The sugar industry is now awaiting a subsidy from the government to make exports viable, as prices have fallen in the international market.
An official with a leading sugar company said: "Exports at current rates, which are around $320-325 a tonne, would be viable only for mills that are located close to ports. For others, it will not be economically viable."
In the international market, sugar prices softened by $3 a tonne to $327 on the news of India lifting ban.
As falling global prices have rendered exports unattractive, the government could give export subsidy in the form of transport assistance, Agriculture Minister Sharad Pawar had indicated last week.
"The government should immediately announce a subsidy of at least Rs 1,000 a tonne to make exports feasible, if not attractive," said Sanjay Tapriya, director, finance, Simbhaoli Sugar Mills. Around 20 lakh (Rs 2 million) tonne is likely to be exported, including that under the advance licence.
But rather than profiting from exports, they will look at exports as a tool to ensure that domestic prices do not become unviable.
"With the fall in international sugar prices, exports will not bring significant gain for mills. The volume of sales may go up but prices would remain low. Sugar stocks may remain rangebound for 2006-07 (October-September) season," said Vikram Suryavanshi of Karvy Stockbroking.
Some mills are said to have obtained release orders for exporting 30,000 tonne under the advance licence (AL) scheme.
"We are contacting prospective international buyers to supply sugar to them. The industry is looking to export 20 lakh tonne (10 under the AL and another 10 under general category) in this season. We are requesting the government to offer subsidies to make export workable," said Vinay Kumar, managing director, National Federation of Cooperative Sugar Factories.