In August 2024, the Ministry of Consumer Affairs, Food and Public Distribution released the draft of ‘The Sugar (Control) Order, 2024’. As the government sought feedback from sugar mills, traders, and other key stakeholders, ChiniMandi—India’s leading digital news and networking portal for the sugar, ethanol, and related industries—decided to bring these key voices together for comprehensive discussions under one roof. Consequently, ChiniMandi organized a series of brainstorming sessions with senior experts from the sugar industry in Kolhapur and Goa.
These sessions were meticulously planned to ensure a comprehensive analysis of each clause within the draft. The experts delved into the sustainability aspects of the proposed amendments, identifying potential issues that could arise in the future. Through detailed discussions and evaluations, they assessed the practicality and long-term impact of the amendments on the industry.
A Committee of experts and visionaries was set up to delve into the matter thoroughly. The members are-
Mr. M. G. Joshi (MD – Jawahar SSSK),
Mr. P. G. Medhe (Ex. MD – Chh. Rajaram SSK),
Mr. M. V. Patil (MD – Datta SSSK),
Mr. Vijay Autade (Ex. MD – Chh. Shahu SSK),
Mr. Jitu K. Shah (Chairman, JK Sugars & Commodities),
Mr. Mohan Narang (MD, KS Commodities),
Mr. Rahil Shaikh (MD, MEIR Commodities),
Mr. Husain Gangardiwala (Director, Najmuddin Trading),
Mr. Janeesh Patel (Director, Samarpan Sugar),
Mr. Uppal Shah (Co-founder & CEO, JK Group),
Mr. Hemant Shah (Co-founder & Dy. CEO, JK Group),
Mr. Rahul Desai (Legal Team, ChiniMandi).
After an exhaustive review, the group finalised a set of well-considered suggestions to be submitted to the Government. These suggestions aim to address the industry’s current needs while ensuring its sustainable growth and compliance with regulatory requirements.
Following are the drawbacks & suggestions:
The Draft Sugar (Control) Order, 2024 hereinafter referëd as “SCO-2024” aims to reshape India’s sugar industry by introducing new regulations. While the intent is to modernize and streamline the sector, there are potential drawbacks/ Cons that need to be considered:
Clause 2: (a) “Sugar” Proposed as per SCO-2024
a. “Sugar” means –
i. Any form of sugar containing more than ninety percent (90%) of sucrose (polarization), including raw, plantation white, refined sugar including sugar candy; or
ii. Khandsari sugar or bura sugar or crushed sugar or any sugar in crystalline or powdered or liquid form.
Drawback: Standardization of sugar percentage is conflicting with the standardization given by FSSAI and BIS.
Suggestion: Instead of specifying percentage in definition clause as 90% it should be modified or altered as the Sugar containing percentage as specified in FSSAI and BIS.
Clause 2: (d) “Plantation White Sugar” Proposed as per SCO-2024
“Plantation White Sugar” means Purified and crystallized sucrose (saccharose) with a polarization not less than 99.5°Z and a moisture content not more than 0.10 percent or as amended by Bureau of Indian Standards from time to time.(Ref: IS 5982: 2003)
Drawback: Standardization of “sugar polarization and moisture content percent” is conflicting with the standardization given by FSSAI and BIS.
Suggestion: Instead of specifying “polarization not less than 99.5°Z and a moisture content not more than 0.10 percent” in the definition clause it should be modified or altered as the sugar polarization and moisture content containing percentage should as specified in FSSAI and BIS.
Clause 2: (g) “Khandsari Sugar” Proposed as per SCO-2024
“Khandsari Sugar” means sugar produced from sugarcane juice using open pan process for concentration and clarified using natural clarificants for ‘Desi Khandsari’ and sulfur for ‘sulphur Khandsari’ and having Pol percent content not less than 96 percent and 96.5 percent respectively or as amended by Bureau of Indian Standards from time to time.(Ref: IS 13953: 1994)
Clause 2: (k) “Khandsari Factory” Proposed as per SCO-2024
“Khandsari Factory” means any premises including the precincts thereof wherein twenty (20) or more workers are working or were working and in any part of which any manufacturing process connected with the production of Khandsari sugar by means of open pan process is being carried on or is ordinarily carried on with the aid of mechanical power and having crushing capacity not less than 500 Tonnes Crushed per Day (TCD).
