The Indian government has unveiled a new regulation, the draft 'Sugar (Control) Order, 2024,' which will permit the sale of raw sugar in the domestic market, effectively replacing a six-decade-old rule that restricted this commodity to exports only. Released on 22 August, 2024, by the ministry of consumer affairs, food & public distribution, this draft seeks to revamp the existing Sugar (Control) Order of 1966 in response to significant technological advancements in sugar production processes and evolving market dynamics. One of the primary objectives is to allow the sale of raw sugar domestically, marking a significant policy shift from the previous regulation that exclusively permitted its export. Currently, Indian sugar mills produce raw sugar primarily for overseas refineries, where it is refined into usable sugar. “Raw sugar commands a higher price than refined sugar, and its sale in the domestic market could be highly beneficial for the industry,” The Economic Times quoted an official on the matter.
The draft order extends its jurisdiction across India and introduces detailed definitions for various sugar products, including plantation white sugar, raw sugar, refined sugar and khandsari sugar, as well as cane gur (jaggery) and different grades of cane molasses. Notably, the definition of a sugar factory has been expanded to include premises involved in ethanol production from sugarcane juice, syrup, sugar, or molasses.
The draft empowers the Central government to regulate sugar production, restrict sales and storage, and issue directives to producers and dealers. It outlines the government's authority to control sugar prices, taking into account factors such as the fair and remunerative price (FRP) of sugarcane, approximate conversion costs from sugarcane or beetroot to sugar, and average revenue realisation from by-products. The order also addresses the regulation of by-products, including ethanol, bagasse, potash-based fertilisers, compressed bio gas (CBG), and bio-electricity produced from bagasse. This comprehensive approach aims to streamline the entire sugar production ecosystem.
In a move to formalise smaller operations, the draft proposes including khandsari units with a crushing capacity of more than 500 tonnes of cane per day under regulatory purview. This change aims to address distortions in the sugar sector and ensure farmers receive the benefits of FRP.
The draft grants authorities expanded powers for inspection, search and seizure related to sugar production. It also outlines procedures for drawing samples and ensuring compliance with the order's provisions. In a step towards digitalisation, the draft requires producers and dealers to furnish information in digital forms and integrate their systems with the central government's digital infrastructure.
The ministry has invited feedback from stakeholders on this draft proposal by 23 September, 2024. If implemented, these regulations could mark a significant transformation in India's sugar industry, potentially boosting domestic sales of raw sugar and providing economic benefits to the sector. However, the final decision will depend on the feedback received and subsequent deliberations by the government.
