The Hindu Business Line : Sugar decontrol: Cabinet decides to set up expert group

The expert group would look at the existing control and regulatory environment governing the sugar industry and suggest alternative systems for the orderly growth of the industry, Government sources said.

The expert group is also expected to examine the viability of sugarcane as an energy crop. Bioethanol from cane is becoming increasingly popular in the US and other countries.

It will help improve the sugar industry economics. The issue of water-intensity of cane cultivation may also be examined. The decision to set up the group was taken towards end-March at a special meeting of the Cabinet, the sources said.

Partial decontrol

According to the Government, sugar sector is already in the partial decontrol mode. After announcing complete decontrol by March 2003, New Delhi postponed the decision to October 2005. Yet, even a year-and-half later, restrictions on the industry continue.

At present mills are expected to surrender 10 per cent of their production to the Government and at prices below the market rate. This is called the `levy system'. Levy sugar goes to meet the needs under public distribution system.

The second restriction is `free-sale quota'. After surrendering 10 per cent of output as levy, the balance 90 per cent is sold by mills in a restricted marketing environment. The Government releases what is called monthly free-sale quota to mills to be sold within stipulated timeframe.

Efficient Growth

These two restrictions have been constricting the sugar mills.

Industry leaders believe the sugar sector will record more robust, orderly and efficient growth in a decontrolled environment.

There are nearly 550 sugar mills in the country in the private, public and co-operative sectors.

In last three years, huge investments have flowed into creation of crushing capacities, especially in Uttar Pradesh. Maharashtra has over 100 sugar mills in the co-operative sector.