The informal group of ministers, formed by the Prime Minister to address the financial problems of the sugar industry, is meeting under the Sharad Pawar banner.
Food minister KV Thomas said,"We have decided to give incentives to promote raw sugar as a new product. The modalities and quantum of the incentives will be worked out after consulting the finance ministry. Incentives would be given per tonne raw sugar basis from the Sugar Development Fund."
According to sources, if raw sugar was exported, the government will incur losses of Rs 4,500 per tonne as the global prices are low. IN other words, when Rs 26,500 per tonn is being used to produce sugar, it is being sold in the international market at Rs 22,500 per tonne.
Moreover, the food industry proposed that an incentive of Rs 2,390 per tonne of sugar be provided and that the burden be shared by the Centre and the state governments.
Indian Sugar Mills Association, the country's apex millers body, suggested an incentive of Rs 3,500 per tonne. If the government agreed, it would have to spend Rs 1,400 crore from public exchequer in two years.
Thomas said that the new policy will be compatible with the norms of World Trade Organizations and would be under constant review.
However, finance minister P Chidambaram and aviation minister Ajit Singh have proposed that the proposal be re-considered and revoked.