Mumbai: The Indian government will create two million tonnes (mt) of sugar buffer for one year beginning May to help mills saddled with huge stocks to save on storage costs, Union agriculture minister Sharad Pawar said on Tuesday.
Under the plan, sugar mills will maintain the buffer while the government would defray the cost of interest, storage and insurance charges incurred on it.
“We will create a buffer of two million tonnes to help mills which are facing problems,” Pawar told a meeting of sugar industry.
The buffer is part of the incentives offered by the government to help mills hit by falling global prices and huge stocks to make timely payments to sugar cane farmers and export sugar.
Sugar firms resumed exports in January after a ban on sales was lifted, but lower world prices have made overseas sales unattractive at the same time as India is expecting a bumper domestic crop in the year to September.
This has forced the government to offer transport and freight incentives to mills that some analysts have calculated may be worth $30-$35 (Rs1,260-1,470) per tonne.