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The government has asked regional cane commissioners to take action against sugar mills selling sugar below a government-mandated price, a letter seen by Reuters showed.
The sugar mills are facing a cash crunch as they also have to pay stipulated prices to buy cane from farmers at a time when there is a glut, and they are heavily in arrears in those payments.
They are under intense pressure from the ruling Bharatiya Janata Party to make those payments as failure to do so could turn the sugar farmers, a powerful voting bloc, against it in the general election in April-to-May. .
India, the world’s biggest sugar consumer, introduced a floor price for the sweetener last year to help the mills and the farmers. Last month it raised the minimum selling price (MSP) of sugar to ₹3,100 ($45.01) per 100 kg from ₹2,900 but despite that order several mills sold sugar below the MSP, which threatens to undermine the initiative.
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