CCEA decontrols sugar; companies to save Rs 3,000cr

The Cabinet Committee on Economic Affairs cleared partial decontrol of sugar by abolishing the requirement for private sugar mills to sell a specified amount of sugar to the government at concessional rates. Given the current political situation, with elections being a few months away, this is the maximum the government could have done, reports CNBC-TV18's Siddharth Zarabi.

Also read: 7 things you need to know about sugar decontrol

Purely from a consumer point of view, what this means is that the sugar industry will be able to sell large quantities on a commercial basis. This will be along with the restriction that had been imposed all these years of levy sugar.

This decision could lead to a surge as far as the sugar industry growth is concerned. We could perhaps see a reflection of this in the sugar industry stocks tomorrow once trade opens. However, the ballpark figure at this stage suggest atleast a 20-25 percent growth.

The removal of the levy sugar burden is expected to save around Rs 3,000 crore. The other important decision taken is the abolition of the regulated release mechanism. This has been delayed for long and will reduce inventories. There was a lot of pressure on this matter, but the government has gone ahead and bitten the bullet on this crucial decision.

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