To infuse liquidity into the sugar sector and facilitate mills making the payment to farmers, the UPA government had rolled out a scheme providing subsidy for export of 4 million tonnes of raw sugar in the 2013-14 season (October-September).

The NDA government extended the scheme for export of 1.4 million tonnes of raw sugar in 2014-15. The subsidy was given up to Rs 4,000 per tonne. Under the scheme, mills managed to export only 1.15 million tonnes of sugar in these two seasons.

"The Food Ministry has decided not to extend the scheme further for the current 2015-16 season. Instead, it is working on a new sugar export subsidy scheme," said sources.

The new scheme is being worked out as the domestic glut situation is expected to continue in view of sugar stocks of 10.20 million tonnes at the end of 2014-15 season and the industry projecting a surplus for the sixth straight year in 2015-16, they added.

The sources also said the previous scheme, which was approved during the mid-season, failed to boost shipments amid a global glut and the new scheme will be made more attractive.

According to a preliminary forecast by the Indian Sugar Mills Association, India's sugar output is expected to touch 28 million tonnes in 2015-16, compared with 28.30 million tonnes last year. Consumption is likely to go up to 25.2 million tonnes in 2015-16, from 24.50 mt last year.

Sugarcane arrears, which stood at Rs 21,000 crore in April this year, have come down to Rs 12,248 crore at the end of the 2014-15 season, according to government data.

The arrears reduced substantially on account of a number of government measures such as the soft loan, hike in import duty and raising ethanol blending with petrol to 10 per cent so as to infuse liquidity into the sugar sector.

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