Ref: MPML/PMS/125/2008
Date : July 5, 2008
Sugar Industry To Get A Taste Of Liberalisation
"THE Centre is considering to lift controls on sugar mills from the next crop year and allow them to sell as much as they want in the domestic market."
"Currently, sugar mills are forced to sell 10% of their output at cheap rates to the government for subsidised sales to the poor, while authorities decide how much of the remainder they can sell in the open market to keep prices stable."
"India is the world's biggest consumer of sugar, gobbling up 22 million tonnes of the sweetener a year."
THE Centre is considering to lift controls on sugar mills from the next crop year and allow them to sell as much as they want in the domestic market, government sources said on Thursday.
Currently, sugar mills are forced to sell 10% of their output at cheap rates to the government for subsidised sales to the poor, while authorities decide how much of the remainder they can sell in the open market to keep prices stable. "We have made up our mind to remove both (quotas) but the Cabinet will have to clear the proposals, which will go a long way in transforming the sugar sector," a senior government official, who did not wish to be identified, said.Another official with knowledge of the proposal confirmed the food ministry's intentions.
Last year, the government allowed exports of the sweetener without its permission. Earlier, after striking export deals, mills had to wait for clearance from the food ministry before shipping consignments.
Analysts say a record output of 28.4 million tonnes in the last crop year to September 2007 helped the government move ahead with liberalisation of the sector. Shanti Lal Jain, director general of the Indian Sugar Mills Association (ISMA) said the further steps would be welcome. "Levy sugar is taken from us at a much lower price, even below our cost of production for the supply to the public distribution system (PDS). This is very, very unjust," he said.
Mr Jain said the sector should be governed by market forces. "I am not against cheaper sugar being given to the PDS, but it should not be at the cost of the industry. Let the government do it. Let them buy it from the open market and then subsidise," he said.
Trade officials say production is expected to drop to 26-27 million tonnes in the current crop year, down from a record production of 28.4 million tonnes the year before. India is the world's biggest consumer of sugar, gobbling up 22 million tonnes of the sweetener a year.
Meanwhile, a mixed pattern of trading was noticed on the Vashi wholesale sugar market on Thursday due to uneven demand and supply transactions. A secton of marketmen feels that sugar prices are likely rise further following lower than free-sale quota for July.
Medium sugar extended gains due to sustained enquiries from retailers amid poor supplies from mills, but small sugar erased some early gains on profit-booking.
(Source: - Economic Times)