Cons for 2(g) & 2(k): Khandsari is nutritionally superior to Sugar and not packets of sugar to their contacts on festive occasions as gifts. Some of them market branded Khandsari and Gur, obviously in response to consumer demand. Khandsari is not an empty calories enhancing the taste and appeal of food and boost energy like Sugar. On the other hand, not only imparts sweetness but also provides flavour and body to the food. Moreover, it provides several essential nutrients like Calcium, Magnesium, Potassium, Iron, Antioxidants and Fibre etc. Khnadsari also helps in digestion, detoxification, respiratory health, anemia prevention, Joint Pain Relief, Skin Health, Weight Management. Khandsari has a lower Glycemic Index than sugar, thus preventing sugar spikes.
Suggestions: All the provisions with respect to the khandsari in the whole SCO-2024 needs to be omitted .
Clause 2 (i) “Cane Molasses” Proposed as per SCO-2024
“Cane Molasses”:- means the mother liquor left over, after production of sugar in factory or khandsari factory, having following sub-types; a. A-Heavy molasses: A-Heavy molasses is an-intermediate by-product produced during production of sugar having purity of molasses between 68 percent to 72 percent. b. B-Heavy molasses: B-Heavy Molasses is an-intermediate by-product produced during production of sugar having purity of molasses between 48 percent to 52 percent. c. C-Heavy molasses: C-Heavy molasses is a final by-product produced during production of sugar having
Drawback: It regulates as by product even it is non essential commodity and it is not classified as Essential Commodities Act, 1955. The molasses is Governed by state laws such as the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964, and the Maharashtra Molasses Control Act, 1956. This by-product is already regulated under existing central and / or state legislation, leading to potential legal conflicts.
Suggestions: As per suggested in Clause 2 (o) . Further the standards w.r.t. A-Heavy molasses, B-Heavy molasses, C-Heavy molasses should be taken as declared from time to time by Vasantdada Sugar Institute (VSI).
Clause 2 (m) “Dealer” Proposed as per SCO-2024
“dealer” means any person engaged in the business of purchase, movement, sale, supply, distribution, storage or processing of sugar, whether as a wholesaler or retailer or big chain retailer or manufacturer or processor or importer or exporter and whether or not in conjunction with any other business and includes his representatives or agent.
Drawback: Avoiding Burdensome Regulatory Requirements on Traders and Dealers. The persons in movement, supply, distribution and storage are least concerned in capacity of the dealer as mentioned in proposed SCO-2024. Any kind of persons and their representatives or agents who are handling movement, supply, distribution and storage of the sugar are not concerned with the Sugar (Control) Order as mentioned in the proposed draft. The Sugar (Control) Order 2024 should differentiate between sugar producers and traders. Dealers and traders should not be burdened with compliance requirements designed for producers, such as production controls or specific packaging requirements.
Suggestions: Traders, persons movement, supply, distribution and storage need to be exempted/ omitted from clauses that regulate production methods, ‘by-product’ management, and specific packaging rules (e.g., Clause 2 (m), 19 requiring jute packaging etc.). They operate within the distribution channel and shouldn’t be impacted by upstream manufacturing mandates.
Clause 2 (n) “Bulk Consumer” Proposed as per SCO-2024
“Bulk consumer,” means halwai, sweetmeat seller, confectioner, soft drink manufacturer, food processing industry or any other institutional buyer etc. consuming not less than thirty metric tons (30 MT) of sugar during last 30 days;
Drawback: Consumption by bulk consumers as ‘not less than 30 MT sugar during 30 days’ is not reasonable in the modern days of sweet foodings.
Suggestion:The consumption of sugar by the bulk consumer to be altered or modified from 30MT to 150 MT in 30 days.
Clause 2 (o) “By-products” Proposed as per SCO-2024
“by-products” means any form of product which has been produced during production of sugar namely ethanol (produced from B-heavy/C-heavy molasses, sugarcane juice, sugar syrup, sugar), bagasse, potash based fertilizers, Compressed Bio Gas (CBG), C-heavy molasses, bio-electricity produced from bagasse, press cake or any other alternative product affecting sugar production from sugarcane.
