NEW FOREIGN TRADE POLICY 2015-2020

Minister of Commerce & Industry Smt. Nirmala Sitharaman released the much awaited Foreign Trade Policy - 2015-20

The Major highlights are given below for your ready reference:

1. Merchandise Export from India Scheme (MEIS) : A New Scheme introduced in place of existing (five) Chapter 3 Schemes. 

2. The benefit under MIES will be determined based on Exporting Product and Exporting Country divided in various Groups. The benefit will range between 2% to 5% of FOB Value of Exports.

3. Served From India Scheme (SFIS) is being replaced by a New Scheme - Services Export from India Scheme (SEIS)

4. All Service Providers of Notified Services located in India will be eligible for the benefits regardless of their constitution or profile of service provider.

5. The SEIS benefit of 3% or 5% will be based on Net Foreign Exchange Earned. 

6. The Duty Credit Scrips issued under both MEIS and SEIS will
    a. without any actual user condition
    b. Freely Transferable
    c. No longer restricted for any specified types of goods.
    d. Can be used for payment of Customs Duty /Excise Duty/Service Tax 

7. The units in SEZ will also be allowed to claim incentive under MIES and SIES Schemes.

8. The Nomenclature of Status Holder Scheme has been changed to One, Two, Three, Four and Five Star Export House.

9. The Criteria for Export performance for the recognition of status holder have been also changed from Rupees to US Dollar. The Minimum Export Performance in FOB Value during current and previous 2 Years is now 3 Million USD.

10. Manufacturer Status Holders will now enabled to Self Certify Country of Origin from India to qualify under various PTA, FTA, CECAs and CEPAs

11. To Boost "Make in India" Specific Export Obligation under EPCG will be reduced to 75% if goods are procured from domestic capital goods manufacturer.

12. Hard Copies of CA /CE / CS Certificates will not be required for various application. Online Upload facility of its soft copy will be made available in the new Online Application Process for Chapter 3 & Chapter 4 Schemes. 

13. Document Records of EPCG Authorisation will now be required to be maintainedonly for 2 Years after redemption.

14. A facility has been created to upload documents in Exporter Importer Profile which will hold copies of IEC, PAN, RCMC, Industrial Licence etc.. Once uploaded, No separate submission of these copies will be required with each application.

15. Communication with Exporter/Importer will be done through SMS/Email and thus mandatory fields like mobile no. and email address will be added in the IEC data base.

16. Application of refund of TED will now be made online.

17. EOUs, EHTPs, STPs have now been allowed 
      a) Share Infrastructural facilities among themselves
      b) Inter unit transfer of goods and Services
      c) To set up facility of Warehouses near the port of export.

18. Goods falling in the category of handloom products, books/periodicals, leather footwear, toys and customized fashion garments, having FOB Value upto Rs. 25,000/- per Consignment (finalized using e-commerce platform) shall be eligible for benefits under FTP.

19. e-Commerce Exports will allowed to be done under Manual Mode through Foreign Post Offices at New Delhi, Mumbai and Chennai and under Courier Regulations through Airports at Delhi, Mumbai and Chennai Only.

20. A New Chapter is introduced to resolve Quality Complaints and Trade Disputes. A Committee on Quality Complaints and Trade Disputes (CQCTD)  is being constituted. 

21. Vishakhapatnam and Bhimavaram in Andhra Pradesh are to be recognised as towns of export excellence for product category - Seafood.

22. New ANF & Appendices have also been notified along with the new FTP. 

Please note that specific Application, procedures and documentation will have to be prepared, applied and submitted as defined under the New FTP and Handbook of Procedures to avail of any of the said benefits under the new   FTP.

The Official Highlights of the NEW FTP is available on the below link: 
(Highlights of the FTP 2015-20)

Govt does a volte-face on wheat exports

Alluding to unfavorable global market conditions, the Union government has put off the decision to allow wheat exports.

Surprisingly, the move comes just after the Agriculture Minister, Mr Sharad Pawar's announcement that the four-year ban on wheat exports had been revoked.

Government sources, however, disclosed that exports of rice and wheat products (maida and atta) would resume soon and the Commerce Ministry was working on last minute modalities for clearing the way.

The government's decision on wheat exports comes in the backdrop of Russian Black Sea wheat flooding the global markets, Ministry officials said, who pointed out that Russia was selling its wheat for $244 a tonne against the Indian variety priced at $300 a tonne.

According to another official, even if the government permits wheat exports, shipments would be delayed, while wheat stocks from Russia had already reached the international markets.

