Cabinet approves sugar exports against licence

NEW DELHI (Reuters) - India, expecting a bumper sugar output in the new season that began in October, on Monday permitted sugar exports by those who had imported raw sugar with an obligation to re-export it within a specified time period.

"The cabinet reviewed the issue of export of sugar and took a decision that those having limited advance licence obligation be permitted to export sugar," cabinet spokesman P.R. Dasmunshi told reporters.

"The cabinet would further review the decision shortly."

He did not say when the decision would take effect.

The government had allowed traders to import close to two million tonnes of raw sugar in the last two years against an obligation to re export it. Of this, close to one million tonnes is still to re-exported, traders said.

Traders said they had expected the ban to be totally lifted as output in the new season was very promising. Crushing of sugar in the new season is at it its peak in most mills.

The ban on sugar exports was imposed in July to curb rising prices due to tight supplies, and was due to run until the end of the financial year in March.

In recent weeks ministers have suggested the ban could be lifted early, but there have also been trade rumours such a move was being resisted by a finance ministry worried about rising inflation.

Agriculture Minister Sharad Pawar told reporters last week the time was appropriate to take a look at lifting the ban on sugar exports. Pawar said sugar output in 2006/07 (October-September) was likely to be 22.7 million tonnes, up from 19.3 million tonnes in the last season.

India's population of more than one billion people annually consumes about 19 million tonnes of sugar.

Shanti Lal Jain, director-general of the Indian Sugar Mills Association, had said last week India might lift the ban between Dec. 18-21.

The industry expects India to export 2 million tonnes sugar in the current season if the ban is totally lifted, although exporters will find global prices are much lower than they were in July.

Global sugar prices have fallen from an average $400 a tonne when the ban was imposed to $349 a tonne now, traders said.