1. SUGAR INDUSTRY IN INDIA: Abinash Verma, DG INDIAN SUGAR MILLS ASSOCIATION, NEW DELHI

2. Will cover following points
Current sugar scenario
Sugar production
Sugar sales/ demand
Sugar stocks needed
Cane pricing policy in India
GST on sugar industry products

3. Sugar Production & Consumption in India
mn. tons

4. Sugar trade from & to India

5. Domestic sugar demand in current season
Sugar sales by factories lower than last year
Oct ’16- Jan.’17 sugar sales lower by 0.75 mn tons
Field reports suggest sugar sales in March ‘17 dull
Beverages, sweet makers etc. reporting lower sales/ growth
Last sugar season , full year; 24.8 mn. tons was sold
Therefore, annual demand in estimated to be lower at 23.8 to 24 mn. tons

6. Current year 2016-17 sugar balance sheet
Opening balance
(as on 1st Oct, 2016)
7.75 mn tons
Estimated sugar production
20.30 mn tons
Estimated imports
0.50 mn tons
Sugar availability during the season
28.55 mn tons
Estimated sugar sales
mn tons
Closing balance
(as on 30th Sept, 2017)
4.55 – 4.75 mn tons 2

7. Is
4.55 – 4.75 mn tons of OB
as on 1st Oct, 2017
good enough?

8. Why do we even require an OB on 1st Oct.
Basically to meet the domestic demand in the interim period, before the new sugar from new sugar comes into the market
The question, therefore, is
When will new sugar hit the market?

9. Regulated Release Mechanism of sugar sales
Under control regime of regulated release mechanism
Govt. decided how much each factory could sell each month
Between production, reporting, release order and sales, there was a lag of at least 45 days
The norm then of OB was 3 months consumption equivalent
The release mechanism was abolished from April, 2013
Now there is no time lag between production & sale
Sugar produced in Oct. is now available for sale in Oct itself

10. When will new sugar hit the market in 2017-18?
Sugarcane crushing to start early in Oct, 2017
Sugarcane availability expected to be much better in SS
Festivals are earlier, so farm labour available in October itself
Hence, new season’s sugar in market in Oct, 17 itself
So, need of old sugar at best till beginning of Nov, 17
The 4.5 to 4.7 mn tons of OB will last till end of Nov. ’17 6

11. No further need of any sugar imports
OB will last till end of Nov, 2017
Whereas new sugar from available from Oct, 2017 itself
Sugar production expected to be back to normal in 17-18
Good sowing reports
Better rainfall in 2016 and good water availability in reservoirs

12. Cane Pricing Policy

13. Cane price in India is fixed by Government
Central Government fixes cane price every year, called FRP
Which then becomes the minimum price that a sugar mill has to pay
5 State Governments fix another higher price called SAP
There is no linkage with revenue realised or with sugar price
Expected sugar prices are assumed when the FRP is recommended, which have mostly gone wrong

14. Cane Price fixed by Government of India
Rs. per quintal
FRP has increased very steeply 3 times in 09-10, and 13-14, which made FRP also unaffordable for the industry.
Proposed FRP for SS is again very steep increase over last year

15. FRP v/s average ex-mill price in last 7-8 years
Rs. per quintal

16. FRP of Sugarcane Vs MSP of Paddy & Wheat

17. Rationalisation of cane pricing policy
Revenue sharing formula or a linkage b/w cane & sugar price
Expert (Rangarajan) Committee recommended in 2012
Decontrol of sugar sector
Decontrol sugarcane pricing
Cane price to be 70% of revenue from sugar and primary by-products or 75% of revenue from sugar alone (5% weightage to by-products)
If Government still wants the farmers to get minimum FRP, which if higher to above formula, gap be filled through a Fund to be created by Government

18. Change over to GST expected from 1st July 2017
Currently, different taxes levied by Centre and different States
Different rates and different tax regimes
Non-availability of credit on input taxes with the output
With GST, almost all the taxes on goods and services under one taxation system
Expect simplicity to understand and comply
Uniform rate of tax on a commodity across the country
Reduction in the cascading effect of the input taxes

19. Expected GST for sugar industry
Sugar currently has tax, including cess, of about 4.5 to 5.5%
GST on sugar at the lowest rate of 5%, will not be much different
Cess on sugar will be subsumed
On sugarcane, no central tax, but few States levy purchase tax
Agriculturists to be exempted from GST
Rumours of ‘reverse’ tax on cane, though unconfirmed
Some States currently levy a tax on ethanol
Once GST is implemented, inter State taxes will not remain and movement will become smoother

20. Concluding …. No need of any further sugar imports
Enough sugar is available in India
Sugar production expected to normalise next year
Healthy OB of 4.5 to 4.7 mn tons
There is need to rationalise sugarcane pricing policy
Will make Indian sugar competitive globally
GST expected to be implemented from July 2017
Not much different rates for sugar and its by-products
Regime may be simpler and more convenient

21. Thank you dgisma@indiansugar.com