The government currently controls the industry from production to distribution. Sugar mills are required to sell 10 per cent of their output to the government at below-cost rates for supply to ration shops. Mills supply levy sugar at 60 per cent of the cost of production, resulting in an annual loss of about Rs. 2,500-3,000 crore for the industry.
In its draft report, the Rangarajan committee suggested that the sugar industry be completely decontrolled and producers not be asked to sell their output at a discount.
The Indian Sugar Mills Association and National Federation of Cooperative Sugar Factories, representative units of the industry, have been seeking partial decontrol of the sector, including the permission to sell sugar in the open market and doing away with the levy obligation for the Public Distribution System (PDS).
The industry has also been demanding removal of the monthly release system under which the food ministry allocates the quantity of sugar to be sold in the open market every month.
The PMO on 27 January set up the expert committee, headed by the chairman of the Prime Minister’s Economic Advisory Council.
Sugar production in India, the world's second-largest producer but also the largest consumer, is estimated to touch 25.2 million tonnes this year against the annual demand of 22 million tonnes.