India, the world's biggest producer behind Brazil, helped its mills with incentives of Rs 3,300 in the last sugar season that ended in September.
The country is sitting on massive mounds of the sweetener due to the fifth straight year of surplus output, which had depressed local prices and strained mills' financials.
Additionally, the world's biggest sugar consumer has failed to export because of unattractive global prices. But with the help of the incentives, mills say they will be able to sell raw sugar to standalone refineries in Asia and Africa.
"Looking at the current global trade dynamics, merely extending last year's export subsidy will not be of any help," said one of the sources.
Copyright: Thomson Reuters 2015