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The Centre’s proactive measures last year supported the sugar industry and the farmers who were hit by low sugar prices and growing sugarcane overdue.
The government announced a positive fuel ethanol policy, removed excise duty on molasses, announced a cane stabilisation fund, encouraged exports, and hiked the cess to be levied for the Sugar Development Fund when prices of sugar go below the cost of production.
Going into 2016, the outlook for the industry is quite positive. But the progress has to be consolidated by helping the industry become more competitive.
Costliest producer
It is a fact that India is one of the costliest producers of sugar as compared to Brazil and Thailand, and therefore is not competitive in international terms. In order to have a sustainable industry, a prerequisite is to establish a value chain that is globally competitive. Even if India is a large consumer of sugar and surpluses happen only occasionally, exports can take place only if we are competitive. The Centre should implement a mandatory cane price formula linked to sugar prices, cutting across all State governments.
Ethanol policy The ethanol policy — to supply ethanol-blended automobile fuel — should be used to control excess production of sugar.
The Sugar Development Fund could be used to create distillery and ethanol capacity across the industry to ensure adequate supply to support 10 per cent blending of automobile fuel with ethanol.
A Sugar Board is needed at the national level to review planting and water availability, and encourage changes in cropping pattern by moving to corporate farms or cooperative holdings — these are much more productive in terms of yield, recovery and ability to plant and harvest through mechanisation.
Bilateral agreements with Sri Lanka and Bangladesh, two major sugar consumers which are viable markets for India, can help the sugar trade on mutually advantageous terms.
The industry is yet to fully exploit bagasse-fuelled cogeneration of power. The Centre should support investments in this field to fully exploit the green power source.
These measures will go a long way in ensuring a stable future for the sugar industry despite the cyclical nature of this crop.
The writer is Executive Chairman, Murugappa Group
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