Pointing out that setting a minimum export price at this point would be of no help to traders, the official said that the decision on wheat exports had, therefore, been deferred for now.

It may be recalled that the Empowered Group of Ministers (EGoM) on food, headed by the Finance Minister, Mr Pranab Mukherjee, had only last week given in-principal approval to lift the ban on wheat exports. The EGoM had also decided to allow exports of one million tonnes of common rice, in addition to keeping the overall limit on wheat product exports at 6.5 lakh tonnes.

Fieo welcomes move to permit rice exports

The Federation of Indian Export Organisations (FIEO) Southern Region has welcomed the Group of Ministers' recent decision to permit exports of 10 lakh tonnes of non-Basmati rice.

Mr Walter D'Souza, Regional Chairman, Fieo, Southern Region, requested the authorities to issue the necessary notification at the earliest.

Calling attention to the export potential of rice from Southern India, Mr D'Souza said that exporters in the region had already risen higher in the value chain after the branding of the fine variety of rice as Sona Masoori quality, which has become among the most sought after varieties in a short time.

The ban on non-Basmati rice exports since more than three years had put exporters in serious trouble, said Mr D'Souza, considering that they had put in their valuable time and energy for marketing the said variety.

DGFT: No export limit on cotton and yarn waste

The Directorate-General of Foreign Trade (DGFT) has apprised about the
Union government's decision to exempt cotton and yarn waste from the
extra cap of 10 lakh bales imposed on exports of the natural fiber for
the 2010-11 season.
The DGFT said the ceiling would not apply to export of cotton waste,
including yarn waste and garneted stock, though other conditions
regarding registration of export contracts would be applicable.
It may be recalled that the government had decided on June 8 to allow
exports of an extra 10 lakh bales (170 kg each) of cotton during the
current season, following a sharp decline in prices in the domestic
market.
In October last year, the government had imposed a quantitative
restriction of 55 lakh bales on cotton exports. However, with prices
plunging 38 per cent from April onwards, they have crashed to over Rs
40,000 per candy (356 kg) currently in the domestic market after
reaching a peak of Rs 62,500 per candy in March-end.

Government gives nod to export extra 5 lakh tone sugar

As I have published previously, after the review of Director General of Foreign Trade The Union government has decided to permit export of an extra five lakh tonnes (lt) of sugar under the open general licence (OGL).

Approved by the Empowered Group of Ministers (EGoM), headed by the Finance Minister, Mr Pranab Mukherjee, the move is a shot in the arm for the domestic industry as it will be able to take advantage of rising global prices.

Taking $ 725 or Rs 32,575 as the price of a tonne, free-on-board, the effective realisation for exports from Maharashtra, after taking away Rs 2,000 towards freight and handling expenses at Jawaharlal Nehru Port or Mumbai Port, would work out to Rs 30,575, which is more than the prevailing ex-factory price of Rs 25,000 a tonne on domestic sales in Maharashtra or Rs 27,000 in Uttar Pradesh.

Of the five lakh tonnes quota permitted earlier, the Directorate of Sugar has already allocated 4.26 lt to individual factories and issued release orders for 4.21 lt, in addition to the 51,500 tonnes allotted to neighbouring countries.

Engineering goods exports jump to 119% in May

According to data released by the Engineering Export Promotion Council, engineering goods exports stood at $ 3.6 billion in May last fiscal.

Propelled mainly by increase in demand from traditional markets like the US and Europe, engineering goods exports posted a robust growth of 119.4 per cent to $ 7.9 billion in May, year-on-year.

Government to initiate action against ‘erring’ cotton exporters

The Commerce Ministry norms specify that cotton exporters who fail to transport the quantity allocated to them within the stipulated period, will be debarred from future allocations.

The Directorate-General of Foreign Trade (DGFT) has made it clear that it will initiate penal action against defaulting exporters.

It may be recalled that the government had to put a ceiling on exports through a quota in the wake of shortages.

While initially the quota allocation was 55 lakh bales (170 kg each), it was later augmented to 65 lakh bales. For the current season ending September, the government has given the nod for export of additional 10 lakh bales.

The DGFT mentions that "(exporter) shall be liable to pay a penalty of not less than Rs 10,000 and not more than five times the value of the goods or services or technology in respect of which any contravention is made or attempted to be made, whichever is more."

Food EGoM to make Decision on Export of sugar today

The Empowered Group of Ministers (EGoM) on food is meeting on Thursday (June 23) to decide on allowing more exports of sugar.

