Sugar exports, estimated at 3.8 MT for SS 2019, are expected to rise to 4.5-5 MT in SS 2020, given the lump sum export subsidy announced.
For SS 2019, the government had granted raw material subsidy of Rs 139 per tonne of sugarcane for sugar exported, along with a transport subsidy of Rs 1,000-3,000 per tonne of sugar, depending on the distance between the exporting sugar mill and the nearest port. These subsidies together worked out to Rs 2,300-4,300 per tonne of sugar exported.
The subsidy provided for SS 2020 is way higher, at a whopping 10,440 per tonne.
In spite of this, CRISIL Research believes it may be hard to achieve the export target of 6 MT as international sugar prices are expected to remain weak due to high global inventories.
Sugar prices to rise ~8% through September 2020.
The Cabinet Committee on Economic Affairs has given its approval for providing a lump sum export subsidy of Rs 10,448 per tonne of sugar to mills for sugar season (SS) 2020, or from October 2019 to September 2020.