Indian sugar mills association

Rising sugar prices makes government uncomfortable ahead of assembly elections in four states

Date:	01 Apr 2016

Source:	The Economic Times

Reporter:	Jayashree Bhosale

News ID:	5390

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PUNE: Sugar prices, which have jumped by 7.2% in the past 15 days and a massive 36% during past six months, have made the central government authorities uncomfortable ahead of the assembly elections in four states, prompting them to tell the industry to keep prices within 'comfortable' limits and ensure that it clears the cane payment arrears.

Admitting that the government is concerned about the recent rise in sugar prices, Abinash Verma, director general of Indian Sugar Mills Association (ISMA), said, "The government did speak to the associations about the steep rise in sugar prices in just about 15 days. As there's no shortage of sugar in the country, the government can come down heavily on the speculators."

The NCDEX spot sugar prices in Delhi market have increased by 10.4% in a month, rising from Rs 3315/quintal on March 1 to Rs 3660/quintal on March 31.

The rise has been peculiarly steep -- 7.2% -- in the last fortnight between March 15 and 31. Sugar prices have increased by close to 36% in Delhi market during the past six months from the beginning of the current crushing season on October 1.

People familiar with the developments in the industry told ET that authorities are concerned about the current import and export policies, which offer incentives for exports but discourage imports, with a duty of 40%. The central government may consider withdrawing the subsidy of Rs 45/tonne on sugarcane, which is linked to mandatory sugar exports.

However, industry leaders claimed that the government does not think the situation warrants any panic. More than the current prices, the steep rise in prices is what has got the government worried, said an industry person, who did not wish to be identified.

With sugar prices increasing by almost Rs 1000/quintal since the beginning of the crushing season, the central government has directed the cane commissioners of various sugarcane-growing states to clear the cane price payment arrears.

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