July 15, 2019

Sugar Export Subsidies To Stay Despite Complaints

[ By Titus Manickam Rock ]

Sugar Export Subsidies To Stay Despite Complaints

Complaints from rival sugar producing nations, notably Brazil and Australia, to the World Trade Organization (WTO) about sugar export subsidies by India is keeping the latter on the edge assuring the world that it will provide the subsidies only within the WTO framework.

As of now, India is the world’s second-biggest sugar producer and it is necessary to export surplus production in order to control brimming inventories. The Indian government has not provided any hint about subsidies without stretching WTO regulations.

India has been producing surplus stock for years and it is turning out to be getting out of control to manage additional stocks. The government has said it will provide incentive to mills for overseas sugar sales and have set a target of 5 million tonnes for 2018-19 year ending September 30. Sugar mills have instead asked for the target to be raised to 8 million seeing bumper production and stocks.

Decision in producing raw sugar or white sugar is necessary in order to accommodate demand for the preferred raw sugar. Normally, sugar mills produce white sugar for local consumption. However, they produce raw sugar in times of surplus to help exports.

In the forthcoming year, India’s sugar production is expected to drop by 18% due to weaker monsoon rains. India already has an inventory of about 15 million tonnes and expects production of another 28 million tonnes in the current year against local demand of about 26 million tonnes.

Policy decision about incentives for exporting surplus sugar will be made by next month, according to industry and government sources.

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