CII raises pitch for decontrol of sugar industry

The Confederation of Indian Industry (CII) has asked the government to give freedom to the sugar industry to sell the sweetener in the open market and to remove the obligation on mills to sell subsidised sugar to the government for PDS requirements.

Saying the sugar industry was “strangulated” by various government controls, CII said the government should remove the levy obligation as well as the monthly release mechanism for vibrant growth of the sector.

Sugar is one of the most controlled industries in India. Attempts to decontrol it were made without success in 1971-72 and in 1978-79. The government has, over the years, eased controls on other major industries like steel and cement.

Sugar mills can sell in the open market only according to the release mechanism. The Directorate of Sugar in the Union government issues release orders every month and gives mills sale quotas. Mills cannot sell beyond this quota. A penalty is levied if they fail to sell the quota within the stipulated month.

Under levy obligations, mills sell a certain quantity (currently 20 per cent) of their produce to the government at lower than the market price. This is supplied to below poverty line families through PDS.

“The government should remove the levy obligation and instead buy sugar from open market,” CII National Committee on Sugar Chairman Ajay Shriram told reporters here. Shriram, also the chairman and senior MD of DSCL, said the industry supplied levy sugar at 60 per cent of the production cost, which led to a loss of Rs 2,500-3,000 crore a year.