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DJ UPDATE:India To Amend Law On Sugar Cane Pricing After Protests81 days ago
(Adds quote from opposition party, details of the proposed amendment in sugar cane pricing policy, and background)
NEW DELHI (Dow Jones)--India's federal government agreed on Friday to amend a proposed new law on sugar cane pricing, which has sparked protests by farmers and stalled proceedings in parliament.
On Thursday, thousands of farmers from Uttar Pradesh, India's second largest sugar-producing state, staged a protest in New Delhi backed by opposition party members.
They are demanding the state-set price of sugar cane be increased to around INR215/100 kilograms from about INR108/100 kg, in line with a jump in local prices of refined sugar. The proposed law would increase prices to INR130/100 kg.
The protests are likely to hit sugar production in India, the world's largest sugar consumer, which is already facing a local shortage, and may lead to higher imports of the sweetener.
The Indian government sets the price of sugar cane but provincial governments issue what is called a state-advised price, which is usually higher than the federal rate.
The proposed law would have made individual states pay the difference between the state-advised price and the federal price, which was earlier paid by mill owners.
Federal Parliamentary Affairs Minister Pawan Kumar Bansal told reporters the government decided to scrap the clause requiring individual states pay the difference between the state-advised price and the federal price.
"This provision has given rise to certain misgivings. In order to remove any misgivings, it is proposed to delete this clause altogether," he said in a statement.
It was not immediately clear whether the federal rate for sugar cane would also be increased further under the proposed law in view of the farmers' protests.
Gurudas Dasgupta, a leader of the Communist Party of India (M), said the government had agreed to amend the law after a meeting with members of various political parties.
"We are satisfied with this understanding worked out with the government," said Sushma Swaraj, representative of the main opposition, Bharatiya Janata Party.
Global sugar prices have risen by 70% since February, when India started importing the sweetener, while local sugar prices have risen 73% since Apr. 1 to INR3,600/100 kg.
India is the world's largest sugar consumer, with an estimated annual demand of 22 million-23 million metric tons; output in the marketing year ended Sept. 30 totaled 14.7 million tons, forcing the government to relax import norms.
-By New Delhi bureau, Dow Jones Newswires; 91-11-43563335; biman.mukherji@dowjones.com
(END) Dow Jones Newswires
November 20, 2009 07:32 ET (12:32 GMT)
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