The record-ever production and heavy inventories have created problems not only of storage, but also of bank finance to the sugar industry. Given the high prices, India managed to export a meagre one lakh tonne of sugar at the international $273 per quintal. In order to achieve the export target of 10 lakh tonnes, the government will have to relax the export norms, he said.

Addressing newspersons after the 55th annual general meeting of the Association, Mr Gurnani said sugar production of the country for the current sugar year ending September is at a record 181.50 lakh tonnes as against 155.41 lakh tonnes in the earlier 1998-99 season.

Last year, with sugar prices depressed, imports had surged to over four lakh tonnes. With duties raised by the government earlier this year, this year imports are ruled out completely this year. Instead, the trade expected that India would be able to export the targeted 10 lakh tonnes during this new sugar season ending October 31, 2001. With domestic consumption rising to around 155 lakh tonnes from last year's 150 lakh tonnes, carry-forward stocks to the next season will be around 99 lakh tonnes, as against 69 lakh tonnes from 1998-99.

Maharashtra's sugar production has been 65 lakh tonnes in the current season as against 53.47 lakh tonnes last season. Mr Gurnani has urged the Union Government to allow free export of sugar to the international markets following bumper sugar production. World sugar production was about 134.3 billion tonnes during 1999-2000 in which India's share was above 50 per cent since the last decade. "If the sector is decontrolled, retail sugar prices would be cheaper during the festival season (Dussera and Diwali) against the current retail price of sugar between Rs 16-Rs 20 per kg," said Mr Gurnani.

Factories inability to make timely payments of the cane prices and wages and salaries has created a law and order situation in certain states like Uttar Pradesh and Maharashtra, among others. The government was also holding dialogues with representatives of the industry and trade, who have been stressing for de-control. But, at present juncture there is a need for retaining the monthly release mechanism for some time. Otherwise, present production and stocks will lead to a crash in the market prices much below the production costs resulting in factories' incapacity to pay remunerative cane prices and in turn a fall in sugar production, again repeating the proverbial cyclical swings.

BSMA and National Federation of Co-operative Sugar Factories have appealed to the Union government for introducing futures trading in sugar. BSMA has been making similar representations to the Union government and also to the forward trading commission (FMC).

Mr Gurnani hoped that the government will give due consideration to BSMA submissions and the Association given its due recognition in any scheme of future trading sugar.