Drawback: Regulation of “By-products”
- Non-Essential Commodities
- The by-products defined under Clause 2(o) of SUGAR (CONTROL) ORDER, 2024, such as bagasse, CBG, molasses, bio-electricity, and press cake, are not classified as essential commodities under the Essential Commodities Act, , 1955. Therefore, the Central Government does not have the jurisdiction to regulate these products through SCO-2024.
Key Points:
- The Essential Commodities Act, , 1955 allows the Central Government to regulate only those commodities deemed essential. Since these by-products are not considered essential, they should fall outside the Sugar (Control) Order of DRAFT SCO, 2024.
- Regulatory provisions in Clauses 3, 4, 5, 6, 8, 9, and 10 would be legally problematic if applied to these by-products.
- Conflict with Existing Legislation
- Several of these ‘by-products’ are already regulated under existing central or state legislation, leading to potential legal conflicts:
- Bio-electricity: Regulated by the Electricity Act, 2003.
- Molasses: Governed by state laws such as the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964, and the Maharashtra Molasses Control Act, 1956.
- Potash-based Fertilizer: Controlled by the Fertilizer (Control) Order, 1985.
- Ethanol: Governed by the Petroleum Act, 1934.
- Jute Packaging: Governed by central laws such as the Jute Packaging Material (Compulsory Use In Packing Commodities) Act, 1987
Suggestion: Exclude ‘by-products’ from the regulation under Clauses 3, 4, 5, 6, 8, 9, and 10 of SUGAR (CONTROL) ORDER, 2024. The Sugar (Control) Order should remain focused solely on sugar, as seen in the existing Sugar (Control) Order, 1966.
Clause 3 “Power to regulate production of sugar” Proposed as per SCO-2024
Power to regulate production of sugar: The Central Government or the State Government with approval of the Central Government, direct that no sugar and its by products shall be manufactured from sugarcane except under and in accordance with the conditions specified in a licence issued in this behalf, whether on payment of a fee or otherwise.
Drawback: Expanding control over by-products is unnecessary and potentially overreaching.
Suggestions: this power should only apply to sugar production and not the by-products.
Clause 4 “Power to restrict sale, storage, disposal etc. of sugar by producers and Dealers:” Proposed as per SCO-2024
Power to restrict sale, storage, disposal etc. of sugar by producers and Dealers: The Central Government may direct that no producer or dealer shall sell or agree to sell or otherwise dispose of, or deliver any kind of sugar and its by-products or remove any kind of sugar from the producers’/dealers’ premises whether owned or hired or leased, except under and in accordance with a direction issued in writing by the Central Government: Provided that this clause shall not affect the pledging of such sugar by any producer or dealer in favour of any Scheduled Commercial or Cooperative Bank as defined in clause (e) of Section 2 of the Reserve Bank of India Act, 1934 (2 of 1934) or any of corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or any Non-Banking Financial Companies as licensed by Reserve Bank of India and no such bank/financial institution shall sell the sugar pledged to it except under and in accordance with a direction issued in writing by the Central Government.
Drawback: Power to Restrict Sale, Storage, and Disposal of Sugar and By-products, Extending control over by-products is unnecessary and burdensome for businesses that handle non-core sugar products like molasses. The existing regulatory frameworks are sufficient.
Suggestions: Focus this clause on sugar and exclude by-products.
Clause 5: “Power to issue directions to producers and dealers” Proposed as per SCO-2024
Power to issue directions to producers and dealers. – The Central Government may, from time to time, by general or special order, issue to any producer or dealer or any class of producers or dealers, such directions regarding the production, maintenance of stocks, storage, sale, grading packing including packing in jute bags, marking, weighment, disposal, delivery, price of sugar for sale, distribution or processing of [any kind of sugar and its by-products] as it may deem fit.
Drawback: Packaging of Sugar
- Existing Regulations
- As a food item, sugar is already regulated under the Food Safety and Standards Act, 2006 (FSS Act). The regulations for packaging and labeling are comprehensive and already established under:
- Food Safety and Standards (Packaging) Regulations, 2018.
- Food Safety and Standards (Labeling and Display) Regulations, 2020.
- Legal Metrology (Packaged Commodities) Rules, 2011 under the Legal Metrology Act, 2009.
