Removal of controls on sugar sector, as suggested by the C. Rangarajan Committee, would trigger fresh investments and boost capacity, millers said on Thursday.

The two major industry bodies – Indian Sugar Mills Association (ISMA) and the National Federation of Co-operative Sugar Factories Ltd (NFCSF) – urged the Government to abolish the regulated release mechanism and remove the system of levy with immediate effect, as recommended by the Rangarajan Committee.

“We urge the Government to withdraw the release mechanism and levy system immediately,” said Jayanti Lal Patel, President, NFCSF, supporting the recommendations of the Rangarajan panel.

Sugar is a regulated sector and the Government decides on the quantity of the sweetener to be sold by the mills in the market every month. Besides, the mills are obligated to sell 10 per cent sugar as levy sales at a cheaper rate to the Government for the public distribution system.

“The removal of levy obligation will benefit the industry worth Rs 3,000 crore annually,” said Gautam Goel, President, ISMA.

“The sugar industry has missed the liberalisation bus, while all other industries that have been liberalised have grown. It is high time the Government removed the archaic controls that the industry is burdened with,” Goel said, adding that such a move would bring in fresh investments and boost capacity.

Pricing mechanism

The sugar industry has the potential to grow from the present Rs 80,000 crore to Rs 1.6 lakh crore, said Abinash Verma, Director-General, ISMA. He ruled out the possibility of cartelisation in the sector, as the industry is fragmented.

Besides removing Government controls, the Rangarajan Committee suggested doing away with the cane reservation area and link the price of cane to the revenue realised by the mills from sugar sale and first-stage by-product. It had also suggested removal of the minimum distance between two sugar mills and exempt the industry from the compulsory packaging order under the Jute Packaging and Marking Act, 1987.

Farmers in North India had urged the Prime Minister to scrap the Rangarajan panel recommendation on abolition of State advised pricing. The panel had suggested that 70 per cent of the sugar price be paid to farmers based on an average of 10.31 per cent sugar recovery. Farmers had said the revenue-sharing formula, as suggested by the panel, was not fair and does not provide for a level-playing field for the Northern States, where the sub-tropical climate influenced the cane recovery and yields.

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