The Indian government has announced that it is considering the recommendations made by the Rangarajan Committee to remove restrictions on the country’s sugar sector. The Rangarajan Committee was set up by the Prime Minister’s Office earlier this year to keep a check on issues relating to the decontrol of the sugar sector.

In a report that was submitted to the government, the Rangarajan Committee has suggested removing major government controls on the sugar sector. It advocated for the removal of levy obligations which calls for a number of sugar mills to supply 10 per cent of sugar at a cheaper rate to the government. In addition, the Committee suggested giving freedom to the mills to sell sugar in the open market, and introducing a stable export and import policy.

According to C Rangarajan, chairperson of the Committee, companies should be allowed to sell in the export markets, and also be allowed to import and sell in the open market to take advantage of price differential.

“[The companies] should be able to export if global prices are attractive or import when it makes sense,” he said.

The recommendations were made in view of the current sugarcane price fixing and the sharing of 70 per cent revenue by sugar firms with farmers.

In India, sugar is defined as a regulated sector. The sector is controlled by the government right from the production to the marketing of the commodity. This means that each month, the central government decides on the quantity of sugar that mills are allowed to put on the market each month.

Industry groups such as the Indian Sugar Mills Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) have backed the recommendations made by the Rangarajan Committee, stating that the current regulations were making the industry uncompetitive.

“The sugar industry has missed the liberalisation bus while all other industries that have been liberalised have grown. It is high time that the government removed the archaic controls that the industry is burdened with,” said president of ISMA, Gautam Goel, adding that the removal of the levy obligations will benefit the industry which is worth INR3000 crore annually.

However, some farmers are not agreeable to the normalisation of the sugar industry. The Tamil Nadu Sugarcane Farmers’ Association and the National Sugar Mill in Alangamallur had expressed fear that the move would lead to the closure of government and cooperative sugar mills –potentially opening up the field for private players.

In the long run, the Rangarajan Committee also suggested doing away with cane area reservation and minimum distance criteria for setting up sugar mills, besides doing away with controls on by-products like molasses.