Since these regulations are already robust and in place, additional packaging rules under SUGAR (CONTROL) ORDER, 2024 are unnecessary. Moreover, packaging sugar in jute bags may lead to non-compliance with labeling requirements under both the FSS and Legal Metrology Acts. Further Jute Packaging is governed by central statute viz. Jute Packaging Material (Compulsory Use In Packing Commodities) Act, 1987
The requirement for packing in jute bags is a duplication of the Jute Packaging Materials Act. It’s unnecessary to include in the Sugar Control Order, and dealers should not be subjected to this requirement as they do not handle packaging. Further the decision w.r.t. Applicability of Jute bag packaging is lis-pendens before the High Court of Karnataka which has already issued an ad-interim order and the notification dated 26.12.2023 and 28.06.2024 are stayed in WP no 23927/2024 by observing that the Sugar is highly sensitive to moisture, which can cause it to clump, harden or dissolve, thereby affecting its quality and shelf life and potentially leading to contamination.
Suggestion – Remove the words “grading packing including packing in jute bags, marking” from Clause 5 of SUGAR (CONTROL) ORDER, 2024, as existing laws already govern the packaging and labeling of sugar effectively. Further dealer words should be deleted from the clause.
Clause 6: “Sugar and its by-products attached by Government officers etc. not to be sold without direction” Proposed as per SCO-2024
Sugar and its by-products attached by Government officers etc. not to be sold without direction. – where any stock of sugar and its by-products with any producer or dealer is attached or seized,- (i) by any officer of the Central or a State Government in accordance with the provisions of any enactment for the time being in force, or (ii) in pursuance of any proceedings in civil court. the sugar and its by-products so attached or seized shall not be ordered to be sold unless the officer or Court is satisfied that directions have been issued by the Central Government under Clause 5 regarding the sale of such sugar.
Suggestions: by-products to be deleted as it cannot be controlled.
Clause 7: “Power to regulate price of sugar” Proposed as per SCO-2024
Power to regulate price of sugar – The Central Government shall, at the time of issuing any Order regarding price of sugar for sale under clause 5, take into consideration the fair and remunerative price (FRP) of sugarcane, approx. & average conversion cost for production of sugar from sugarcane/beetroot, average revenue realisation from by-products generated in the process of sugar production.
Drawback: Regulation of Price of Sugar
- Inclusion of By-products in Price Consideration
Clause 7 of SUGAR (CONTROL) ORDER, 2024 includes revenue from by-products in determining the price of sugar. However, these by-products should be split into two categories:
- First-stage by-products: Products without value addition (e.g., molasses, bagasse, press cake).
- Second-stage by-products: Products that undergo value addition and require significant investments (e.g., ethanol, bio-electricity, potash-based fertilizer, CBG).
- Including revenue from second-stage by-products when setting sugar prices is unjustified, as these products require separate investments and infrastructure. Only first-stage by-products, which are directly linked to sugar production, should be considered.
Suggestion: Modify the wording of Clause 7 to replace “by-products” with “first-stage by-products i.e., molasses, bagasse, press cake”, ensuring a fair and accurate method of price determination for sugar. Further it is suggested that instead of regulating sugar price by declaring maximum selling price be restricted to Minimum Selling Price (MSP) for sugar.
By addressing these concerns, the Draft Sugar (Control) Order, 2024 can be more focused and legally sound, preventing unnecessary conflicts and promoting fair regulation within the sugar industry.
- Market Distortions:
o Disrupts Free Market: Introducing price controls could distort market forces, leading to mismatches in supply and demand, while also diSugar (Control) Orderuraging innovation and investment.
o Reduced Profit Margins: Strict price regulations may negatively affect profit margins, especially when production costs fluctuate due to factors like input prices (e.g., fertilizer or water).
- Impact on Exports:
o Export Competitiveness: The new regulations will harm India’s competitiveness in the global sugar market if domestic prices remain higher than international ones, reducing export opportunities.
o Hoarding and Black Market: Price ceilings might encourage illegal hoarding or the creation of a black market, potentially undermining consumer benefits.
- Farmer Impact in Drought Conditions:
o Unviable Farming: Farmers in drought-prone areas could struggle to meet production quotas, further deepening economic hardships, particularly if they cannot diversify their crop production.