The meeting has reportedly been called at the behest of Mr Sharad Pawar, Union Agriculture Minister, who wants the government to permit exports of an additional one million tonnes of the commodity. Sugar mills too have sought permission to export more of the sweetener as production is expected to rise in the next season from October.

The country's sugar production is estimated at 24.2 million tonnes in the 2010-11 season, compared to 18.8 million tonnes in the previous season. In 2011-12, it is estimated to be 26-26.5 million tonnes.

India is the second-largest producer and the biggest consumer of sugar in the world.

Oil meal exports jumps 84 % due to record output

Due to record output of oilseeds in the 2010-11 crop year, oilmeal exports shot up by 84 per cent to 3.2 lakh tonnes in May 2011, compared to 1.73 lakh tonnes in the same month of last year.

In a statement, the Solvent Extractors' Association of India (SEAI) said that exports of oilmeal more than doubled to 8.21 lakh tonnes in the first two months of the current fiscal, compared to 3.77 lakh tonnes in the year-ago
period.

During April-May 2011, oilmeal imports by Japan from India climbed more than 300 per cent to 2.05 lakh tonnes from 48,887 tonnes in the year-ago period. Besides, Vietnam imported 1.10 lakh tonnes during the period under consideration against 41,853 tonnes in the same period of the previous year.

SEAI data indicates that oilmeal exports have climbed for seven months in a row in the current oil year (November 2010-October 2011).

Besides, exports have nearly doubled to 40.04 lakh tonnes in the current oil year till May, compared to 20.58 lakh tonnes in the same period of the previous year.

The Association attributes the continuous rise in exports to the sharp increase in oilseed output to 30.25 million tonnes in 2010-11, compared to 24.88 million tonnes in the previous year (2009-10).

The increased availability of oilseeds has led to higher crushing and output of oil and meals for domestic consumption and exports.

Export ban on wheat and rice to continue: Prof. K. V. Thomas

Also, Govt to take call on sugar exports only after Diwali

With India, the world's second-biggest food grains producer, going ahead with preservation of grains in order to supply food to consumers at below market prices under a new law, the Food Ministry has ruled out scrapping curbs on exports of wheat, rice and sugar.

In an interaction with newsmen, the Minister of State for Food, Prof. K. V. Thomas, said that the question of allowing exports does not arise considering that the government had to not only feed its own people, but also think about the country's consumption, which was on the rise.

With regard to sugar, Prof. Thomas said that the government had no plans to allow exports before Diwali, which falls in October. In a meeting with industry representatives, who were seeking enhancement of export quota by 1.5 million tonnes, Prof. Thomas said that the government would take a decision on exports only after reviewing the demands of the coming festive season and next year's estimated output.

According to Prof. Thomas, India may need as much as 70 million tonnes of rice and wheat to be supplied at subsidised rates to its citizens once Parliament gives its nod to the Food Security Bill. At present, "the government's grains requirement is around 60 million tonnes for various welfare programmes," he said.

It may be recalled that India banned shipments of wheat in early 2007 and non-Basmati rice in April 2008 to augment domestic supplies in the midst of a global food crisis. According to the Food Corporation of India, the state reserves of foodgrains totalled 65.6 million tonnes on June 1, which is almost triple the quantity five years ago.

On sugar, the Minister said the government was aware of the fact that the industry's estimate of sugar output has time and again been erroneous in recent times, leading to soaring prices at home. According to him, the output estimate for 2010-11 is 24.2 million tonnes, while for 2011-12 it is much higher at 29 million tonnes.

The Minister also firmly ruled out any possibility of relaxing the stock holding limit imposed on millers and traders with the intention of augmenting open market supply, pointing out that doing so in the past had resulted in hoarding and indirect pushing up of prices.

FIEO ask Government to Provide export credit at 7 % to MSMEs

Mr. Ramu S. Deora, President, Federation of Indian Export Organisations (FIEO), Commenting on the monetary policy review stressed that the interest rate increase by 25 basis points had only confirmed the worst fears of the export sector.

The FIEO chief pointed out that in the last 15 months, key policy rates had gone up 10 times, from 3.25 per cent to 7.50 per cent, impacting the growth momentum while making some leeway in reducing wholesale price inflation, which fell to 9.06 per cent in May, from 9.68 per cent a month ago.

"However, the flip side has been a moderation in the economic parameters, such as IIP declining to 4.4 per cent in April (against 8.8 per cent in March) and 4th quarter GDP dropping to 7.8 per cent, against 8.3 per cent recorded in the 3rd quarter," he said.

