Govt may consider mills' demand for lowering PDS sugar quota

The Food Ministry may consider lowering the quantity of sugar that mills contribute for sale through ration shops in the 2009-10 crop year, as output is set to exceed estimate by 2.5 million tonnes.

Sugar mills have to contribute 20 per cent of their total production in 2009-10 crop year to the Centre for distribution under Public Distribution System (PDS), under a system called 'levy sugar'.

Industry has been demanding that the percentage of levy sugar should be lowered as sugar production in 2009-10 crop year (October-September) is estimated to rise at 18.5 million tonnes from the earlier forecast of 16 million tonnes.

At 20 per cent, sugar mills would contribute 3.7 million tonnes, which is nearly one million tonnes more than what the Centre requires annually for running the PDS.

"Industry has demanded that the percentage of levy sugar be lowered. We will look into their demand once the production figure for the current season is finalised when mills close by May-end," a senior government official said.

In a conference call to analysts on May 3, Balrampur Chini Managing Director Vivek Saraogi, who is also President of Indian Sugar Mills Association, said: "Hopefully, the government should reconsider. We, from the sugar mills association, said that the basis is 27 lakh tonnes, hence 15 per cent is enough. So, we are hopeful on that front".

The official said the government would also consider the industry's demand to impose import duty on raw and refined sugar. The Centre had abolished import duty in February last year to augment domestic availability and check prices and is valid till December this year.

The country has imported six million tonnes of sugar since last year, the official added.

Last week, Food and Agriculture Minister Sharad Pawar had said the government is not in a hurry to impose import duty and would consider it after assessing the production situation of the current year as well as the next year.

On the current retail sugar prices, the official said the situation is comfortable.

Sugar prices, which touched nearly Rs 50 a kg in the retail market of Delhi, have declined by about 30 per cent in last four months at Rs 32-33 a kg.

Asked about sugar exports next season, the official said since the production is expected to outstrip domestic demand of 23 million tonnes, industry would be in a position to fulfil their export obligation of one million tonnes.

Industry had imported over two million tonnes of raw sugar in 2004-05 under the Advance Licence Scheme, under which they were required to export an equal quantity of refined sugar.