- Possible Resistance from Industry Stakeholders:
o Opposition from Large Producers: Large players in the sugar industry may resist the regulations, citing decreased profitability, potential export limitations, and increased compliance burdens.
o Adjustment Period: A transitional period may be required to implement the new regulations, causing disruptions in production and distribution.
Clause 8: “Power to regulate movement of sugar and its by-products” Proposed as per SCO-2024
Power to regulate movement of sugar and its by-products: The Central Government may, by general or special order, direct that no person shall transport or offer or accept for transport by any means of transport, all or [any kind of sugar and its by-products], except under-
(a) a general or special permit issued in this behalf; and
(b) a military credit note.
Drawback: No need of ‘by products’ in regulating moment
Suggestions: The ‘by products’ from clause 8 be deleted.
Clause 9: “Power to regulate quality of sugar and its by-products” Proposed as per SCO-2024
Power to regulate quality of sugar and its by-products:
(a) the Central Government may prescribe the quality of sugar in terms of Indian Sugar Standard Grades to which all or any kind of sugar should conform at the time of delivery in pursuance of the directions issued to a producer or a class of producers under clause (f) of subsection (2) of Section 5 of the Essential Commodities Act, , 1955, or Clause 5 of this Order.
(b) When the Central Government is of the opinion that any stock of sugar and its by products with any producer is below any of the Indian Sugar Standard Grades of sugar, it may direct the producer to reprocess the said stock with a view to conform to one or more of the Indian Sugar Standard Grades of sugar or to sell it only to bulk consumers for use in the manufacture of their products.
Drawback: The regulation of quality of ‘by products’ is unwarranted as it is already regulated by various Central and State legislations. Again regulating the ‘by products’ by the proposed order will conflict the provisions of existing Statutes and Rules there under.
Suggestions: The word ‘by-products’ from clause 9 be deleted.
Clause 10: “Power to call for Information, etc.” Proposed as per SCO-2024
Power to call for Information, etc. – The Central Government or any person authorised in this behalf by the Central Government may, with a view to securing compliance with this Order, or to satisfy itself that any order or direction issued under this Order is complied with,- (a) require any producer or dealer to furnish within such period or at such intervals as may be specified, such information, returns or reports and in such forms including digital forms, and to integrate their Digital Systems with the Digital system of Central Government through API or any other mode and to allow information sharing of such information already shared with any Government organisation to ensure authenticity of data and compliance, as may be required; and (b) prescribe the manner in which accounts of any sales, purchases or other transactions of sugar and its by products should be kept.
Drawback: Digital Record-keeping Flexibility for Small Traders / Dealers The SCO 2024 emphasizes the digital systems for record-keeping and tracking. For small dealers and traders, mandatory digitization could introduce financial and logistical challenges.
Suggestion : Make digital record-keeping optional for small traders and dealers, especially those in rural areas with limited access to technology. This flexibility will encourage compliance without placing an undue burden on small-scale operators. Instead of integration of API, specified forms by the Competent authorities under the order shall be given by the traders/dealers.
Clause 11: “Power of inspection, entry, search, sampling, seizure, etc.” Proposed as per SCO-2024
Power of inspection, entry, search, sampling, seizure, etc. – [1] Any officer authorized by the Central Government in this behalf, may- (a) direct any producer or dealer to maintain such records as he may specify; (b) direct any producer or dealer to furnish such information as he may require; (c) inspect or authorize any person to inspect any books or any documents or stocks of sugar belonging to or under the control of a producer or dealer; (d) enter and search or authorize any person to enter and search- (i) any place where sugar is manufactured including the machinery installed therein; (ii) any place in which there is reason to believe that sugar is stored in contravention of this Order. (e) draw or authorize any person to draw, in accordance with the procedure laid down in Clause 10, samples for examination- (i) from any stock of sugar belonging to, or under the control of a producer or dealer;
(ii) from any consignment of sugar in the course of its delivery or despatch by a producer; (f) stop and search or authorize any person to stop and search- (i) any person transporting sugar; or (ii) any vehicle, vessel or other conveyance used or capable of being used for the transport of sugar, in contravention of this Order; (g) seize or authorize the seizure of any sugar in respect of which he has reason to believe that a contravention of this, Order has been, is being or is about to be, committed, along with the packages, coverings or receptacles in which sugar is found or the animals, vehicles, vessels, or other conveyance used in carrying such sugar and thereafter take or authorize the taking of all measures necessary for securing the production of such packages, coverings, receptacles, animals, vehicles, vessels or other conveyances in a Court and for their safe custody pending such production. (2) The provisions of relevant Sections of the Bhartiya Nagrik Suraksha Sanhita, 2023, relating to search and seizure shall, so far as may be, apply to searches and seizures under this clause.