Mr. Deora contends that the macro-economic indicators of neither the United States nor Europe (with Greece approaching EU for a second bailout) are in the best of health and, therefore, there could be a correction in global commodity prices, which would mean a slowdown in exports. "Further, oil prices will continue to be a cause of concern and act as a 'drag' on the GDP," he fears. He highlighted the estimation of analysts that an increase of $10 a barrel in oil prices had the potential of raising the fiscal deficit by around 0.2 per cent of GDP.

The FIEO President expects banks to, sooner or later, beef up the cost of credit, which could touch 11.5 per cent for exporters compared to 7.1 per cent in July 2010, a jump of over 60 per cent in a year. "How will we compete with countries with interest rates ranging between 1-5 per cent?" he asks.

In order to maintain export momentum and immediately introduce interest subvention, Mr. Deora urged the government to distinguish between exports and domestic finance and provide export credit to the MSME sector at 7 per cent and to others at 9 per cent.

On exports, he elaborated that higher interest rates and their differentials (meaning more arbitrage opportunities and more FDI, which could result in rupee appreciation) hamper export competitiveness.

Mr. Deora said he looked forward to the Panel on Exports and FDI in the Planning Commission sizing up the situation in the Middle East (Libya/Syria/Bahrain) as well as the fragile state of the advanced economies, while addressing India's own inherent transaction costs, quantified at $ 13 billion by the Ministry of Commerce's High-Powered Committee, and draw up a package consistent with the requirements of the trade and the emerging economic realities.

Orders for export of Quantity 3.93 Lakh Tonnes sugar issued till date

The Sugar Directorate has said that the Union government has so far issued orders for release of 393,334 tonnes of sugar for exports under the Open General Licence Scheme (OGLS), an increase of 919 tonnes from June 9, when the last data was released.

According to the Directorate, 442 mills have been given permits to export sugar so far.

Last month, the government had decided to extend the time given to mills to apply for export release orders under the OGLS. Mills had been given time till June 2 to seek export permits, while merchant exporters could apply for release orders until June 17.

Exports are currently lucrative as global sugar prices have shot up in the past few weeks, due to crop concerns in Brazil and on port congestion, resulting in tight supplies in the world market.

Having touched a three-month high of $734.40 a tonne, the August white sugar contract on the London International Financial Futures and Options Exchange closed at $723.50 a tonne.

Planning Commission panel set up to boost exports and FDI (Foreign Direct Investment)

The Planning Commission (PC) has set up a working group to recommend government policies aimed at enabling the private sector to meet the targeted increase in exports.

The latest move is bit of a surprise as it has come at a time when the government has made it clear that it will not extend the Duty Entitlement Passbook scheme (DEPB) for exporters beyond September.

With PC member, Mr Saumitra Chaudhuri at the helm, the group will not only identify policy measures to attract more foreign direct investment (FDI), especially in the manufacturing and infrastructure sectors, but will also assess India's experience with FDI and foreign institutional investors.

The group would also assess existing schemes for export promotion, to explore various methods to further encourage private players.

Besides, the panel will take stock of the country's comparative advantages in trade, with specific reference to manufacturing goods and farm products, and whether these have moved over the past decade. In addition, it will make suggestions on how Free Trade Agreements and Comprehensive Economic Cooperation Agreements can be fitted into the framework of multilateral arrangements.

The group will take a view on the experience with special economic zones (SEZs) and other special trade facilitating measures, at a time when SEZ developers are voicing their disapproval of the government's bid to impose Minimum Alternate Tax (MAT) on them.

Lastly, the panel will take stock of market assess issues, including non-tariff trade barriers.

Extend DEPB till introduction of GST : FIEO ask Revenue Department

Appreciating the Revenue Secretary for consenting to Fieo's plea for extending (by three months) the Duty Entitlement Passbook (DEPB) scheme, Mr Ramu S. Deora, President, Federation of Indian Export Organisations (FIEO), called for the relevant notification to be issued immediately so that the uncertainty over the extension is brought to an end.

The FIEO President also suggested that the DEPB scheme should be allowed to continue till the introduction of the goods and services tax (GST), as it would not be possible to fix the drawback rates for all the products for which DEPB rates exist in the short span of three months.

In the long run, Mr Deora feels that the government should definitely bring all products under the All Industry Duty Drawback Scheme, and should make the industry bodies a party while fixing rates to ensure accuracy of data and transparency.

