Industry body the Confederation of Indian Industry (CII) today demanded that the government should give freedom to the sugar industry to sell sugar in the market and also stop taking the sweetener from mills at a subsidised price for running ration shops.
Pointing out that sugar industry is being "strangulated" by so many government controls and has become a "politically punching bag", CII said levy obligation as well as monthly release mechanism should be removed for vibrant growth of the sector.
The government asks mills to contribute 10% of their production (called levy sugar) at a cheaper rate to run public distribution system. Through monthly release mechanism, the Centre fixes the monthly sugar quota that mills can sell in the open market and ration shops.
"The government should remove levy obligation on sugar industry and instead it should buy sugar from open market for supply through PDS," CII National Committee on Sugar Chairman Ajay Shriram told reporters here.
The industry supplies levy sugar at 60% of the cost of production, resulting in a loss of about Rs 2,500-3,000 crore every year, he observed.
"We are told how much to sell in the market every month. The government should remove monthly release mechanism. To intervene in market, it can maintain strategic buffer stock, which can be stored at mills," he said.
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On giving freedom to farmers to sell their sugarcane, Shriram said the de-reservation of cane area can be done in the next phase of reform as he feared that some mills could face the shortage of sugarcane.
Making a strong case for decontrol of the sector, CII said that consumption pattern shows that two-third of sugar demand is from bulk users such as manufacturers of beverages and ice-cream.
The share of sugar is just 2.4% and 1.5% of the total consumer expenditure for rural and urban India, respectively, therefore, some increase in prices would not have much impact on monthly food expense, it added.
"The government is micro-managing the sector. We beg the government to stop micro-managing. We know how to take care of farmers," National Committee on Sugar Vice Chairperson Rajshree Pathy said.
Pathy said that the committee had started pushing for sugar decontrol with the government, which "is looking at our demand with compassion".
"This is the good time for decontrol because of surplus production and there should be some decontrol," she said in an optimistic note.
The production has risen to 24.2 million tonne in 2010-11 season (October-September) against 18.8 million tonne in the previous year. Domestic demand is pegged at 21 million tonne. In next season, output is seen at 26 million tonne.