India, the world's top sugar consumer, has set up a committee to study deregulation of the sector and come up with recommendations as quickly as possible, a statement on the prime minister's website on Friday said. The committee will be headed by C. Rangarajan, chairman of the Economic Advisory Council, and will include top civil servants from the food and agriculture ministries and the chief economic adviser at the finance ministry.
Food Minister K.V. Thomas had said earlier this month he would discuss lifting controls with the finance minister, a first indication the government was open to the idea. "The committee will look into all the issues relating to de-regulation of the sugar sector," the statement said, adding "it has been requested to complete its task as early as possible and give its recommendations to the prime minister."
Sugar is one of the most highly regulated industries in the country. New Delhi, keen to ensure cheap availability of the sweetener and to keep prices in check, currently sets the price mills must pay to farmers and buys 10 percent of their output, called levy sugar, at a big discount for its welfare schemes.
The government also decides how much sugar will be sold in the open market and at times imposes limits on stocks that large buyers can hold - all measures which some industry players say lead to a cycle of boom and scarcity. Sugar mills in India, the world's biggest producer behind Brazil, have repeatedly asked the government to lift restrictions, saying yo-yoing output forces the country to import and export every two-three years. The Indian Sugar Mills Association and other industry bodies are asking the government to abolish the levy sugar quota and link the price of cane to sugar.
India is forecast to produce 25 million tonnes in the 12 months starting October 1, 2011 - well above annual demand of about 22 million tonnes. It has allowed exports of one million tonnes of the sweetener so far in the crop year ending in September 30, 2012.