Exports up record 57 per cent in May

Exports in May 2011 jumped an all-time-high 57 per cent to $25.9 billion on the back of increasing exports of engineering goods, electronics, drugs and petroleum, among others.

However, imports also rose by a staggering 54.1 per cent to $40.9 billion due to rising prices of petroleum, widening the trade deficit to $15 billion in May.

"I am sure we will continue with strong performance so that current account deficit can be kept manageable," Commerce and Industry Minister, Mr Anand Sharma, said. On the rising import, the Minister added that since India is a major importer of petroleum products, the situation needs to be watched carefully.

Calling it a matter of concern, Commerce Secretary, Dr Rahul Khullar said the trade gap is much larger than it had been in the last 2-3 years, "...but I should be ready for the eventuality that this (trade gap) may turn out to be a feature for the next couple of months... if it is a recurrent feature for the next couple of months then I have to be concerned," he said.

Govt Approve for export of 10 lakh more cotton bales

THE relevant Group of Ministers (GoM) has taken the decision to allow exports of an additional 10 lakh bales of cotton during the current season, ending September.

Till date, around 52.5 lakh bales have already been shipped out since October, of the total export quota of 55 lakh bales (170 kg each) approved by the government for the 2010-11 season (October-September).

The GoM is chaired by the Finance Minister, Mr Pranab Mukherjee, and also comprises the Commerce and Industry Minister, Mr Anand Sharma.

Mr Sharma said that with the extra 10 lakh bales, total exports would touch 65 lakh bales by September-end.

On the rationale behind the decision, he said that while cotton supplies were reportedly more than the domestic demand, the GoM took the decision taking into account the commodity's domestic consumption, especially by the textile mills. It would seek more clarity after the arrival of fresh stocks in the market in October, he added.

Finance Minister gives DEPB 3-month extension for one last time

THE Duty Entitlement Passbook (DEPB), the popular-export incentive scheme, has got a three-month extension from the Finance Ministry. It was to end on June 30.

However, the Ministry has made it clear that exporters should brace themselves to switch to the duty drawback scheme by October as it would not grant any further extensions to DEPB.

According to a source, by permitting exporters to enjoy the benefits offered by DEPB for three more months, the government wants to ensure a smooth transition to the new scheme.

The source apprised that a three-member panel, comprising Secretaries from the Commerce and Finance ministries, would work out the modalities of migration to the duty drawback scheme.

Last week, the Finance Minister, Mr Pranab Mukherjee and Commerce Minister, Mr Anand Sharma met and discussed the issue and decided to extend the scheme.

It is a known fact that the Finance Ministry is firm on ending DEPB, contending that it allows exporters double benefit instead of just neutralising the import duty on inputs that go into exports.

In 2010-11, the scheme cost the exchequer Rs 8,520 crore, of which more than 60 per cent was exploited by large engineering and chemical exporters.

In contrast, the drawback scheme just neutralises levies paid on inputs. The rates are fixed annually, based on the changes in the duty structure in the Budget.

In this direction, an expert panel headed by Planning Commission member Mr Saumitra Choudhury will evaluate the duty drawback rates for all export products, including those covered under DEPB now.

Besides, the Finance Ministry has also asked the Commerce Ministry to direct export promotion councils to provide relevant data to the panel. The industry is not against the DEPB phase-out, as long as a substitute scheme is in place.

Fieo asks Mr. Anand Sharma for interest subvention, DEPB extension

DRAWING attention to the concerns over constant increase in export credit rate over the last one year, Mr Ramu S. Deora, President, Federation of Indian Export Organisations (Fieo), pointed out recently that exporters were competing with countries having credit rates below 5 per cent.

Speaking at an Interactive Session in Chennai recently, Mr Deora said that the base rate of Indian banks had moved up between 2-2.50 per cent in the last 7 to 8 months, pushing up export credit, but on the contrary, interest subvention for exports had been withdrawn from April 1, 2011.

According to the Fieo Chief, export finance cost, which was 7 per cent in July 2010, had now moved up to somewhere between 11-11.5 per cent, which is a whopping increase of about 57-64 per cent. Hence, Mr Deora urged the Commerce and Industry Minister, Mr Anand Sharma to prevail upon the government to draw the line between exports and domestic finance and make available export credit to the MSME sector at 7 per cent, and to others at 9 per cent in order to maintain export momentum.

