To encourage procurement from sugar mills, the government has increased the stockholding limit for a trader to 500 tonnes from 200 tonnes.
The decision was taken at a meeting of the empowered group of ministers (eGoM) which met on Tuesday.
The eGoM has also extended the order, which authorises states to impose stock limit on sugar, by six months, starting April 1. The increased stock holding will enable traders to procure more sugar from millers and replenish their pipelines which have virtually been dry for the last few months.
“The empowered group of ministers not only extended the stock holding limit by six months but also raised it to 500 tonnes,” said a senior government official.
Millers said this will enable big traders and wholesalers to lift more sugar from mills leading to an increase in supply in the retail markets. The eGoM also allowed exports of 500,000 tonnes of sugar under open general licence (OGL) after a delay of almost three months. OGL is a permit the government gives to mills to export sugar without any restriction and riders.
“In the last few months, the difference between the mill gate price of sugar and the retail price has widened to almost Rs 5 per kilogram as traders were reluctant to lift more sugar, now that the stock holding limit has been raised, traders will purchase more from the mills,” a senior industry official said.
As per industry sources, the ex-mill price of sugar in Uttar Pradesh, the country’s second largest sugar producing state, has been hovering around Rs 2,800 per quintal, while that of Maharashtra is around Rs 2,600 per quintal.
However, a department of consumer affairs data says the retail price of sugar in Delhi is pegged at Rs 33-34 per kg since more than a month, while in Mumbai it has been around Rs 32 per kg.
Sugar prices rose marginally on Wednesday at the spot markets following the government’s announcement on exports.
Shares of all major sugar companies also rose following the export news.
In Kolhapur, a key market in Maharashtra, the price of the most-traded S-variety sugar increased by 0.93 per cent to Rs 2,700 per 100 kg. On the National Commodity and Derivatives Exchange (NCDEX), sugar contract for April delivery was trading at Rs 2,791 per 100 kg, up by 0.54 per cent from the previous close.
Shares of Bajaj Hindustan Ltd, the country’s biggest sugar producer rose by 1.85 per cent to close at Rs 71.75, while that of Renuka Sugar rose by 1.45 per cent to Rs 73.25.
Balrampur Chini Mills share rose by 0.70 per cent to Rs 72.70. The Sensex closed on Wednesday at 18,206.16 points, up 1.21 per cent from the previous close.
