Govt may ease sugar stock norms for bulk users

NEW DELHI: The government may relax restrictions on sugar stocks that bulk consumers can keep in the wake of prices of the sweetener falling by about 30 per cent in the past three months, according to sources.

A proposal to allow bulk users such as ice-cream and beverage makers, who consume 60 per cent of the country's total demand of 23 million tonnes, to hold stocks good for 15 days against 10 days now is under the food ministry's consideration, the sources said.

In August last year, the Centre had imposed stockholding limit on bulk consumers asking them not to keep sugar stock exceeding 15 days of their consumption. The government defined bulk consumers as those having average consumption of sugar in excess of 10 quintals a month.

Later in February this year, the government reduced the stockholding limit to 10 days.

The move was aimed at discouraging bulk consumers from stocking sugar and to ensure adequate availability of sugar in the open market for retail consumers.

With sharp fall in sugar prices that has put pressure on their margins, sugar industry has been demanding that stockholding limit on bulk consumers should be increased to three months from the current 10 days in order to discourage bulk users to go for imported sugar on which there is no stockholding limit.

Sugar prices, which touched nearly Rs 50 a kg in January, have declined to about Rs 35 a kg in the national capital.

Stockholding limit on bulk consumers, better than estimated sugar production and Uttar Pradesh government allowing processing of imported raw sugar in its state were major factors that contributed to the fall in sugar prices.

In November last year, UP had banned processing of imported raw sugar in the wake of farmers' protest over cane price.

Meanwhile, sugar production of India-- the world's second largest producer but the biggest consumer-- is estimated at 18 million tonnes in 2009-10 season (October-September), two million tonnes more than the projection made at the beginning of the crushing season.

The gap between demand and supply is being met through imports. The country has imported more than six million tonnes of raw and refined sugar from April last year, when the Centre abolished the import duty on the sweetener.

The duty-free import of raw and refined sugar is valid till December this year.

source: ET