Drawback: by bringing all the dealers under control it may cause day to day business and affairs of the small traders. Any of the controlling authorities, even those who don’t have any knowledge, may harass the traders / dealers.
Suggestions: The word Dealer needs to be deleted or earlier provisions may be continued as it is.
The other Suggestions was also emphasised:
Why raw sugar should be introduced in the domestic market
Introducing raw sugar into the domestic market can offer numerous financial, sustainability, and consumer-related benefits for the sugar industry. Below are the key reasons for promoting raw sugar domestically:
- Increased Revenue
- Higher Prices:
Raw sugar generally commands higher market prices compared to refined sugar. This can enhance overall revenue for sugar mills and refineries.
- Market Diversification:
By offering both raw and refined sugar, producers can tap into different market segments, reducing reliance on a single product and spreading risk.
- Cost Efficiency
- Reduced Export Costs:
- Selling raw sugar domestically eliminates the need for export-related expenses, such as transportation, tariffs, and international logistics, making it a more cost-effective option.
- Local Processing:
Processing raw sugar locally is more efficient and cost-effective than exporting it for refining elsewhere, which further boosts the economic feasibility for local sugar producers.
- Sustainability
- Energy Savings:
Producing raw sugar requires significantly less energy than refining sugar, leading to lower energy consumption and a reduced carbon footprint for the sugar industry. - Waste Reduction:
The by-products of raw sugar production, such as molasses, can be repurposed in other industries, promoting a circular economy and reducing overall waste.
- Support for Farmers
- Fair and Remunerative Price (FRP):
- Ensuring that farmers receive a fair price for their sugarcane improves their financial stability. A stable income also promotes sustainable farming practices.
- Increased Demand:
- An increase in demand for raw sugar could lead to more sugarcane cultivation, offering economic benefits and enhanced livelihoods for farmers.
- Regulatory Benefits
- Government Support:
Government oversight, as seen in recent sugar policies, can provide stability in the market, ensuring fair practices, and protecting the interests of both producers and consumers. - Price Regulation:
The government’s role in regulating raw sugar prices can safeguard the industry from market volatility, helping producers maintain sustainable pricing models in the long run.
- Consumer Benefits
- Healthier Options:
Raw sugar retains some natural minerals and has a lower glycemic index compared to refined sugar, offering a slightly healthier option for consumers. - Product Variety:
The introduction of raw sugar in the domestic market adds variety to consumer choices, potentially driving up demand and increasing sugar consumption overall.
It is humbly prayed that if the Indian Government takes decision to reintroduce raw sugar into the domestic market after 60 years represents a pivotal policy shift aimed at rejuvenating the sugar industry. This move not only promises to enhance revenue for producers and support sustainable practices but also offers economic benefits for farmers, producers, and consumers alike.
By embracing technological advancements and regulatory changes, the industry can look forward to a more diversified and resilient future. This policy aligns with the broader goals of economic growth and sustainability, setting the stage for a more robust and dynamic sugar sector in India.
Before we close,
Here are some potential negative consequences of continuing with the new Draft Sugar (Control) Order 2024 for various stakeholders:
- For Sugar Millers :
Increased Compliance Burden : The new order might impose stricter regulations, such as production controls, packaging requirements (e.g., jute packaging), and reporting obligations, leading to increased costs and administrative workload.
Profit Margin Pressure : If price controls are enforced, millers may find it difficult to adjust to rising production costs, leading to reduced profitability and potential operational inefficiencies.
Stifled Innovation : The introduction of stringent regulations on production methods and by-product management could limit innovation and flexibility in adopting new technologies or more efficient processes.
Overregulation of By-products : Regulations on the management of by-products like molasses, ethanol, or bagasse might restrict millers’ ability to diversify revenue streams and adapt to new market opportunities.
