The Indian government is considering dual pricing of sugar to boost the income of farmers and improve the cash flow of sugar mills at a time there are surplus sugar stocks.
The government is likely to mandate higher pricing for industrial users — like bakers, beverage makers and makers of sweets — who comprise 65-70% of users, according to Chinimandi.com.
Household users who comprise the rest will be charged a lower price.
The government has been trying to provide relief to the sector by hiking the minimum support price for farmers, providing soft loans to the industry and assistance for exports.
However, early this month the government said it won’t be extending a sugar export subsidy, without which shipments to international markets will become tough as domestic prices are higher than global rates.
It s a dilemma for the sector as there is currently a surplus of 7 million tons of sugar in the country.
In order to provide relief to the sector, the governent is therefore thinkong of allowing them to charge a higher price to industrial users.
India is the world’s second-largest producer of sugar. The domestic industry has warned that the untenable situation in the sector may have a dire impact that is likely to be felt for years.