India decontrols $15.5 bn sugar industry

New Delhi : The Indian government Thursday decided to decontrol the Rs.80,000 crore (around $15.5 billion) sugar industry in line with the suggestions of a panel headed by C. Rangarajan, the chairman of the prime minister’s economic advisory council.

“There will be no levy on sugar for two years. There will be no change in the PDS price of sugar. There will be no burden on the consumer,” Food and Consumer Affairs Minister K.V. Thomas told reporters after the cabinet committee on economic affairs (CCEA), headed by Prime Minister Manmohan Singh, cleared the proposal that seeks to balance the interests of farmers and mills.

Information and Broadcasting Minister Manish Tewari said the gap between the provisional cap on Rs.32 per kg issue price of sugar under the Public Distribution System and the market price will increase the subsidy burden from around Rs.2,500 crore to Rs.5,000 crore.

“We have taken the burden to protect the farmers and the consumers,” said Thomas.

According to Thomas, the existing sugar export policy will continue.

The CCEA took the decision in the light of the Rangarajan panel report submitted to the government last October.

The expert panel had recommended lifting all controls on the sugar industry, among the most regulated sectors in India.

India is the world’s second largest producer of sugar at nearly 340 million tonnes and the annual output is worth around Rs.80,000 crore (around $15.5 billion).

The livelihood of 50 million farmers depends on the industry, which employs 500,000 people directly at the mills.