CII welcomes removal of cap on sugar exports - Suggests a Five Point action plan for deregulation

New Delhi: CII welcomes the Union Government’s decision to remove the cap on sugar exports and place the commodity under the open general license category like wheat and rice. This was one of the key recommendations under phased decontrol of the sugar proposed by CII’s Sugar Committee.

Welcoming the announcement Mr Ajay Shriram, Vice President CII and Senior Managing Director, DCM Shriram Consolidated Ltd said “The step was long awaited and the industry welcomes the Government’s decision as it will help the industry get some much needed relief. Further decontrol of the sugar industry is the only way to achieve the sugar sector’s full potential. We hope and expect the Expert Committee, headed by Dr. C. Rangarajan will recommend further reforms like removal of levy sugar, linking of sugarcane price to sugar price etc. soon, and these recommendations will be implemented by the Government without further delay”.

This is a step towards streamlining all policy issues in the sugar sector to the best advantage of farmer, industry and consumers and to ensure a buoyant growth for the sector. However complete liberalization of the sugar sector is a must so that sugar prices are determined by the market forces ensuring better competition and benefits to all the stakeholders involved including cane farmers.

CII suggests the following 5 point action plan to decontrol the sugar industry;

1. Unviable sugar price with no linkage to cane price makes it difficult to give remunerative cane price to farmers. A new formula needs be coined in order to link sugarcane price directly to sugar realization and realization from cane by products.

2. Sugar is sold by sugar factories on the basis of release orders issued quarterly by the Sugar directorate, GoI. The release mechanism through orders needs to be discontinued and strategic stock to be maintained by the Government to have better cash management and enable timely payments to the farmers.

3. Levy obligations are imposed on the sugar industry at prices which are much lower than the cost of production which causes a huge loss to the industry (around Rs 3000 crores). The industry supplies 10% of its output to the Government, much below market prices. These obligations should be done away with. The Government can maintain supply of sugar through PDS by buying from the open market as in done in the case of rice & wheat.

4. The Government decides the minimum percentages from time to time for compulsory packaging of sugar in jute bags whereas no other industry has the restriction over the packaging material. The packing cost of sugar in jute bags is very high compared to the other packaging material. The Government should fully exempt the sugar industries from compulsory packaging in jute bags and should Allow packaging of sugar in any food grade bags

5. Molasses, a by product of sugar industry, has a vital role to play in alcohol industry and also in production of Ethanol for blending with petrol. However, lack of a proper ethanol pricing formula is affecting its use in its blending with petrol. Therefore, government needs to finalize ethanol pricing formula

Indian sugar industry is one of the main drivers of the country's rural economy supporting its agricultural growth. The industry worth around Rs 75,000/- crores is the largest agro based industry in the country. Located in the rural heartland, it supports 50 million farmers and their families directly or indirectly and generates employment for around 12% of the entire rural population (in major 9 sugar producing States). With an estimated annual sugar production capacity of 30 million tons from around 5 million hectares of land under cultivation it is also one of the most environmentally friendly and green industry. CII believes that phased decontrol of the sugar industry will help in achieving the sectors full potential.

source: indiaeducationdiary

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