The government's delay in fixing the export subsidy on raw sugar for the April-May period is adversely affecting shipments contracted earlier, the Indian Sugar Mills Association (ISMA) said today.

The government had announced a subsidy of Rs 3,300 per tonne on raw sugar exports on February 28 to help the cash-starved industry to clear cane arrears and improve their financial situation. It also decided to review the subsidy amount, depending on the rupee-dollar exchange rate.

According to ISMA, 1.45 million tonnes of sugar in both raw and refined form are estimated to have been exported in the first six months of the current marketing year, which started in October. Of this, 3,50,000 tonnes of sugar were exported last month, the first month of the subsidy.

"However, government is yet to announce the incentive for raw sugar production and exports for April and May. The delay in announcement of incentive rate is adversely impacting the physical shipments of sugar exports already contracted," ISMA said in a statement.

As much as 4,00,000 tonnes of sugar are likely to be exported in April and May. Some shipments have already been dispatched and are in transit.

ISMA said the market expects the subsidy to be unchanged at Rs 3,300 per tonne.

The country's sugar output declined 4% to 23.1 million tonnes till April 15 of the 2013-14 marketing year from 24.15 million tonnes in the same period last year.

Production declined in Maharashtra and Uttar Pradesh, the top two producing states, while output in Karnataka was at a record following good rains.

Source:- articles.economictimes.indiatimes.com