INDIA’S DE-REGULATION WHAT’S NEW?

Agenda•Overview of Indian Sugar Industry

•2013-14 Scenario

•Consumption and Production

•Cyclicality of Sugar

•Sugar Import / Export

•Ethanol - By Sugar Industry

•Regulations on Indian Sugar Industry

•Expected Benefits of Deregulation

•Outlook for 2014-15

INDIAN SUGAR INDUSTRY - OVERVIEW !

• Located in rural heartland, directly contributes to rural economic development.

• Largest consumer and second largest producer of sugar in the world.

• 15% share in the world sugar production.

• Around 5 million hectares of land is used for sugarcane cultivation with an average farm size of about 1 to 2 hectares.

• 50* million farmers, their dependents and a large mass of agricultural labourers are involved in sugarcane cultivation.

• About 0.5 million skilled & semi-skilled workers, mostly from the rural areas are engaged in the sugar industry. Thus over 7.5 % of the rural population is directly or indirectly dependent on sugar industry.

• Contribution of sugar industry to Indian economy is enormous with its total turnover of $13.55 billion US Dollars per year.

• There are 664 sugar factories -widely dispersed over UP, Maharashtra and other states with average crushing capacity of about 3500 TCD.

• About 38 per cent of sugar production comes under cooperative sector.

• Continuos surplus sugar production for last three years

2013-14 Scenario • Estimated production of 24 million tones.

• Opening stock of 9.2 million tones.

• Surplus of 9.7 million tones of sugar after meeting the domestic demand of 23.5 million tones.

• Exported 1.8 million tones of sugar till April 2014.

• Expected net exportable surplus of 4 million tones for 2014-15.

PRODUCTION -CONSUMPTION OF SUGAR OVER LAST FEW YEARS

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14*

Lakh /one thousand hundread tonnes0.00 75.00 150.00 225.00 300.00

235.0

226.0

220.0

207.7

213.3

229.1

219.0

199.0

185.0

250.0

251.4

263.4

243.9

189.1

145.4

263.6

283.7

192.7

Production (Lakh tonnes) Consumption(Lakh tonnes)

Cyclicality of Sugar• Indian sugar production follows a

5 year cycle.

• 2 to 3 year of high production; followed by 2 to 3 years of low production; and vice versa.

• Consumption growth —> Linear.

• Results in huge swings in the sugar equation

Import and Export

• 15 % rate of duty on import.

• India imported around 0.35 million tones raw sugar in 2014

• India has exported around 1.8 million tones in 2014

Sugar trade for last few years

Milli

on T

onne

0

1.25

2.5

3.75

5

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

00

4.08

2.4

00

3.5

2.6

0.240.17

4.96

1.73

Export Import