(Suggestion- It is suggested that instead of regulating sugar price by declaring maximum selling price be restricted to Minimum Selling Price (MSP) for sugar. )
- For Transporters :
Logistical Challenges : New packaging and handling requirements (e.g., mandatory jute bags) may lead to inefficiencies in transportation, increasing costs and delays.
Increased Regulatory Scrutiny : If the order extends oversight to transporters, they may be subject to inspections, seizures, or penalties, leading to disruptions in the supply chain and added operational complexity.
Higher Operational Costs : Compliance with specific packaging and quality control standards could lead to higher transportation costs, which may ultimately be passed on to other stakeholders in the supply chain.
- For Traders :
Price Control Impact : Traders could suffer from reduced margins if price ceilings are enforced on their sales, limiting their ability to adapt to market conditions and reducing profitability.
Overbearing Regulations : Imposing the same production-based regulations on traders as millers, such as quality control and by-product management, may create unnecessary complications, leading to operational inefficiencies.
Digitalization Challenges : For small traders, especially in rural areas, mandatory digital record-keeping could be a significant financial and technical challenge, potentially pushing smaller players out of the market.
Reduced Flexibility : Traders may face challenges in managing inventory if restrictive packaging and handling rules, such as those concerning jute bags, are applied universally, limiting their ability to operate efficiently.
(Suggestion- It is suggested that instead of regulating sugar price by declaring maximum selling price be restricted to Minimum Selling Price (MSP) for sugar. )
- For Consumers :
Potential Price Increases : The added compliance costs for millers, transporters, and traders may be passed on to consumers, leading to higher sugar prices, especially in a controlled market with limited flexibility.
Reduced Market Competition : Smaller traders and distributors may exit the market due to compliance pressures, leading to reduced competition, which could negatively affect consumer choices and lead to monopolistic pricing practices.
Supply Chain Disruptions : Overregulation and logistical challenges could lead to delays in the sugar supply chain, resulting in potential shortages or inconsistent availability, further pushing up prices in local markets.
Limited Consumer Protections : If the focus of the regulations is disproportionately on millers and traders, consumers may not see a corresponding benefit in terms of improved product quality or transparency.
Overall, the Draft Sugar (Control) Order 2024 may introduce significant burdens on stakeholders across the sugar supply chain, potentially leading to inefficiencies, increased costs, and negative outcomes for both businesses and consumers if not properly balanced.
Closing remarks
The sugar industry is a crucial part of India’s agri-economy, serving as a key energy source for the population. For farmers, it plays an essential role in their livelihoods. Globally, India is the highest producer of sugar, balancing sugar trade and dynamics.
As the industry transformed from being an ‘anna datta’ to ‘urja datta’, the regulations and policies guiding the industry assume far greater significance.
When the Government initiated reviewing the Sugar (Control) Order, 1966, and asked the sugar industry and other key stakeholders to give their suggestions and recommendations to arrive at a conducive point of reference to draw the final Sugar (Control) Order, 2024, we at ChiniMandi felt that the process of arriving at a consensus should be prolific, convenient and comprehensive.
We are grateful for the guidance and support provided by industry veterans in this mission. We acknowledge the efforts and time given by Mr. M. G. Joshi (MD – Jawahar SSSK), Mr. P. G. Medhe (Advisor – Chh. Rajaram SSK), Mr. M. V. Patil (MD – Datta SSSK), Mr. Vijay Autade (Ex. MD – Chh. Shahu SSK), Mr. Jitu K. Shah (JK Sugars), Mr. Mohan Narang (KS Commodities)
What we present today is the fruit of endless sessions of discussions, brainstorming and insights that were undertaken to ensure that the interests of the sugar industry and allied industry, cane farmers, consumers and other stakeholders are safeguarded, and it provides a bedrock on which the foundation of a sustainable, progressive and competitive sugar industry is built.
We are grateful to Shri Sanjeev Chopra ji (Secretary, DFPD), Shri Ashwini Srivastav ji (Joint Secretary – Sugar, DFPD), Shri Jaivir Singh ji (Under Secretary to the GOI, DFPD), Shri Sangeet Singla ji (Chief Director – Sugar, DFPD) and Department of Food and Public Distribution for providing us with the opportunity to play a part in this great task and make it a democratic process for the industry to be heard and make key suggestions.
