Vellayan.
He said this move will hurt the credibility if India with foreign buyers who have contracted and will be let down.
Interestingly, Indian Sugar Mills Association (ISMA) has questioned the revised figure of Rs 2,277 per tone be calculated.
“The action of the government to reduce the rate of incentive from Rs 3300 per tone to Rs 2277 per tone can’t be appreciated especially when there is more than surplus sugar in the country which needs to be exported, said ISMA.
The ex-mill sugar prices have not only fallen in last one month but continues to be lower than the cost of production leading to losses to the industry as well ass when cane price arrears of farmers continue to be outstanding at highest levels over Rs 12,000 crore, ISMA stated.
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