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Sugar Division

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There are 716 installed sugar factories in the country as on 31.01.2016, with sufficient crushing capacity to produce around 330 lakh MT of sugar. The capacity is roughly distributed equally between private sector units and cooperative sector units.

The capacity of sugar mills is, by and large, in the range of 2500 TCD-5000 TCD bracket but increasingly expanding and going even beyond 10000 TCD. Two standalone refineries have also been established in the country in the coastal belt of Gujarat and West Bengal which produce refined sugar mainly from imported raw sugar as also from indigenously produced raw sugar. The sector-wise break-up of sugar mills in the country is as given below:-

Sr. No. Sector Number of factories
1 Co-operative 326
2 Private 347
3 Public 43
Total 716*

*Includes each refinery in West Bengal & Gujarat.

Cane Price Arrears

The payment to sugarcane farmers by sugar mills, though statutorily supported by various statutes and enforced by State Governments, get affected by the dynamics of domestic market price as well as international situation related to export possibilities. Despite, the sugar production in the country being more than domestic requirements for the last five sugar seasons and also expected to be sufficient to meet domestic requirements during 2015-16 sugar season. Due to surplus sugar production, the prices of sugar have been subdued in the domestic market, adversely affected the liquidity of the sugar mills to pay the cane dues to the sugarcane farmers in time. Consequently, the Government has implemented various schemes to increase the liquidity of the sugar mills so that the cane price arrears could be kept to a minimum during these seasons.

The position of cane price payments and arrears for the past few sugar seasons, on a similar cut-off date, was as under :-

(In crores Rs.)

Season Position as on Total Price Payable Total Price Paid Arrears % of Arrears on Price Payable
2015-16 15/03/2016 45301.91 30962.78 14339.13 31.65
2014-15 15/03/2015 48710.67 30460.90 18249.77 37.47
2013-14 15/03/2014 43747.18 25312.13 18435.05 42.14
2012-13 15/03/2013 48585.22 36278.97 12306.25 25.33
2011-12 15/03/2012 40125.05 31207.02 8918.03 22.23
2010-11 15/03/2011 33488.72 28960.45 4528.27 13.52

The new system for distribution of sugar in the PDS

The Central Government has decontrolled the sugar sector partially by removing the levy obligation on sugar mills and doing away with the regulated release mechanism on open market sale of sugar. Prior to it, sugar mills were mandated to supply 10% of their production to meet the Public Distribution System (PDS) demand. Sugar mills are now free to sell their entire production as per their commercial prudence. However, under the new dispensation, to make sugar available in the PDS at the existing retail issue price of Rs. 13.50 per kg, the State Government/UT administrations are required to procure it from the open market through a transparent system. The Central Government is reimbursing the States/UT’s @ Rs. 18.50 per kg, limited to the quantity based on their existing allocations. Recently, the Central Government has given liberty to the States/UTs to either absorb the additional cost, if any, on account of handling, transportation and dealer’s commission or pass it on to consumers by including it in the Retail Issue Price.

Further, with a view to ease out the financial burden of the State Governments, the Government is providing advance subsidy to all State Governments who approach the Central Government for the same.

The new system of open market procurement of sugar has been adopted by 30 States/UTs from June, 2013 onwards. An amount of Rs. 4500 crores has been released to the States/UTs. during 2015-16.

PRODUCTION, CONSUMPTION AND STOCKS OF SUGAR

Production of Sugar

Sugar production in India has been cyclic in nature. Every 2-3 years of high sugar production are followed by 2-3 years of low sugar production. From the sugar season 2010-11 onwards, the production of sugar has been surplus over the domestic requirements in the country. As such, it appears that the cyclicity in sugar production has reduced. Season - wise production of sugar from 2010-11onwards is given below:-

Sugar Season(October-September) Production of Sugar(Qty. in lakh tonnes)
2010-11 243.50
2011-12 263.43
2012-13 251.83*
2013-14 ( P) 245.54
2014-15(P) 284.63

* - excludes 6.76 lac tonnes white sugar produced from imported raw sugar.
(P)-Provisional

CLOSING STOCKS OF SUGAR

The closing stocks of sugar at the end of each sugar season from 2010-11 to 2014-15 are given below:-

(Qty. in lakh tonnes)

Sugar Season Closing Stock
2010-11 58.19
2011-12 66.96
2012-13 91.09
2013-14 72.13
2014-15 (P) 88.76

(P) -Provisional

Based on the sugarcane production data released by the Department of Agriculture and cooperation and the information received from the Cane Commissioners of the major sugar producing States, the production of sugar during current sugar season 2015-16 is provisionally estimated to be around 255.00 Lac tons. The details of estimated carry-over stocks, production, imports, availability, estimated internal consumption, closing stocks for the last five seasons are as under :-

