India's plans to more than double its sugar buffer stock would ease the worries of firms burdened with huge stocks, but were unlikely to offer much support to prices, a top industry official said on Tuesday. The government was considering a plan to raise the buffer stock to 5 million tonnes from 2 million, farm minister Sharad Pawar had said on Monday.
The sugar industry had asked for help to cope with a sugar glut. "This will only be like the government holding the industry's hand for some time," Shanti Lal Jain, director general of the Indian Sugar Mills Association, told Reuters.
"It will help to the extent that the burden of carrying the heavy stocks would be somewhat lightened," he added. Mills have been hit by falling global prices and huge stocks, and are struggling to make timely payments to sugarcane farmers and to export sugar.
India, the world's second-largest sugar producer, is expected to produce a record 27 million tonnes in the year to September, against annual consumption of 19-20 million tonnes. Trade officials say the stocks at the end of the season would amount to more than 10 million tonnes, as the new season began with an inventory of 4 million tonnes.