By Pratik Parija/ Bloomberg
New Delhi: The Election Commission of India, which oversees voting in the country, has approved a federal government plan to build sugar stockpile and provide subsidies to exporters, a trade body said.
The plan, which was approved by the government last month, needed the Election Commission’s consent because of assembly polls in the northern province of Uttar Pradesh, India’s largest sugarcane-producing state.
India, the world’s second-biggest sugar producer, plans to build stockpiles of 2 million tonnes to help arrest a slide in domestic prices amid record output. The government will also pay exporters up to Rs1,450 ($34.5) a metric tonne to meet transportation costs to ports, agriculture minister Sharad Pawar said on 29 March.
According to the Election Commission’s model code of conduct, ministers “shall not announce any financial grants in any form” from the time elections are announced. The incentives will likely boost overseas sales, helping sugar companies improve incomes.
“The incentives were definitely required and they were overdue,” Prakash Naiknavare, managing director of the Maharashtra State Co-operative Sugar Factories Federation Ltd, said in a phone interview from Mumbai on 18 April. “This will aid exports and improve domestic prices, helping mills.
“India’s output will reach a record 26.1 million tonnes in the year ending 30 September, according to C. Czarnikow Sugar Ltd. Domestic sugar prices have fallen by more than a fifth in the past year, reducing earnings at Bajaj Hindusthan Ltd. and other local producers.
A slide in prices has cut profits at India’s top three sugar mills viz. Bajaj Hindusthan, Balrampur Chini Mills Ltd and Shree Renuka Sugars Ltd. Their shares are among the 10 worst- performers on the BSE-500 index in the past year.
The government will have mills keep the stockpiles and pay them storage costs, Naiknavare said.