On the DEPB scheme, Mr Deora acknowledged that it had been a time-proven instrument, helping Indian exports grow to the present level. "DEPB is well suited to the needs of small exporters, since it is not feasible for them to effect imports on their own account as economic volumes are not generated," Mr Deora said.

The Fieo chief observed that the uncertainty over continuation of the DEPB Scheme after June 30, 2011 had been a cause of concern to exporters, which could taper down growth. Hence, he urged Mr Sharma to extend the DEPB scheme till GST becomes operational or at least till the fiscal-end.

While suggesting a host of measures to cut transaction cost of exports, ranging between 7- 10 per cent of exports value, Mr Deora also alluded to the occurrences of long delay while ratifying the Norms for Advance Authorisation, issued under Paragraph 4.7 on self-declaration basis where SION does not exist.

Raising concern on the delays and paperwork involved in closure of advance authorisation at DGFT, the Fieo president contends that the same procedure should be put in force at the Customs also.

Mr Deora also asked the government to implement full EDI connectivity amongst the agencies involved in import/exports for seamless movement of cargo, which could go a long way in reducing transaction time and cost to a large extent.

Meanwhile, on the issue of DEPB extension and re-introduction of interest subvention, the Commerce Minister, Mr Sharma has made it clear that both issues have been taken up with the Finance Minister, who had given an assurance of adequately addressing the exporters' concerns.

Mr Sharma also announced that from now on the DGFT's zonal office would provide time-bound clearances, which would be audited every quarter. Besides, he also apprised that he was trying to make available the discharge of export obligations electronically in order to do away with the voluminous documents and delays.

The minister also assured that he would review the delays in imposition of provisional anti-dumping duty so that the same could be imposed in reasonable time, compared with the best practices. For providing commercial information to exporters, Mr Sharma agreed to strengthen commercial missions abroad and open more such missions.

With regard to the new manufacturing policy, Mr Sharma said it would be announced shortly with the aim of augmenting the share of manufacturing in GDP from 16 per cent to 25 per cent.

Sonia's PA asks PM to lift ban on cotton exports

MR Ahmed Patel, Political Secretary to Congress President, Ms Sonia Gandhi, has made a plea to the Prime Minister, Dr Manmohan Singh, to lift the ban on cotton exports to give much-needed relief to the country's farmers.

In a letter to the PM, he gave details of his communication with several Union Ministers, including Finance Minister, Mr Pranab Mukherjee, Textiles Minister, Mr Dayanidhi Maran and Commerce Minister, Mr Anand Sharma in this regard.

Mr Patel said lifting the ban on cotton exports would not only protect the interests of farmers in Gujarat, but will also benefit growers from other parts of the country, as cotton prices have nosedived by 30 to 40 per cent in the past two months.

He pointed out that cotton prices had plunged to Rs 42,000 per candy from Rs 63,000, which had come as a shock to traders, millers, ginners and eventually farmers.

Mr Patel highlighted that a third of India's total cotton output came from Gujarat, of which 50 per cent was exported "due to its superior quality".

In 2010-11, Gujarat produced 104.55 lakh bales of cotton, cultivated on 24.64 lakh hectares. "In case the ban is not lifted, it would ruin Gujarat's farmers", Mr Patel stressed, and added that with the onset of the monsoon farmers were left with no option but to sell their crops at low prices, given that they did not have a storage mechanism.

Export orders issued for 3.39l tonnes of sugar so far

Of the total export quantity of five lakh tonnes permitted by the government last month, the Food Ministry has issued export orders to mills for 3.39 lakh tonnes of sugar till date.

Sugar mills cannot go ahead with exports without obtaining a release order from the Food Ministry. It may be recalled that an Empowered Group of Ministers (EGoM) on Food, headed by the Finance Minister, Mr Pranab Mukherjee, had given the go-ahead to mills to export five lakh tonnes of sugar under Open General Licence (OGL) on March 22. The decision was notified on April 19.

Of the allotted quota, 51,500 tonnes was reserved for neighbouring countries and the balance 4,48,500 tonnes was allocated to the mills, based on their average output over the last three years.

Latest data shows that the Ministry has issued export release orders for 3,39,187 tonnes till June 1.

With production set to overtake domestic consumption after a gap of two seasons, the EGoM had resolved to allow sugar exports with quantity restriction of five lakh tonnes.

In the past, the government had permitted mills to fulfil their export obligations of about one million tonnes. The country's sugar output is estimated to surge to 24.5 million tonnes in the 2010-11 sugar year, from 19 million tonnes in the previous year. In terms of output, India is the second largest producer of sugar in the world after Brazil.