As the government battles food inflation through measures, including a ban on export of most farm products, the Commerce Ministry wants Export-Oriented Units to at least be allowed to ship out sugar and edible oils made from imported raw material.
There is a proposal for making EOUs an exception to the rule, sources said.
India has banned sugar exports due to a shortage in domestic production, while the country depends on imports to meet 50 per cent of its edible oil needs.
The issue will soon be placed before the Empowered Group of Minister (EGoM) headed by Finance Minister Pranab Mukherjee, the sources said.
Besides sugar and edible oils, the government has banned export of agricultural commodities such as rice, wheat and pulses to maintain domestic supplies and prices. Food inflation has been hovering close to 20 per cent for a while now, and has pushed up overall inflation to over 7 per cent.
The Ministry's argument is that export of commodities, whose inputs have been imported, will have no bearing on domestic supplies.
"If raw material is imported and then the final product is exported, what is the harm? It is not affecting the domestic supply," the source said, quoting the proposal.