Sugar Balance Sheet since 2010-11Sugar Season on wards

(Qty in Lac tons)

Particulars 2010-11 2011-12 2012-13 2013-14 (P) 2014-15 (Projected)
Carry-over stocks with sugar mills from Previous season 51.25 62.96 66.96 91.09 72.13
Less –Adjusted 5% 2.56 - 0.95 - -
Export quantity from 2010-11 stock against OGL -3 (allowed but exported after September, 2011) - 4.42 - - -
Net opening stock 48.69 58.54 66.01 91.09 72.13
Production of Sugar 243.50 263.43 258.58# 245.54 284.63
Imports - - 6.76 1.05 -
Estimated Total availability 292.19 321.97 324.59 337.68 356.76
Estimated releases/ dispatches for Internal consumption 208 227.25 230.00 243.00 256.00
Exports against ALS/AAS obligation and OGL 26 27.76 3.5 22.55 12.00
Domestic Raw Dispatches - - - - -
Total Estimated releases/Dispatches 234 255.01 233.50 265.55 268.00
Estimated Closing stocks with sugar mills at the end of season 58.19* 66.96 91.09 72.13** 88.76

P-Provisional
# includes 251.83 Lac M.T White Sugar and 6.76 Lac M.T White Sugar produced from imported Raw Sugar.
*closing stock of one season is differ from opening stock of other season to account for damaged /wet sugar, sugar sold against court order.
** Excludes about 0.60 lakh tons of unmarketable BISS/Brown sugar in the stocks

Ex-Mill & Retail Prices of Non-Levy Sugar

Retail prices of sugar have been stable in the domestic market during current sugar season 2014-15. The range of price of non-levy sugar (S-30 Grade) in the major centres of the country during sugar season 2009-10 to 2015-16 (upto November, 2015), was as under:-

Sugar Season (Oct.-Sept.) *Range of Ex-Mill Prices of sugar (Rs. per quintal) **Range of retail prices of sugar (Rs. per Kg.)
2009-10 2500-4400 25.00-47.00
2010-11 2350-3090 28.00-34.00
2011-12 2540-3735 31.17-43.70
2012-13 2810-3685 32.74-41.00
2013-14 2420-3300 31.00-36.00
2014-15 2050-2860 29.35-35.87
2015-16(upto March, 2016) 2350-3500 30.55-34.64

Source: * Daily Trade Mart Enquiry, Directorate of Sugar.
** Price Monitoring Cell, Department of Consumer Affairs

EXPORT OF SUGAR

Till 15.01.1997, the exports of sugar were being carried out under the provisions of the Sugar Export Promotion Act, 1958, through the notified export agencies, viz. Indian Sugar & General Industry Export Import Corporation Ltd. (ISGIEIC) and State Trading Corporation of India Ltd. (STC). Through an Ordinance, the Sugar Export Promotion Act, 1958, was repealed w.e.f. 15th January, 1997 and thus the export of sugar was de-canalized. Under de-canalized regime, the export of sugar was being carried out through the Agricultural and Processed Food Products Export Development Authority (APEDA), under Ministry of Commerce. Thereafter, the sugar export was undertaken by the various sugar mills/merchant exporters, after obtaining the export release orders from the Directorate of Sugar.

During the surplus phase of 2006-07 and 2007-08 sugar seasons, the sugar exports were permitted without release orders vide notification dated 31.07.2007. Subsequently, the necessity of obtaining release orders was reintroduced from 01.01.2009, as country entered the down swing phase of sugar production. During 2010-11 & 2011-12 sugar seasons (till May, 2012), in view of the surplus over domestic consumption, exports of sugar were permitted under OGL at the strength of release orders. Thereafter, the Government vide Notification No. 1059(E) dated 11.05.2012 has again dispensed with the requirement of export release orders. The export of sugar is now free subject to prior registration of quantity with Directorate General of Foreign Trade (DGFT).

Import of Sugar

Import of sugar, which was placed under Open General License (OGL) with zero duty in March 1994, continued with zero duty upto 27.04.1998. The Government imposed a basic customs duty of 5% and a countervailing duty of Rs.850.00 per tonne on imported sugar with effect from 28.4.1998. The basic custom duty was increased from 5% to 20% w.e.f. 14.1.1999 in addition to the countervailing duty. In the Union Budget for the year 1999-2000, duty on imported sugar was further increased from 20% to 25% with surcharge of 10%. The customs duty on imports of sugar was again increased to 40% on 30.12.1999 and 60% on 9.2.2000 along with continuance of countervailing duty of Rs.950/- per ton ( w.e.f. 01.3.2008) plus 3% education cess.

