The Centre aims to set aside a certain quantity of sugar as strategic reserve to plug occasional shortages.
The food ministry hopes to carve out the limited stock because it expects normal availability of sugar in 2009-10 in spite of a production shortfall of 7 million tonnes.
The deficit will be met largely through imports totalling 5 million tonnes as well as last-year’s carry-over stock of 2.4 million tonnes.
India is the world’s largest consumer of sugar. The country uses 2 million tonnes of the sweetener a month. Demand in 2009-10 is expected to be nearly 23 million tonnes.
Although the country has huge reserves of foodgrains, much of India’s sugar buffer stock of 5 million tonnes from the 2007-08 sugar season stands liquidated.
Sugar is a sensitive commodity because it is widely consumed, and price swings have the potential to trigger political upheavals.
The price of sugar has risen sharply since the beginning of 2009 because of a bad cane crop, causing domestic output to fall short of the demand.