The Indian government on Wednesday gave go-ahead to the export of two million tonnes of sugar until the end of the 2017-18 marketing year.
India okayed the export in efforts to clear surplus stock and increase cash flow to clear arrears of cane farmers.
Export of white sugar also got green light till September this year under the Duty Free Import Authorisation scheme, under which exporters are allowed to import sugar at zero duty within three years.
As of March 21, sugar mills owe a whooping Rs 13,899 crore or over Tk 17,500 crore to sugarcane growers, according to official estimates.
The arrears to farmers have become a politically sensitive issue for the BJP-led government in India.
In its latest order, the Indian food ministry has allowed two million tonnes of sugar export under the Minimum Indicative Export Quota (MIEQ) scheme for the 2017-18 marketing year.
"In view of inventory level with the sugar industry and to facilitate achievement of financial liquidity, mill-wise MIEQ has been fixed for the 2018-19 marketing year," according to the order.
Under the MIEQ, it is mandatory to export the fixed quota, failing which the mills shall be deemed to be violating the directives of the government, it said.
The export quota has been fixed taking into account average production of mills achieved in the last two years and up to February of this marketing year. Mills can export the quota or get it exported by other mills on mutually agreeable conditions.
As per official data, mills in Uttar Pradesh have maximum cane price arrear at Rs 5,136 crore, followed by Karnataka Rs 2,539 crore and Maharashtra Rs 2,348 crore as of March 21 this year. Uttar Pradesh, Maharashtra and Karnataka are the largest-sugar producing states of India.
To stabilise domestic prices, the government has doubled import duty on sugar to 100 percent, scrapped export duty and also imposed stock limits on sugar mills for two months.
Sugar output in India is estimated to rise to 27.2 million tonnes in 2017-18 marketing year, as against the demand of 25 million tonnes. India had produced 20.3 million tonnes in the previous year.