Centre Plans To Revive Tax Cuts On Sugar Exports

Syllabus:  GS-III, Indian Economy;

Subject: Indian Economy;

Topic: Issues relating to planning, mobilization, of resources, growth, development and employment.)

Issue: Reviving Tax Cuts on Sugar Exports.

Context: Sugar industry has appealed to Food Department to change shipments back to the ‘free’ category from ‘restricted’; plans also in the works to enhance existing tax cut rates for export of tea


The Union government is exploring ways to reinstate tax remission benefits for sugar exports, previously placed in the ‘restricted’ category in mid-2022. Additionally, there are considerations to address the demands of tea exporters by potentially enhancing existing tax remission rates.

Remission of Duties and Taxes on Export Products (RoDTEP) Scheme:

  • Launched in January 2021 to prevent the addition of domestic taxes on goods meant for export.
  • Sugar exporters lost RoDTEP benefits when sugar was moved to the ‘restricted’ category in June 2022 to boost domestic availability and curb price increases.

Current Situation:

  • Items in the ‘restricted’ category are ineligible for RoDTEP benefits.
  • Sugar industry appeals to change the restriction on sugar and return it to the ‘free’ category, subject to certain conditions.

Legal Perspective:

  • The Gujarat High Court suggests that export permissions granted for sugar shipments should be eligible for RoDTEP benefits.
  • Calls for potential creation of a new export category beyond ‘free’ and ‘restricted’ to accommodate exports under specific conditions.

Tea Export Considerations:

  • The Commerce Ministry is reviewing RoDTEP rates for tea exports, especially high-quality tea.
  • Industry request for rate enhancement being considered, with data submitted by the Indian Tea Association forwarded to the official panel for review.

Conclusion: The government aims to address the concerns of the sugar industry and tea exporters by potentially modifying export categories and RoDTEP rates. The outcome will impact the competitiveness and benefits for these sectors in the global market.

Background :

The sugar industry is a vital agro-based sector with a significant impact on rural livelihoods, involving around 50 million sugarcane farmers and approximately 5 lakh workers directly employed in sugar mills.

  • India – world’s largest producer and consumer of sugar.
  • World’s second-largest exporter of sugar.
  • The sugar industry is geographically distributed across two major production areas:
    • North: Uttar Pradesh, Bihar, Haryana, and Punjab.
    • South: Maharashtra, Karnataka, Tamil Nadu, and Andhra Pradesh.
  • South India’s tropical climate favors higher sucrose content, leading to increased yield per unit area compared to the north.

Optimal Growth Conditions:

  • Temperature: 21-27°C with a hot and humid climate.
  • Rainfall: Approximately 75-100 cm.
  • Soil Type: Deep, rich loamy soil.

Sugar Exports Status:

Current Scenario (2021-22):

  • Out of India’s total sugar exports of 110 lakh tones in 2021-22:
    • Raw sugar accounted for 56.29 lakh tones.
  • Major importers of Indian raw sugar include Indonesia, Bangladesh, Saudi Arabia, Iraq, and Malaysia.
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