SOURCE:- Directorate of Economics & Statistics, Ministry of Agriculture and The Economic Times in respect of Mumbai from 1998-99 onwards.

3.21 The range of retail prices of non-levy sugar in the four metropolitan cities (Delhi, Mumbai, Kolkata and Chennai) during 1998-99 to 2006-07 (upto 30th November, 2007) sugar seasons was as follows:-

SOURCE:- Directorate of Economics & Statistics, Ministry of Agriculture and Price Monitoring Cell (PMC), Department of Consumer Affairs.

3.22 The Central Government fixes the SMP of sugarcane in terms of Clause 3 of the Sugarcane (Control) Order, 1966 for each sugar season. The SMP is fixed on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consulting the State Governments and associations of sugar industry and cane growers. The SMP is fixed having regard to the following factors:-

a) cost of production of sugarcane;

b) return to the growers from alternative crops and the general trend of prices of agricultural commodities;

c) availability of sugar to consumers at a fair price;

d) price at which sugar produced from sugarcane is sold by sugar producers; and

e) recovery of sugar from sugarcane.

3.23. The Central Government have fixed the Statutory Minimum Price (SMP) of Sugarcane for the 2006-07 sugar season at Rs. 80.25 per quintal linked to a basic recovery of 9.0%, subject to a premium of 88 paise for every 0.1% point increase in the recovery above that level. The SMP of sugarcane payable by sugar factories for each sugar season since 2000-01 has been shown in the following table:-

Sugar Season	SMP   (Rs. per quintal)	Link to recovery level
2000-2001	59.50	8.5%
2001-2002	62.05	8.5%
2002-2003	69.50	8.5%
2003-2004	73.00	8.5%
2004-2005	74.50	8.5%
2005-2006	79.50	9.0%
2006-2007	80.25	9.0%
2007-2008	81.18	9.0%
2008-2009	81.18	9.0%

3.24 Some of the State Governments, however, have been advising the sugar factories to pay cane price generally at a higher level than the SMP.

3.25 As reported, the position of cane price payment and arrears for the 2006-07 sugar season as on 30th September, 2007 was as under :-

i) Cane price payable 29,389.03

ii) Cane price paid      26,834.38

iii) Cane price arrears  2,554.65

iv)Percentage of cane price arrears

on cane price payable 8.69%

3.26 There had been appreciable decline in the market prices of free sale sugar , which has constrained the capacity of sugar mills to pay the cane price to sugarcane growers. In order to mitigate the hardships of sugar cane growers, the Government created a buffer stock of 20 lakh tones of sugar for a period of one year with effect from 18.12. 2002 to17.12.2003. The advance buffer subsidy had been paid to 357 sugar factories amounting to Rs. 220 crores and the final buffer subsidy claim of 329 sugar mills amounting to Rs. 67 crores up to 31.12. 2006.

The buffer subsidy has been extended for one more year i.e. up to 17.12. 2004 and buffer subsidy to the tune of Rs.228 Crores has been paid in 282 cases for the period 18.12.2003 to 30.09.2004, up to 31.03. 2007 and remaining cases of buffer subsidy are likely to be settled at the earliest.

The budgeted provision for buffer subsidy in 2006-07 (RE) and 2007-08 (BE) are as under: -

(Rupees in Crores)

3.27 Till January 15, 1997, the exports of sugar were being carried out under the provisions of the Sugar Export Promotion Act, 1958, through the notified export agencies, viz. Indian Sugar & General Industry Export Import Corporation Ltd., (ISGIEIC) and State Trading Corporation of India Ltd., (STC)

Through an Ordinance, the Sugar Export Promotion Act, 1958, was repealed w.e.f.15th January, 1997 and thus the export of sugar was decanalised. Under the decalanised regime, the export of sugar was being carried out through the Agricultural and Processed Food Products Export Development Authority (APEDA), under Ministry of Commerce. Government removed the quantitative ceiling on Export of Sugar and also dispensed with the requirement of the issue of the Registration-Cum-Allocation Certificates (RCAC) by APEDA, w.e.f. 1.4.2001 on sugar Exports. Now the export of sugar can be undertaken by the various sugar mills/ merchant exporters, after obtaining the export Release Order from Directorate of sugar.

P- Provisional SOURCE: DGCI&S KOLKATTA

The export release orders in 2005-06 sugar season were issued only to Advance License holders except that the Indian Sugar Exim Corpn., (ISEC), the joint body of Indian Sugar Mills Association (ISWMA)_ and the National Federation of Cooperative Sugar Factories (NFCSF), the apex organizations of sugar industry,. was allowed to export 1.5lakh tones of sugar to the Trading Corporation of Pakistan. As per information received from DGFT the quantum of export obligation on account of export in 2004-05 and 2005-06 sugar seasons (Oct-Sept) under Advance License Scheme comes to about 21.9 lakh tones of sugar has been exported during 2005-06 sugar season. However, to curb rise in prices of sugar in the domestic markets the Government banned export of sugar w.e.f 22nd June 2006 vide notification dated 4th July, 2006 upto the end of current financial year except export permitted through ISEC subject to the quantitative ceiling notified by te Director General of Foreign Trade (DGFT) from time to time. It was also provided that the ban would not be applicable for export of sugar against irrevocable letters of credit (LC) opened before 22nd June 2006. Subsequently the Government allowed export of sugar that has left the factory premises before 22nd June 2006 and in port premises or in transit after verification of certain documents. Accordingly permission was given for export of 52539 M.T of sugar.

3.29 Import of sugar, which was placed under Open General License (OGL) with zero duty, in March, 1994 continued with zero duty up to 27.4.1998. Government imposed a basic customs duty of 5% and a countervailing duty of Rs.850.00 per tonne on imported sugar with effect from 28.4.1998. The basic custom duty was increased from 5% to 20% w.e.f. 14.1.1999 in addition to the countervailing duty. In the Union Budget for the year 1999-2000 duty on imported sugar was further increased from 20% to 25% with surcharge of 10%. The customs duty on imports of sugar was again increased to 40% on 30.12.1999 and 60% on 9.2.2000 along with continuance of countervailing duty of Rs. 850/- per tones which is still continuing.

As per information furnished by DGCI&S Kolkata, the import of Sugar from financial year 2003-04to2006-07(upto31.10.2006) are as under : -

SOURCE: DGCI &S, KOLKATTA

In order to augment sugar stocks for 2004-05 and enable the Government to meet the normative 3 months’ consumption requirement of the country, the Advance License Scheme has been liberalized for raw sugar import, in as much as the imported raw sugar under Advance License was allowed to be processed

into white sugar , sold in the domestic market , and allowing such importers to fulfill export obligation within 24 months period or such extended period as allowed by Directorate General of Foreign Trade (DGFT)by exporting indigenously manufactured white sugar. As per information received from DGFT the quantum of export obligation on account of imports in 2004-05 and 2005-06 sugar season (October – September) under Advance License Scheme comes to about 21.9 lakh tones. Out of this, about 11.9 lakh tones of sugar have been exported during 2005-06 sugar season. During he month of January 2006 to June 2006 the prices of sugar in the domestic markets had shown an abnormal increasing trend. As such, the Government permitted import of white sugar without any quantitative restrictions upto 30.09.2006 vide notification dated 4th July, 2006.