Following rescinding of the Molasses Control Order 1961 in 1993, the government agencies have no legislative sanction to regulate the molasses movement.
Accordingly, the sugar producers used to supply molasses to liquor manufactures in the other States, thus inflicting higher prices on the local industry.
According to the industries sources, while the State produces over 5 lakh tonnes of molasses annually, over 50% is supplied to States like West Bengal and Orissa.
The sugar companies are exporting to other States for higher prices as high as over Rs 4,000 per tonne, industry sources told FE.
Sources said that the major sugarcane producing States like Uttar Pradesh, Maharashtra, Punjab and Tamil Nadu have their own legislation to regulate molasses to protect their industry interest.
Interestingly, the courts have ruled out the States interference in the movement of molasses and also observed that the State is not debared from making any legislation with regard to molasses.
Industry sources say that the molasses production is expected to dip further in the 2008-09, for which the crushing session will start shortly.
Besides, the prices of molasses will further more upwardly as distilleries, chrome industry, cattle feed industry are flocking to Andhra Pradesh for grant of no objection certificate to transport molasses.