The new government today reinstated the export subsidy at Rs 3,300 per tonne on raw sugar shipments to be undertaken during June-July, a move the industry said would boost exports.
To help the cash-starved industry to pay arrears to sugarcane farmers, the previous government had announced a subsidy for export of raw sugar up to 4 million tonnes during 2013-14 and 2014-15 marketing years (October-September).
It had fixed the subsidy at Rs 3,300 per tonne for February-March and decided to review it every two months.
However for April-May, the subsidy was reduced to Rs 2,277 per tonne for raw sugar shipments.
Issuing a fresh notification, the Food ministry said: "The incentive towards marketing and promotion services for raw sugar production for the period beginning from June 1, 2014 and ending on July 31, 2014, shall be at the rate of Rs 3,300 per tonne."
Welcoming the decision, Indian Sugar Mills Association (ISMA) said: "The mistake of reducing the export incentive for April-May even though the rupee had appreciated, is now rectified. Sugar exports, which could not take pace in last two months due to cut in incentive, will now resume."
"This positive step gives a lot of confidence to the sector that the new government will be fair in its decisions and positive towards farmers' interests," it said.
The country has exported about 5 lakh tonnes of raw sugar so far availing the benefit of the subsidy, it added.
At present, sugarcane arrears are around Rs 11,000 crore, of this Rs 7,200 crore belongs to Uttar Pradesh.