Sugar industry divided over need to import the sweetener.

PUNE: India's sugar industry is divided over the need to import the sweetener amid rising prices, with a section alleging that a private industry body is deliberately trying to give a higher sugar production estimate to prevent imports. 

A section of the industry alleged that the Indian Sugar Mills Association (ISMA) is playing a short-sighted game hoping that the government will not import. "What if the sugar prices shoot up in the middle of the UP elections," said an industry veteran, who did not want to be identified. 

There are wide differences about the estimate of sugar production in the country. While the Indian government has estimated production of 22.5 million tonnes, ISMA estimated it to be 23.4 million tonnes, which it will review on January 25. 

Narendra Murkumbi, vice chairman and managing director of Shree Renuka SugarsBSE 2.12 %, said: "I think the estimate of 22.5 million tonnes by the government and 23.4 million tonne by ISMA needs to be urgently revised. In reality, actual sugar production is much worse than expected as bulk of the damage has been caused in Maharashtra and Karnataka due to last year's drought." 

Maharashtra has produced 2.74 million tonnes of sugar up to January 6 and 36 mills have already closed operations. "We are very sure that the production in Maharashtra is unlikely to be more than 5 million tonnes, while that in Karnataka will be less than 2.5 million tonnes. The total fall in sugar production in these two states will be will be 5 million tonnes," said Murkumbi. "If the sugar production is more than 22.5 million tonnes, we will not need any imports. But the reality looks differen .. 

Maharashtra is the top sugar producer while Karnataka is the third largest, with Uttar Pradesh being the state between them. 

Last year, Maharashtra produced 8.5 million tonnes and Karnataka, 4.1 million tonnes. Based on Murkumbi’s estimate for this year for the two states, the country's sugar production could miss the 22.5 million tonnes forecast. 

However, ISMA, which represents the private sugar industry, firmly believes that the country will not need imports. "Even if the sugar production of Maharashtra and Karnataka falls, the country will definitely have an opening balance of about 2.5 months for next year due to good production in UP," said Saritha Reddy, president of the association. 

She said even if the retail price hits Rs 46-47 a kg, it should not be considered an alarming situation as the cost of sugar production has increased to Rs 36.50 a kg due to increase in cane price in northern India and lower capacity utilisation in the South due to drought.