Companies & Sectors
Export subsidy can bring relief to sugar industry

If the export subsidy of Rs3,300 per tonne is given, by extending the scheme, and bearing in mind the growing sugar stocks on hand, it would bring great relief to the industry


As per details released by the Indian Sugar Mills Association (ISMA), 45 mills, including 14 cooperatives have begun crushing of sugarcane in Uttar Pradesh (UP). By the end of December another 70 mills would go into crushing programme, and, hopefully, by the first week, ISMA expects most mills in UP to be in full swing in crushing cane.


At the end of November, the arrear payments to sugarcane farmers is reported to have come down to Rs1,200 crore and the ex-factory sugar price stood at Rs2,700/2,750 per quintal. In UP, based on a recovery of 9.2% the State Advisory Price is Rs280 per quintal for 2014-15 season. Of this, Rs240 is expected to be paid within 14 days of purchase, Rs40 to be paid within 90 days after crushing. For the second tranche, government plans to gives Rs20, covering the society commission of Rs6.60, purchase tax of Rs2 and entry tax of Rs8.60, subject to market movements, once cane payments are made.


As in the past, banks lend upto 85% of the stock value as working capital and had the first charge on sugar stocks pledged to obtain the loans. However, due the recent ruling by the Allahabad High Court, cane dues to the farmer get priority over the bank claims. Rightly so.


If the export subsidy of Rs3,300 per tonne is given, by extending the scheme, and bearing in mind the growing stocks on hand, it would bring great relief to the industry. It may be noted last year India exported 1.2 million tonnes of raw sugar, out of which 700,000 tonnes were covered under the incentive scheme. Ram Vilas Paswan, Food Minister, has indicated that a decision would be tied to cane arrears being repaid on time. Our opening stocks of sugar amounted to 7.5 million tonnes and production during the current season is expected to be between 25 and 26 million tonnes, marginally higher by 5% over last year.


If Brazil, the world's largest producer can divert 60% of cane it produces for the manufacture of ethanol, why not India also make it mandatory for the sugar mills to compulsorily set aside a certain percentage for this purpose? This should be followed by mandatorily directing the blending with petrol for the oil companies and marketing the same. Current fall in oil prices should not make us complacent.


Finally, the UP mills have been demanding the implementation of the linkage formula as outlined by the Rangarajan Committee, and there is no reason why this matter cannot be revisited by a new committee to be set up by the present government. What is important is to find a solution to this perennial issue that comes up every year!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Dr Anantha K Ramdas

3 years ago

Tiharwale: You are absolutely right in so far as the chaotic conditions in UP are concerned, affecting the sugar industry.

The UP sugar mill association or through ISMA, petition should be made to either permit the mills to revert back to old mandatory supply of 20% instead of 34% to liquor manufacturers.Unfortunately, this
policy encourages the Liquor manufacturers and does not care for the existence of the sugar cane farmers.

Is not the Food Minister Ram Vilas Paswan aware of this sordid situation? If the UP government wants to make such a ruling, the Centre must intervene and cannot wash its hands off.Otherwise, let the Liquor makers pay a fair price for molasses. We need to study this issue further as to what other sugar producing states are doing in this area?

Thanks for raising this issue.


3 years ago

The problem is U.P.Govts policy on molasses announced on 26 August 2014. the compulsory sales of 34% molasses to the liquor manufacturers results in a distorted market, where price of molasses to liquor manufacturers is one-sixth or 16-17 per cent of open market price.

The open market price of molasses is around Rs 6,000 a tonne, whereas the liquor manufacturers pay only Rs 750 a tonne.

During 2013-14, the molasses production in the U.P. stood at 3.37 million tonne, of which molasses for other than captive consumption is 1.52 million tonne.

At 34 per cent, it would translate into 0.51 million tonne reserved for exclusive sale for country liquor. Thus, a loss of about Rs 5,250 a tonne of molasses would mean net loss of about Rs 270 crore to Uttar Pradesh sugar industry.

“Since, the realisation from sugar is on the lower side, the price and realisation from molasses could have helped mills clear arrears,” and there is no need to provide export subsidy

DWS Mid Cap Fund - Series 1– More of the same

Deutsche Mutual Fund-DWS has launched its first mid-cap oriented scheme in a market where investors are flooded with so many choices


There are as many as 55 mid-cap oriented mutual fund schemes, excluding close-ended schemes, which are available for investment. With most small and mid-cap schemes delivering double-digit returns in excess of 75% over the past year, fund houses seem to be using this opportunity to attract investors. Deutsche Mutual Fund too has joined the league of mutual funds that offer a mid-cap oriented scheme. The fund house recently launched a three-year close-ended scheme— DWS Mid Cap Fund. With a high allocation to mid-cap stocks, investors should be aware of the risks associated with the scheme, especially since it is a close-ended scheme with no prior track record.


The scheme will invest 70%-100% of its investments in mid-cap companies. Up to 90% of the portfolio will be invested in non mid-cap companies. According to the offer document of the scheme, mid-cap companies are companies are defined as those “with a market-cap within the market-cap range of the companies in the CNX Mid Cap Index.” The performance of the scheme will be benchmarked to the CNX Mid Cap Index.


Akash Singhania will be the fund manager for equity investments. He has around 10 years experience. Rakesh Suri will be the co-fund manager. He has an experience of 16 years.


Obama praises Modi for shaking India's 'bureaucratic inertia'

Modi has impressed me so far with his willingness to shake up the bureaucratic inertia inside of India, however it is a long-term project and we will have to see how successful he is, the US President says


US President Barack Obama Thursday praised Prime Minister Narendra Modi's efforts to shake up the 'bureaucratic inertia' in India, less than a month after he described the Indian leader as a 'man of action'.


However, Obama said that this was a long-term project and one would have to see how successful Prime Minister Modi is in his efforts.


"Modi has impressed me so far with his willingness to shake up the bureaucratic inertia inside of India. But that is a long-term project and we'll have to see how successful he is," Obama told a business roundtable, which was attended by top corporate leaders of the country.


The roundtable was organised to discuss the current economic condition of the US and across the globe.


Last month in Myanmar on the sidelines of the East Asia Summit, Obama in his brief interaction with Modi had told him that he is a 'man of action'.


On his return from the 10-day trip to the Asia Pacific region that took him to Beijing, Myanmar and Australia, Obama announced that he has accepted an invitation to be the chief guest at the annual Republic Day Parade in New Delhi on 26th January next year.


In his interaction at the business round table, Obama said the US, over the last six years, has put more people back to work than Europe, Japan, and the rest of the advanced world combined.


The growth of emerging markets has been slower than anticipated, he noted.


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