Global Trade Alert

On 18 November 2015, the Indian Cabinet Committee of Economic Affairs (CCEA) announced a production subsidy of INR 4.50 (USD 0.07) per quintal (100 kgs.) of sugarcane crushed. The amount of the subsidy will be paid directly to the farmers on behalf of the mills. The mills are required to pay a minimum Fair Remunerative Price (FRP) to the sugarcane farmers, which is set to INR 230 (USD 3.43) per quintal for the 2015-16 season. Out of this FRP, INR 4.50 will be borne by the government and paid directly to the farmers.
 
This production subsidy will only be provided to only those mills who have met at least 80% of their export targets under the Minimum Indicative Export Quotas (MIEQ) notified on 18 September 2015 or for mills with distillaries have met at least 80% of their ethanol supply targets as notified in the Ethanol Blending Programme (EBP)
 
According to the Indian Sugar Mills Association and comments made by officials, a total subsidy of INR 1100 crore (appx. USD 163 million) will be provided under this benefit.
 
The production subsidy was withdrawn with effect from 19 May 2016.
 
On 3 August 2016, the CCEA revised and lowered the eligilibity targets as follows - 
 

• The export targets which earlier had been set under the MIEQ at 15.70 kg. of sugar for each tonne of estimated sugarcane crushing have been revised to 15.70 kg of sugar for each tonne of sugar actually crushed by the mill in the current sugar season or the earlier MIEQ, whichever is lower.
• The ethanol supply targets have been revised to the actual quantity contracted by the mills with the Oil Marketing Companies. In case of distilleries with no such contracts as of date the earlier notified targets will be applicable.
• Lastly, firms that have exported at least 50% of their export targets and (for mills with distilleries) supplied ethanol as per the revised guidelines will be eligible for the subsidy

 
* INR to USD conversion as on 12 December 2015 at INR 67.15/USD