The government has warned mills against hiking prices of sugar ahead of summer, the peak demand season, while saying that the decision to reduce or scrap import duty remains open and would depend on local price movement. On instructions from food minister Ram Vilas Paswan, ministry officials had a meeting with private mill owners where the government’s concern for price rise was conveyed, sources said. The government has told sugar mills that the onus is on them to maintain prices at the current level since they have been stressing that there is enough supply in the domestic market. The mills have opposed relaxing import duty. The government does not want to lower the duty from the current 40 per cent level at least until Uttar Pradesh assembly election is over, sources said. Uttar Pradesh is the largest producer of sugarcane and sugar in the country as per industry estimate during 2016-17 season (October-September). “Almost all the mills, barring five perennial defaulters, are clearing payment to sugarcane farmers in Uttar Pradesh in time. If import is allowed at zero duty, it may reduce domestic prices and also lead to cane arrears,” an official said. “As long as prices are under control, the government does not have any problem,” the official added. The current sugar prices are reasonably good and are allowing mills to cover their costs and pay cane price of farmers, said RV Giri, president of the Consortium of Indian Farmers Association. He also said only because of higher sugar price, the cane arrears this year is almost half of last year. “We do not want the sugar price to fall even by a rupee as it can delay the cane price payment. Uncontrolled import of sugar can bring down prices,” he said. The arrears in UP is higher mainly because of 5 sugar firms, which account for almost 70 per cent of the dues, Giri said, adding the government must take necessary steps to get the cane price arrears cleared. The Indian Sugar Mills Association (Isma) has cut its estimates to 21.3 million tonnes (mt) from an earlier 23.4 mt. India consumes about 25 mt of sugar per year. But the demand may be lower this year, estimated at 24.2 mt by Isma, due to demonetisation. India, the world’s second largest producer after Brazil, produced 25.1 mt sugar in 2015-16. The production fell 15 per cent to 14.67 mt between October 1 and February 15 of the 2016-17 season (October-September) from 17.33 mt in the corresponding period previous year, Isma said last week. The fall was due to lower cane output in Maharashtra and Karnataka, which faced two consecutive years of drought.