Indian sugar mills association

PM sets up expert panel to deregulate sugar industry

Date:	28 Jan 2012

Source:	The Tribune

Reporter:	Vibha Sharma

News ID:	888

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New Delhi, January 27 Prime Minister Manmohan Singh has set up an expert committee to examine long-pending issues related to sugar and come up with recommendations as soon as possible.

Headed by PM`s Economic Advisory Council Chairman C Rangarajan, the committee will examine issues related to deregulation of the industry, perhaps the only sector still under the government control.

“The committee will look into all the issues relating to deregulation of the sugar sector and it has been requested to complete its task as early as possible and give its recommendations to the Prime Minister,” said a statement issued by the PMO.

The decision has been hailed both by the industry and farmers.

The industry has been long clamouring for removal of monthly release system, under which the Food Ministry allocates quantity of sugar to be sold in the open market.

Apex industry body the Indian Sugar Mills Association (ISMA) said it expected the panel, comprising “some very experienced and knowledgeable experts” to give positive recommendations for the benefit of industry and sugarcane farmers.

“Sugar deregulation will give enough freedom to the industry to invest and grow. Farmers will also benefit if the industry is able to generate cash flows at the right time and give them timely and better payment,” ISMA director general Abinash Verma said, hoping that the government would accept suggestions made by the committee on sugar decontrol.

Sugar is one of the most highly regulated industries in the country. Keen to ensure availability and keep prices in check, the government sets the price mills pay to farmers. It also buys 10 per cent of their output, called levy sugar, for distribution under the PDS at a cheaper rate. Industry estimates are that millers loose about Rs 2,500-Rs 3,000 crore to meet levy obligations. Besides keeping a check on exports, the government also decides on how much sugar will be sold in the open market. The ISMA and other industry bodies have been clamouring for abolishing levy sugar quota and linking the price of cane with sugar.

Firm pricing of ethanol

* ISMA says a firm price of ethanol will ensure more quantity for blending and Oil Marketing Companies (OMCs) will not be required to increase petrol prices frequently

* Since recommendations are under consideration, manufacturers are currently supplying ethanol at an interim procurement price of Rs 27/litre

* Under the mandatory 5% ethanol blending programme, OMCs have finalised around 47 crore litres of ethanol to be supplied by sugar mills and ethanol manufacturers for the sugar year 2011-12

* The supply of ethanol up to December 31, 2011, is around 1.4 crore litres, 3% of the total contracted quantity

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