India: Government to do away with the regulatory release mechanism in sugar market

Moving towards the deregulation of thesugar industry, the Centre is planning to do away with the regulatory release mechanism gradually.

It has now decided to release quota of sugar every six months for sale in the open market. “We are moving towards a free market. We will first take to a half-yearly release mechanism very soon before phasing out the regulatory regime completely,” said Food and Consumer Affairs Minister KV Thomas.

The government recently adopted a mechanism through which it will release sugar quota every four months, against the previous system where sugar was released every quarter. “This will give greater flexibility and scope for better cash flow planning in the industry.Sugar mill owners will be able to plan their sale according to demand and the market would also be better equipped to absorb sugar released over a longer period of time,” said Abinash Varma, director general, Indian Sugar Mills Association ( ISMA).

The government is also planning to firm up its farm export and import policies. It’s planning to make India a consistent and reliable exporter of sugar and food grains.

“We are on our way towards framing policies which can help export surplus produce. We should benchmark a certain quantity every year to create an image in the global market that we are a consistent and reliable supplier,” Thomas said. He said the government will finalise the issue of import duty on refined and raw sugar to regulate free entry of cheap sugar.

“In the next 15 days, I assure you that a decision will be taken on the import duty of sugar,” he said.

Currently, there is a 10 per cent duty on import of raw and refined sugar. Industry bodies are demanding a hike in import duty, especially on refined sugar, to restrict entry of cheap sugar from Pakistan and other countries after a drop in international prices. Global prices in the last two months have gone down drastically from $650 a tonne to $530 a tonne.

“When India has surplus sugar, where is the need to import it? Cheap imported sugar will compete with domestically-produced sugar and affects the industry badly,” said a sugar mill owner.

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