Industry pitches for decontrolling sugar

As the country prepares for a better sugarcane harvest next season, increasing possibility of more sugar production, industry and experts have demanded de- controlling the sector --one of the few sectors un- touched by liberalisation.

The sugar industry says this is the right time for de- control as production is ex- pected to be 22-24 million tonne in 2010-11 season (October-September) while the demand is pegged at 22- 23 million tonne only.

The industry has been demanding decontrol, but the government has been reluctant to do so. Repre- sentatives of the Indian Sugar Mills As- sociation and National Feder- ation of Coop- erative Sugar Factories have also urged the government to decontrol the sector.

"The remedy may lie in full decontrol of the sugar industry but the transition needs to be announced in the budget for 2010-11," said Sanjay Kaul, MD and CEO of NCMSL, which be- sides managing sugar stocks of mills, also arranges funds for mills against their stocks.

Kaul, who is also a for- mer policy maker in food, said the underlying malaise confronting the sugar in- dustry can be traced to the fact that it is over regulat- ed and with each crisis, the degree of controls in- creases.

He cited the ban on futures trading, weekly release mechanism, stock holding limits and ban on ex- ports as some of the measures taken by the government in the past 18 months after production shortfall.

Source: Financial Chronicle mydigitalfc.com