Managing Sugar - New Export Policy for US and EU & More

Managing Sugar – New Export Policy for US and EU & More

Question - Government has recently relaxed norms for sugar exports to EU and the US. Discuss the new norms and also briefly indicate the step taken for sugar mills to manage surplus sugar production.

Change in Export Policy for the EU

• Preferential quota sugar to the EU was exported through State Trading Enterprises subject to quantitative ceiling notified by DGFT regularly

• To extend the benefits of the Preferential Quota sugar to the entire sugar industry for exporting to the EU, government has liberalised export policy

• The Preferential Quota sugar has been liberalised from STE to Free regime subject to quantitative ceiling notified by DGFT regularly

• Certificate of origin will now be issued by Additional DGFT, Mumbai

• Exporters will be required to provide actual export details to the Additional DGFT and APEDA

Change in Export Policy for the US

• Preferential Quota sugar was being exported to US via STE subject to DGFT quantitative ceiling

• GoI has changed the export policy from STE to Free regime for export of Preferential Quota sugar to the US subject to DGFT quantitative ceiling

• Quota is to be operated by APEDA

• Exporters should furnish details to APEDA about the Export

• Certificate of origin will be issued by Additional DGFT, Mumbai if needed

Implication

• Change in policy of preferential sugar quota will enable sugar industries in the nation to export sugar subject to minimum requirement of registration from APEDA or DGFT

Steps Taken For Managing Surplus Sugar Production
• The process of procurement of ethanol under the Ethanol Blending Programme has been liberalised keeping in mind the surplus sugar production

• Under the EBP or Ethanol Bending Programme, fixed remunerative ex depot price of ethanol has been encouraged in range of INR 40.50 to 49.50 to encourage sugar industry for diverting more molasses for ethanol production

• Government has also continued incentive schemes for marketing and promotion services of raw sugar production targeted for export during current sugar season

• In case of mills offering alcohol production capacities, incentive will only be provided if ethanol offered to OMCs under EBP is 25% of annual production level of alcohol

• There is no restriction on sugar mills for producing ethanol from molasses including B-Heavy molasses

Facts and Stats

• Sugar industry contributes to the rural economy; sector supports over 50 million farmers and delivers value addition

• A KPMG report has projected that in 2017, domestic sugar consumption will be around 28.5 million MT

• Given past trend in production cyclicality, the report also estimates sugar equal to 1.5 months of consumption or extra 3.5 million MT of sugar needs to be produced by 2017.