A top government agency officials said on Tuesday that India will withdraw sugar export subsidies for the new season which begins in October 2021. A sharp rise in global prices makes it easier for Indian sugar exporters to sell their produce in the global market.
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‘The government is not considering any subsidy for next year’ Sudhanshu Pandey, the Ministry of Consumer Affairs, Food, and Public Distribution’s most senior civil servant told Reuters in an interview.
‘As we see it, there appears to be no need for subsidy support under the current circumstances, if the exports can happen on their own, it is also better for the world market if no subsidies are provided’ He told.
India, the world’s second-largest producer of sugar after Brazil, has incentivized overseas sales for three years in a row, assisting New Delhi in establishing itself as a significant and stable exporter of the commodity.
Rival suppliers have frequently criticized India’s sugar export subsidies. Following protests from Guatemala, Brazil, and Australia, the World Trade Organization (WTO) decided in 2019, establish panels to hear complaints about India’s sugar export subsidies.
India has maintained that its sugar export subsidies do not violate WTOs rules.’Because demand for Indian sugar is expected to increase, (global) prices are expected to rise. There may be no need for a subsidy’ Pandey stated.
On Tuesday, benchmark raw sugar prices in New York reached a new four-and-a-half-year high, boosted by fund purchases against a backdrop of tightening supplies.
According to food trader Czarnikow, Brazil’s center-south (CS) sugar production in 2021/22 is expected to fall to 32.5 million tonnes from 34.1 million tonnes in June due to drought and frost damage to the sugarcane crop.
Making profits from rising sugar prices in the global market, Indian traders have signed export contracts five months ahead of shipments for the first time, as a probable drop in Brazilian production, prompted buyers to secure sugar supplies from India ahead of time.
From November to January, Indian mills have inked a contract to export approximately 725,000 tonnes of raw sugar and 75,000 tonnes of white sugar.
‘As Brazil’s production is being revised down, overseas demand is very strong. In the coming season, we will be able to export 6 million tonnes Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd. (NSCSF),’ stated
Thanks to subsidies to boost overseas sales, India is set to export a record 7.1 million tonnes of sugar in the current fiscal year, which runs from September 30 to September 30, 2021.
Higher sugar production has hammered local prices for many years, threatening mills’ financial health and making it difficult for sugar barons to make timely payments to cane farmers.