Govt proposes domestic sale of raw sugar, ending six-decade-old ban

The Central Government has proposed allowing the sale of raw sugar in the domestic market, a move that would overturn a regulation in place for more than six decades, which restricted the commodity’s sale exclusively for export, according to a report by The Economic Times. The proposal is part of the draft ‘Sugar (Control) Order, 2024’, issued by the Ministry of Consumer Affairs, Food, and Public Distribution.

‘Raw sugar’ means unwashed, centrifugal sugar with a minimum polarisation of 96.5 degree Z; surrounded by the original film of molasses, derived from sugarcane. ‘Refined sugar’ means purified and crystallised sucrose (saccharose) with a polarisation not less than 99.8 degree Z.

The draft regulation, which seeks to amend the existing Sugar (Control) Order of 1966, has been introduced in response to technological advancements in sugar production processes. Indian sugar mills have traditionally produced raw sugar solely for export to overseas refineries, where it is refined into consumable 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 proposed changes would also extend to traditional sweeteners like gur (jaggery) and khandsari (a type of unrefined sugar).

Under the new proposal, khandsari units with a capacity to crush more than 500 tonnes of cane per day will be included in the regulatory relaxation, while smaller-scale units will remain unaffected.

Currently, these units do not adhere to the Fair and Remunerative Price (FRP) norms, nor are they subject to quotas for the sale of their products, which has led to distortions in the sugar sector and pricing, the official noted. “This also results in farmers missing out on the benefits of FRP,” the official added.

The ministry has called for feedback from stakeholders on the draft proposal by September 23.

The draft regulation also proposes granting the government authority to regulate sugar prices, taking into account factors such as the FRP of sugarcane, the approximate conversion cost from sugarcane or beetroot to sugar, and the average revenue from by-products of sugar production. Additionally, it outlines the government's power to conduct inspections, searches, and seizures related to sugar production.

Moreover, the draft specifies the Centre’s authority to impose restrictions on the sale, storage, and disposal of sugar by producers and dealers.

If implemented, this regulation 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 from stakeholders and the subsequent deliberations by the government.