In 1998-99 to 2002-03, production outstripped consumption leading to stock accumulation. However, 2003-04 witnessed a significant decline in production. Sugar producers belong to both the private and co-operative sectors, with the latter accounting for over 50% of production in 2003. The largest private sector company has just 2% marketshare.
Regulatory control: The Centre announces the statutory minimum price (SMP) for sugarcane procurement by mills with some states too following the practice of announcing state advised prices (SAP). It regulates sale through a release mechanism. Sugar manufacturers have to sell 10% of their output to the government under the "levy sugar" scheme which is sold at a concessional rate under the Public Distribution System or (PDS). While the price of PDS sugar is announced by the Centre, the price of free sale sugar is affected by the release mechanism (as the Centre decides the quantum of sugar that can be sold).
Raw material procurement: Cane prices are linked to 9% recovery and have witnessed an upward trend since 1996-97. The SMP is linked to the previous year's average recovery.
Low economic size: The average cane crushing capacity in India is only 2,500 tonne crushed per day (tcd), while in Thailand it is 10,300 tcd and Brazil 9,200 tcd. Poor economies of scale and high cost has affected exports.
White sugar: 60%
Raw sugar: Duty free imports allowed under the advanced licensing scheme with an obligation to export within 36 months.
Set the ball rolling for completely deregulating the industry.
Put in place a long-term policy to handle periodical sugar shortages/surpluses
Sort out policy on ethanol programme
Ram V Tyagarajan, CMD, Thiru Arooran Sugars Ltd
Encourage use of ethanol (which is produced from sugarcane molasses) in a mixed gasoline fuel
Reduce excise duty on sugarcane molasses from Rs 500 a tonne to Rs 200 a tonne
Allow remission of basic excise duty of Rs 34 a quintal for one year
Extend 150% weighted deduction of the cost incurred by sugar factories for road construction in rural areas