Govt bars mills from 10 lt quota for exports for overselling more than permitted in domestic market
Informing sugar mills about the decision to allow 10 lakh tonnes (lt) of sugar for exports, the Food Ministry has issued detailed guidelines on Monday in which mills are directed to complete the export by September 30. Also, the government has debarred some sugar mills from receiving export quota as they had violated the rules by selling excess sugar in domestic market than their allotted monthly quantity.
In a communication to all sugar mills, the Union Food Ministry has said, “Those sugar mills which have violated the policy guidelines issued by the Department of Food and Public Distribution (DFPD) order No. 5-1/2024-SC (386427) dated July 26, 2024 for action to be taken against violation of monthly stock holding limit orders for sugar or the mills which have defaulted government dues pertaining to this department are not being allocated any export quota during the current sugar season 2024-25 (October-September).”
As many as 509 mills have been allotted export quota while 46 mills were debarred due to payment default and another 24 were barred from the list due to overselling. There are as many as 18 mills in Uttar Pradesh, including Maqsudpur, Belwara, Barkhera, Gagnauli, Bilai, Thanabhawan and Kinauni which were penalised due to selling more sugar than monthly allotted quota.
On the other hand as many as 11 mills including NCS Sugars, Kumarantham, Lakshimipuram and Chelluru in Andhra Pradesh and 16 mills including Rahuri, Faizpur, Jamani, Rajgad and Jeur have been not found place in the list of export quota for default in repaying to the government.
The dues as mentioned in the guidelines pertained to loans availed from the Sugar Development Fund, since disbanded, for expansion of mills capacity and also setting up distilleries.
The Ministry has also said that all grades of sugar can be exported by a sugar mill /refinery/exporter up to the quantity allocated to each mill. As export quota of 10 lt has been prorated to the sugar mills under a formula, they have also been allowed to exchange/surrender their quota with domestic quota of another mill.
Under the formula, only mills which operated in at least one sugar season out of the last three sugar seasons as well as new mills started only this season are eligible for export quota.
Uniform quota
All the sugar mills have been allocated a uniform export quota of 3.174 per cent of their 3 years average production of sugar. But, the mills which commenced sugar production for the first time during current sugar season 2024-25 or the mills which were closed in the previous three sugar seasons but have restarted in the sugar season 2024-25 have also been allocated export quota of 3.174 per cent of their estimated sugar production in current season after verification by State Cane Commissioner.
Sugar mills can export the allotted quantity of sugar either themselves or through merchant exporters/refineries and the last BL (Bill of Lading) date shall be on or before September 30. Sugar mills which are not willing to export have been told to surrender their export quota (partially/whole) on or before March 31.
Exchange of quota
Alernatively, mills have also been allowed to exchange their export quota (partially/whole) with domestic quota of any other sugar mill before March 31. “Exchange of export quota with domestic quota would reduce transportation cost involved in export of sugar and movement of sugar from mills present in non-coastal States. For example, if a mill in Punjab or Uttar Pradesh which is far away from a port, does not wish to export due to higher transportation cost involved can exchange its export quota with monthly domestic quota of another mill located nearer to a port,” the letter (to the mills) said.
There is also a cap made on exchange as the government has said that mills shall apply for exchange of their domestic quota with export quota to the maximum limit of their average monthly release for subsequent five months of last three sugar seasons. Explaining it further, the letter said that if a sugar mill exchanges its export quota in the month of March, the average domestic release shall be calculated from April-August during the last 3 sugar seasons.
The Ministry further said that exchange of export quota with domestic quota once permitted will not be reversed.
Commenting on the government’s decision, Deepak Ballani, Director General of Indian Sugar & Bio-Energy Manufacturers Association (ISMA), said, “The permission to export sugar reflects the government’s commitment to balance domestic availability with industry’s financial health. This decision provides significant relief to sugar mills, enabling them to generate crucial revenue, which will contribute to timely cane payments to farmers.”