Despite the announcement of complete decontrol of sugar by the Centre, the sugar industry is far from satisfied. According to the industry, the Centre has announced the inevitable step, but has decided to remain mum on the two important things needed by the sector - creation of buffer stocks and transport subsidy.

They added that the issue of buffer stocks had been before the government since one year and “yet the Centre has failed to take any decision on it.” Moreover, the premature announcement of the transport subsidy by the food minister Shanta Kumar has had a negative impact on exports.

“Traders have been holding on to their stocks since January with the anticipation of a subsidy. Thus exports have been much lower than last year,” the sources said.

Kumar had announced the proposal of providing a transport subsidy in December 2001. However, no step has been taken so far.

With the announcement of the proposal, the industry had been very upbeat about exports. “We are at an advantageous position from January till mid-March-April as India and Thailand are the only two countries exporting the commodity,” they said.

According to analysts, if the subsidy had been given to sugar exporters, it would have meant a benefit of around Rs 600-750 per tonne to individual factories.

However, analysts said that things would get tough from May when Brazil enters the market. Brazil is expected to have a record crop of 194 lakh tonnes and despite their announcement of using 26 per cent of the crop for ethanol, there will be lot of sugar in the market.

Analysts say that Brazil can offer sugar even at $190 per tonne. Moreover, Thai exports are expected to increase by four lakh tonnes this year while Brazil exports is estimated to increase by 2.5 million tonnes.

Indian sugar industry has been exporting the commodity to various countries including Yemen, Indonesia, Sri Lanka and Pakistan since June 2000 and hopes to cross the 10 lakh tonne mark by September this year.