New Delhi: India is likely to provide financial support to cane farmers for produce sold to sugar mills, two government sources said, in a rare move to subsidise the industry which is reeling under a glut and struggling to export because of low global prices.
India, the world’s biggest sugar consumer, last month scrapped a 20 per cent export tax and made it compulsory for mills to export at least 2 million tonnes of sugar.
But mills said they would incur a loss of at least $150 a tonne because global prices were near a two-and-half-year low.
Narendra Modi’s administration is likely to approve a proposal to pay around Rs 55 for every tonne of cane sold to the mills, two government sources said, seeking anonymity in line with government policy.
Although India is not planning any direct incentive for sugar exports, rival suppliers such as Brazil, Australia and Thailand could still lodge complaints with the WTO, saying such support will help Indian industry to sell overseas.
Brazil, the world’s biggest sugar producer, has already expressed concerns over the policies that support overseas sales of the sweetener from India and neighbouring Pakistan.
Government officials insist India’s plans to directly pay cane growers would not contravene WTO rules.
But it will boost the prospects of 50 million cane farmers, an influential political lobby, and 524 mills struggling with massive mounds of sugar.
