The sugar industry has asked the Food Ministry to grant 15 more days for it to complete sale of June quota of sugar in the open market, citing poor demand from bulk consumers like ice cream and beverages companies.
The government sets a target for open market of sale of sugar by millers every month and in June, they were to sell 17 lakh tonnes.
"As of now, mills have sold only 25 per cent of the total June quota. We have written to the Food Ministry to give more time till July 15 to sell sugar," National Federation of Co-operative Sugar Factories Managing Director Vinay Kumar said.
Kumar pointed out that currently there is not much demand of sugar in the market despite low domestic prices, which have dipped to Rs 24 per kg (ex-factory price) in Maharashtra and Rs 26 per kg in Delhi.
"The quantity of sugar released for the current month is very high as compared to demand. The government has fixed higher quota for June without considering the import done by the bulk consumers," another industry official said, while attributing the reasons behind low-offtake of sugar.
Indian Sugar Mills Association (ISMA), which represents private sugar factories, has also made a similar demand for extending the deadline till July 15.
Bulk sugar users account for 60 per cent of the country's annual sugar demand of 23 million tonnes, but the demand has reduced off late as they are meeting their needs through imports, the official noted.
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To curb rising sugar prices that touched nearly Rs 50 a kg in mid-January, the government had imposed stockholding limit on bulk consumers asking them not to store sugar that meets more than 15 days of their requirement.
The domestic sugar prices are much below the production cost of around Rs 35 per kg and as a result, the mills are incurring hefty losses every month, the official said.
The retail prices have declined by about 30 per cent in last five months on account of improved availability situation owing to higher domestic output as well as imports.
India's sugar production is estimated to touch nearly 19 million tonnes in 2009-10 marketing year ending September, which is three million tonnes more than the earlier estimate.
Besides, the country has imported six million tonnes of sugar since February last year to meet the domestic demand, which stands at 23 million tonnes annually.