Recent interventions by Government will spur further growth in Indian sugar industry
Mumbai, India – May 21, 2014 - One of the oldest commodities in the world, the origins of sugar can be traced back to 4th century AD in India and China. Previously, only manufactured from sugarcane, the countries lost their initiatives to other European, Oceanic and American countries as they won over with their newer technologies in manufacturing sugar from beet. Despite the competitive advantages, India still remains a dominant player in the production of sugar according to sugar industry reports. Moreover, considering the growing sugar production and recent initiatives taken for the structural change, India is all set to continue with its domination at the global level.
Furthermore, with the recent undertakings by the government to abolish outdated controls and introduce improved market freedom, India sugar industry is forecasted to grow by 4% annually. Recently the government has removed the quarterly release mechanism that will relief this segment which currently bears more than USD 1.95 billion as arrears. As of now, there is partial decontrol of the sugar sector as of the current season which will moreover create a positive investment opportunity for sugar companies. The investors are finding this as an added advantage, as this will give them greater freedom in the domestic market, and also help them export sugar which will improve bottom lines and operating margins.
However, despite these opportunities, there are still some structural challenges that have been overlooked and these include the value chain of key raw materials, especially the obtaining price of sugarcane among others.
Despite the recent sugar surplus last year, and forecasted surplus that was expected to affect the market segment negatively, South India’s mills estimated profitability in the upcoming year. However, as per the India sugar industry report the UP based peers will continue to register loses in this segment.
Evaluating all these aspects, the Indian sugar production is forecasted to increase to 29.8million metric tons due to rise in sugarcane production. The surplus sugar production and demand for export will further see a growth of the segment and India dominating the world as net exporter of sugar.
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