Food Min to discuss sugar decontrol with FM soon

Food Minister KV Thomas today said he will discuss the relaxation of government controls on the sugar sector with Finance Minister Pranab Mukherjee soon.

"There are a host of issues to be looked into for initiating the process of decontrolling the sugar sector. I will soon discuss them with the Finance Minister," Thomas told reporters after the 20th board meeting of the Bureau of Indian Standards (BIS).

Thomas said his ministry is waiting to know the outcome of the meeting that took place yesterday between the Finance Minister and private sugar industry body ISMA on the issue of sugar sector decontrol.

At present, the sugar industry is under the government's control, right from the level of production to distribution.

In its meeting with the Finance Minister, the Indian Sugar Mills Association (ISMA) demanded partial decontrol of the sector, including the removal of the levy sugar system, scrapping of the monthly sale quota and permission for the export of an additional two million tonne of the sweetener this year, among others.

On sugar exports, Thomas said his ministry "is not against the export of some more quantity".

The government has permitted the export of one million tonne of sugar in the 2011-12 season (October-September), with approvals given for overseas shipment of over 0.4 million tonne so far.

Currently, the Food Ministry -- which controls the sector -- allocates the quantum of sugar that mills can sell in the open market on a monthly basis. Apart from this, mills are obliged to sell 10% of their sugar output to the government at cheaper rates for supply to ration shops under the levy sugar system.

The industry supplies levy sugar at 60% of the cost of production, resulting in an annual loss of about Rs 2,500-3,000 crore.

Sugar production in India, the world's second-largest producer and biggest consumer, is estimated to rise to 24.5 million tonne in the 2011-12 season (October-September), against annual demand of 21.5 million tonne.