India Exporting Sugar
The sugar produced by these mills is pledged with MSC Bank, the main lender to the state’s cooperative sugar factories. The bank had refused to let them export sugar without paying up the difference between domestic and overseas prices.
The bank agreed to extend the loan to mills in Maharashtra, India's second-largest sugar-producing state, to help them bridge the gap between domestic prices and export prices, which are lower by about 50%.
“The way for export of about 7 lakh tonnes of sugar has been cleared with this decision of the bank,” said Sanjay Khatal, managing director of the Maharashtra State Federation of Cooperative Sugar Mills (Sakharsangh).
India’s sugar industry has been suffering due to excess production, while dues to sugarcane farmers are rapidly mounting.
The move of MSC Bank will directly help 51 sugar mills. Another 51 mills that have borrowed from district cooperative banks will also be eligible for similar loans from MSC Bank to export sugar. The total export quota of Maharashtra mills is about 1.5 million tonnes, of which more than 200,000 tonnes have already been contracted. Of the total state quota, the collective quota of 102 cooperative banks is about 900,000 tonnes.
“Hence, our conservative estimate is that a minimum of 7 lakh tonnes of sugar will be immediately available for export,” said Khatal.
Although the loan is available for one year against the export quota, MSC Bank will tag an additional Rs 100/quintal on all sugar that mills export as well as sell in the domestic market.
By BOA Bureau