Commodity market regulator FMC today lifted the ban on trading in sugar futures, as retail prices of the sweetener have dropped by 40 per cent since January and also buoyed by expectations of a bumper output in 2010-11.
"We have allowed to lapse the ban on sugar futures trading today," FMC Chairman B C Khatua said.
He said FMC would take a decision on launch of new contracts in 2-3 days after consultation with sugar industry and commodity exchanges.
The government had banned futures trading in sugar in May last year to control prices in the domestic market. India, the world's second largest prodcuer and biggest consumer, has been importing sugar from February 2009 to meet domestic demand.
However, the output in 2010-11 (October-September) is expected to rise to 25 million tonnes from 19 million tonnes in the current sugar year, which runs from October to September.
Annual demand is 23 million tonnes.
The prices have crashed to Rs 30-32 per kg in the retail market of Delhi from a record Rs 48 a kg in the mid-January.