The committee that studied restructuring of the sugar industry in its report presented Thursday to Agriculture and Food Minister Sharad Pawar recommended the abolition of restrictions on mills' sale in open market, known as free sale sugar quota system, from Oct 1, 2005.

To protect the interests of the farmers, the committee headed by S.K. Tuteja, secretary of the Department of Food and Public Distribution, has proposed retaining the statutory minimum price (SMP) along with benefits of price sharing with sugarcane farmers under the Sugarcane Control Order 1978.

Simultaneously, the committee set up in March to suggest ways to revitalise the sugar industry has favoured retaining the present system of collecting 10 percent of mills' production mills as levy sugar.

To help revive the sick and ailing mills, the expert panel has recommended measures to soften the burden on sugar mills from loans availed till Mar 31, 2004.

These "might be deferred or rescheduled to long-term loans payable in 10 to 12 years besides giving a moratorium of both interest and principal for three years starting from 2004-05," the committee has suggested.

"The exact terms of the package might be worked out by NABARD and Reserve Bank of India in consultation with state governments on a case-to-case basis taking into consideration the debt service obligations and the capacity of the mills to repay," the report states.

The committee has also recommended allowing state governments of drought- and flood-affected states to go for additional open market borrowings to help sugar factories to meet the fixed costs and 75 percent entitled wages (of last year and the next two years).

This is expected to help mills that were operational in 2002-03 sugar season but may have to remain closed in 2004-05 and 2005-06 seasons due to non-availability of sugarcane.

Due to erratic rainfall, the sugarcane production this year is expected to be much lower than expected. India is one of the largest producer and consumer of sugar.

The panel has also mooted taking up all eligible cases for restructuring under the Corporate Debt Restructuring scheme.  

The sugar factories in Uttar Pradesh have been urged to enter into a direct contract with sugarcane growers and execute tripartite agreements with banks and farmers for procuring sugarcane and to facilitate use of Kisan Credit Cards. 

The committee has also recommended a major role for the Indian Sugar Exim Corporation (ISEC) for regulating the availability of sugar in the country by playing an important role both for import and export of sugar.

--Indo-Asian News Service