The sugar industry may have to wait for reduction in the levy quota on sugar sale, as the ministry of consumer affairs is unlikely to take any decision right now. According to official sources, the government would wait for the monsoon and sowing figures for the next season (2012-13) to assess the production estimates before taking a decision.
The industry has been demanding a reduction in levy quota from 10 per cent so that they have minimal carry forward stock in the new 2012-13 season. Besides, further exports, sources said, will also have to wait till the time new season estimates arrive.
Meanwhile, the government is yet to decide on changing the parameters for export of another one million tonnes. Typically, the government allocates export quota or permits to factories based on their production in the preceding three years. However, a section of sugar millers from the south and west have demanded the quota be allowed on a first-come-first-served basis. This has been referred to EGoM.
The government has so far allowed three million tonnes of exports in the current season under the open general licence.
The government has been following a policy of partial control and dual pricing, under which a certain percentage of sugar produced by factories is to be sold at a price fixed by the government for the Public Distribution System (PDS).
The government also decides the quantity of non-levy (free sale) sugar allowed to be sold.
The compulsory levy obligation of factories was gradually reduced from 40 per cent to 30 per cent from January 1, 2000. From February 1, 2001, this was further reduced to 15 per cent. The obligation has been 10 per cent of production since March 1, 2002. Mills supply levy sugar at 60 per cent of the cost of production, resulting in an annual industry loss of Rs 2,500-3,000 crore.
The country’s sugar production has increased 14 per cent to 21.16 mt till March 15 in the current marketing year that started October last year, according to industry data. Maharashtra, the largest producing state, has produced 7.3 mt till March 15, which is 13 per cent higher than last year.
Production in Uttar Pradesh is also up by about 13 per cent to six mt.The southern states of Karnataka and Tamil Nadu have also reported higher output of 3.2 mt and 1.08 mt, respectively. Compared to 419 sugar mills operational on March 15 last year, 476 mills were operational as on March 15, 2012.