Sugar production in the sugar season 2008-09 has declined and in order to augment the domestic stock of sugar, the Central Government allowed import of raw sugar under Advance Authorization Scheme by sugar mills at zero duty from 17.02.2009 upto 30.09.2009 and import of raw sugar at zero duty under Open General License (OGL) w.e.f. 17.04.2009 which was continued till 30.06.2012. Thereafter, a moderate duty of 10% was re-imposed w.e.f. 13.07.2012 which was increased to 15% w.e.f. 08.07.2013 and subsequently 15% to 25% as on 20.08.2015. The import duty was further increased from 25% to 40% with effect from 30.04.2015. Thereafter, there had been hardly any import of sugar under OGL.

As per information published by DGCIS, Kolkata, the export/import of sugar from sugar season 2009-10 to 2015-16 is given below :-

Export of Sugar

Sugar Season(Oct-Sept) Quantity (In lakh M.Ts)**
2009-10 2.371
2010-11 28.14
2011-12 36.74
2012-13 12.02
2013-14 26.85
2014-15 24.32
2015-16 (upto February, 2016) - (P) 19.39

Import of Sugar

(in MT)

Sugar Season Qty. imported*
2009-10 41.80
2010-11 3.65
2011-12 1.886
2012-13(P) 17.12
2013-14(p) 10.788
2014-15 12.82
2015-16 (upto February, 2016) - (P) 10.38

(P) - provisional*Includes quantity under Advanced Authorisation Scheme.

INCENTIVE SCHEME FOR MARKETING AND PROMOTION OF RAW SUGAR PRODUCTION

The Government on 28.02.2014 has notified a scheme allowing incentive for marketing and promotion services for raw sugar production targeted for export market for a quantity of 40 lakh MT during 2013-14 and 2014-15 sugar seasons. The incentive amount was increased to 4000 per MT for export of raw sugar during 2014-15 sugar season subject to ceiling of 14 lakh MT. The incentive available under the scheme shall be utilized by the sugar mills for making payment to the farmers. About 7.75 lakh MT of raw sugar has been exported till end of 2013-14 sugar season and about 5.85 lakh MT has been exported till end of 2014-15 under the incentive scheme

DEVELOPMENT COUNCIL FOR SUGAR INDUSTRY

sugar

The Development Council for Sugar Industry is a statutory body set up under Section 6 of the Industries (Development and Regulation) Act, 1951 vide Notification No. SRO 892 dated 12th March, 1954 of the Ministry of Commerce and Industry. After expiry of the tenure, the Council is reconstituted for a further period of two years. The Development Council for Sugar Industry was last reconstituted on 5th September, 2011 and was valid up to 4th September, 2013. It has two Standing Committees viz., Standing Advisory Committee on Sugar Standards (SACSS) and Standing Research Advisory Committee (SRAC) appointed for specific purposes. The tenure of these Standing Sub-Committees runs concurrently with the tenure of the Council.

The Government has recently taken a decision that the Development Council for Sugar Industry (DCSI) may be dissolved and may not be reconstituted further. The two Sub-Committees of the Development Council may also be disbanded.

  • The work of Standing Advisory Committee on Sugar Standards (SACSS)may be assigned to Sugar Industry Sectional Committee of Food & Agricultural Division( FAD-2), Bureau of Indian Standard(BIS), with the concurrence of Head, Food & Agricultural Division, BIS for recommending the introduction of Indian Sugar Standards from year to year for use by the sugar factories, trade, Government Organizations, etc and to review the price differentials for different grades of sugar and other related matters.
  • The work of Standing Research Advisory Committee (SRAC)may henceforth be taken up by a Sub- Committee constituted under Sugar Development Fund (SDF) Standing Committee under SDF Rules for examining the research schemes received from the sugar factories, Scientific Organizations and other concerned organizations for recommending sanction of grant-in-aid for conducting research activities relating to the sugar industry, monitoring the progress made in regard to approved research work and all other related matter.

E-GOVERNANCE INITIATIVES

In order to improve and systemize the data management system in sugar sector, the Directorate of Sugar under Department of Food and Public Distribution has developed a web based platform (esugar.nic.in/sugar_pII ) for online submission of inputs by sugar mills on monthly basis. This has helped the Government to take prompt and informed policy decisions for better management of sugar sector. The new system also provides transparency in the data management of the sugar mills as well as Government’s working. The portal also provides window for online connectivity with the State Governments for getting inputs regarding production, stocks utilization of levy sugar for PDS, cane price arrears of sugar mills on fortnightly basis etc.

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