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Sugar industry seeks decontrol for growth; rules out cartelisation

Last Updated: Thursday, November 8, 2012 - 22:01

New Delhi: Seeking immediate decontrol, sugar industry bodies ISMA and NFCSF Thursday said giving freedom to mills to sell sugar will help achieve higher growth of 15-20 percent and bring investment into the sector.

They also ruled out any price cartelisation after decontrol.

Indian Sugar Mills Association and National Federation of Co-operative Sugar Factories demanded abolition of two major controls - regulated release mechanism and levy sugar system - as recommended by the Rangarajan Committee recently.

Under the release mechanism, the Centre fixes the sugar quota that mills can sell in the open market. Through levy sugar system, millers are forced to sell 10 percent of their output to the government at subsidised price for ration shops, resulting into a burden of Rs 3,000 crore on the industry.

"We welcome all recommendations made by the Rangarajan panel. It is high time that the sugar sector is liberalised. We want that levy sugar system and regulated release mechanism should be done away at the earliest possible," ISMA President Gautam Goel told reporters here.

On the linkage of sugar and sugarcane prices, industry bodies said they would hold discussion with farmers and states for adopting a fair and transparent price mechanism.

Earlier this week, Food Minister K V Thomas had said the government is considering the Rangarajan Committee report on sugar decontrol, which was submitted to Prime Minister last month, and will take a decision on removing some of the curbs on the sector by next month.

Asked whether decontrol would lead to cartelisation, he said: "All these controls have not reduced volatility in prices. Allowing market forces is better and efficient way to determine prices than government control".

ISMA Director General Abinash Verma said there is a need for an investment to meet rising demand, estimated to touch 32 million tonnes by 2020 from 22 million tonnes at present.

"It is not possible in the sugar to cartelise because of the fragmented nature of the sector. There are more than 400 mills across the country," Verma said.

On prices, he said rates could decline after decontrol as levy sugar quota would be available for open market sale.

Asked about benefits of decontrol, Isma President said the industry size could double to Rs 1,60,000 crore in the next 5 years by achieving an annual growth of 15-20 percent.

The saving of Rs 3,000 crore from abolition of levy sugar mechanism would also be utilised for cane payment and adding capacity, Goel said.

On present growth rate, Goel said: "In the last five years, there has not been any growth in the sector". NFCSF Managing Director Vinay Kumar said there has been a negative growth in the co-operative sector.

"Our objective is to produce more than our consumption and we should have a fair share in export market," Goel said. He noted that adequate and timely payment of cane price to farmers is key for achieving this objective.


First Published: Thursday, November 8, 2012 - 22:01
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