At present, the biggest concern for India’s sugar industry is the sudden decision of the Union government to put brakes on export. Aditya Jhunjhunwala, president of Indian Sugar Mills Association (ISMA) — the private millers association — said such knee-jerk reactions can not only queer Indian sugar industry’s pitch in the international market, but also lead to endless litigation and blacklisting of sugar companies in the country. The industry, which has seen one of the best seasons both in terms of production and sugar prices, Jhunjhunwala says, is now worried about uncertainty in terms of policies.
The season of 2021-22 will go down in the history of India’s sugar industry as one of the best. The country has produced 360 lakh tonnes of sugar and was on its way to export 100 lakh tonnes of sugar before the government stepped in. Mills desirous of exports would now require permission from the government before sending out their consignments. The first-ever export order had seen mills crying foul as they were allowed lesser quota than exporters.
Jhunjhunwala said such a decision was unwelcome as mills had already uploaded the contracts they had to ship out. Other than logistics, this would also invite action on mills for breach of contract and lead to blacklisting of sugar mills. “We should have a steady policy which will allow for our international presence to be permanent,” he said. For the current season, Jhunjhunwala said, exports should not be capped as there would be ample stock available at the start of the 2022-23 season.
Ethanol has come as the saviour of the sugar industry and has allowed the industry to solve to an extent the problem of liquidity. For December to November Ethanol Supply Year (ESY), the industry had reported 34 lakh tonnes diversion of sugar into ethanol. For the next ESY, the industry hopes to supply around 80 per cent of the 500 crore litres of ethanol that is going to be supplied.
Another issue which ISMA has been long advocating is the linking of Fair Remunerative Price (FRP) with the Minimum Selling Price (MSP). The present FRP of Rs 2,900/tonne at 10 per cent recovery does not commensurate with the MSP of Rs 31,000/tonne of sugar. Cost of chemicals, cost of conversion and other costs have gone up which is yet to be reflected in the MSP.