* India allows mills to export 2 mln T of sugar by Sept 30
* Wants to cut bulging stocks of the sweetener
* Mills can import duty-free raw sugar in 2 yrs to Sept 2021 (Adds details on export quota)
NEW DELHI, March 28 (Reuters) - India relaxed rules on sugar exports on Wednesday, allowing mills to sell abroad until the end of the current season in a move that could further drag down benchmark sugar prices.
India, the world's biggest sugar consumer, is struggling to manage overflowing domestic stocks.
In the measures http://dgft.gov.in/exim/2000/PN/PN17/Public%20No.69(e).pdf announced http://dgft.gov.in/exim/2000/NOT/NOT17/Notification%20No.57.pdf on Wednesday, the government also said millers that export sugar this season would be allowed duty-free imports of raw sugar for the following two seasons through September 2021.
The government has written to sugar mills to say the export quota for the sector has been set at 2 million tonnes, according to a letter seen by Reuters.
India is likely to produce a record 29.5 million tonnes of sugar in the 2017/18 season ending on Sept. 30, up 45 percent from the previous year.
Reuters reported earlier this month that the government was planning to bring in rules to force sugar mills to export millions of tonnes of surplus supplies to prop up local prices.
India's attempt to cut its local stocks comes as global sugar prices are trading at around 2-1/2-year lows.
One sugar mill owner, who did not wish to be identified, said the new measures would not help him much.
"Global sugar prices are too low and mills will incur a loss of at least $150 a tonne," the mill owner said. (Reporting by Nidhi Verma and Mayank Bhardwaj; Editing by Susan Fenton and Mark Potter)