The Competition Commission of India (CCI) has ordered a probe into allegations of cartelisation by sugar companies in fixing the selling price of the sweetener.
"The Director General (Investigations) is looking into the matter. We have taken up the case suo motto after the Maharashtriya Rajya Sahakari Sakhar Karkhana Sangh announced the minimum floor price for sugar," a CCI official said.
Last month, co-operative sugar millers of Maharashtra, Karnataka and Tamil Nadu had decided not to sell sugar below the production cost in an attempt to trim losses after prices began to fall below the cost of production.
Since the production cost was reckoned at an average Rs 2,700 a quintal, the mills agreed to fix this as the floor rate for selling sugar.
The officials of Maharashtra State Co-Operative Sugar Factories Federation could not be contacted.
Early this month, Indian Sugar Mills Association President Vijay Saroagi had said there was no cartelisation in the sugar industry. There are around 500 mills in the country and a cartel cannot be formed with 4-5 mills, he had said.
In the current season, mills have paid as high as Rs 25-26 per kg for one kg of sugarcane and this has led to the production cost of sugar going beyond Rs 30 per kg.
Retail sugar prices have slid by about 40 per cent to Rs 30 a kg now from Rs 48 a kg in mid-January in Delhi.
Sugar production in India, the world's second largest producer and biggest consumer, is estimated to touch 18.8 million tonnes in the ongoing 2009-10 season, nearly three million tonnes more than the earlier projection.
In 2010-11, sugar output is expected at 25.5 million tonnes, higher than the annual demand of 23 million tonnes.
Sugar season runs from October to September.
The country had imported about 6 million tonnes of sugar since early last year as sugar output in 2008-09 and 2009-10 crop year was lower than the domestic demand.
