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By:

Rajendra Joshi

3 December 2024 at 9:20:26 am

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has...

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has raised serious questions about the role of intermediaries and the effectiveness of the Centre’s efforts to contain sugar prices. The margins available to traders and intermediaries have reportedly crossed 20 per cent, leaving sugar millers perplexed. At a time when both sugarcane growers and mill operators are under financial pressure, the trading chain appears to be benefiting disproportionately. The Centre must examine this growing disparity and take corrective measures to prevent speculative profiteering. Retail sugar prices began rising sharply in August, touching nearly Rs 70 per kg in some markets. The escalation added to inflationary pressures and caused concern among consumers, particularly ahead of the festive season. In response, the Centre introduced a series of measures to improve domestic availability and moderate prices. These included permitting duty-free sugar imports, initially until October 31, a deadline subsequently extended to December 31. The government also directed sugar mills to commence the crushing season from October 15 and tightened monitoring of sugar stocks. In another significant intervention, it modified the ethanol policy, restricting the diversion of sugarcane juice, sugar syrup and B-heavy molasses for ethanol production. Following these measures, sugar mills began witnessing a decline in the prices offered through their sale tenders. Recent transactions have fetched between Rs 4,600 and Rs 4,800 per quintal. Going by the conventional relationship between ex-mill prices and retail rates, sugar should ideally have been available to consumers at less than ₹50 per kg. However, retail prices continue to hover around Rs 58 per kg, pointing to a substantial disconnect between the mill gate and the consumer market. Traditionally, sugar retailing operated on relatively thin margins. Since sugar is an essential commodity, retailers often treated it as a low-margin product to attract customers who would subsequently purchase other household provisions. The margin was sometimes informally equated with the resale value of the empty 50-kg jute bags in which sugar was supplied. This was considered a nominal return for retailers. That traditional pricing mechanism, however, appears to have undergone a significant change. The widening gap between mill-level tender prices and retail rates has created considerable scope for intermediaries to extract higher margins. The critical question is whether the additional amount paid by consumers is reaching the sugar mills or remaining within the trading chain. The issue assumes particular significance in Maharashtra, where the sugarcane pricing dispute has intensified ahead of the new crushing season. Farmers’ organisations have been demanding a minimum price of Rs 5,500 per tonne for sugarcane. Millers, meanwhile, are preparing to agitate for a revision in the Fair and Remunerative Price (FRP) framework and the restoration of a more supportive ethanol policy. The Swabhimani Shetkari Sanghatana, led by Raju Shetti, has taken a firm position that sugar mills should not be allowed to commence operations until farmers receive an acceptable price for their cane. Shetti has also drawn the state government’s attention to the unusually high retail prices of sugar, questioning why consumers continue to pay more even as mills are forced to sell at relatively lower rates. The Centre’s sudden changes to the ethanol policy have further complicated the industry’s financial position. Ethanol production had emerged as an important revenue stream for sugar mills, enabling them to diversify operations, improve cash flows and enhance their capacity to pay farmers. Restrictions on the diversion of sugarcane-based raw materials have weakened this support at a critical juncture. The resulting contradiction is difficult to ignore: farmers are demanding better cane prices, millers are struggling with shrinking realisations and policy uncertainty, while intermediaries appear to be benefiting from the gap between wholesale and retail prices. The government cannot address the sugar crisis merely by regulating mill stocks, imports and ethanol diversion. It must also examine the entire supply chain, identify where the widening margins are accruing and ensure that the benefits of market interventions reach both sugarcane growers and consumers. With nearly Rs 2 lakh crore riding on the sugar economy, allowing intermediaries to thrive while the industry’s primary stakeholders struggle would be a serious policy failure.

Bridging the Chasm: India and the Taliban’s Unexpected Detente

Jan 15, 2025
4 min read
Unexpected Detente

In the labyrinth of global politics, a famous quote attributed to William Clay, the long-serving first African American representative from Missouri, eternally resonates: “This is quite a game, politics. There are no permanent enemies, and no permanent friends, only permanent interests.” India’s evolving relationship with Afghanistan’s Taliban-led government epitomizes this axiom, as geopolitical realities compel a nuanced recalibration of ties. This diplomatic choreography, fraught with challenges, highlights India’s commitment to its strategic interests in Afghanistan despite the shifting sands of regional geopolitics.


India and Afghanistan’s ties have deep historical roots, stretching back centuries through cultural exchanges along the Silk Road. In modern times, these bonds were reinvigorated during the presidency of Hamid Karzai when India emerged as one of Afghanistan’s most steadfast allies. India poured nearly $10 billion into Afghanistan, building its parliament, establishing educational and healthcare infrastructure, and funding critical power and transportation projects — symbols of enduring camaraderie. Afghanistan’s inclusion in the South Asian Association for Regional Cooperation (SAARC) bore New Delhi’s diplomatic imprint, further cementing its role as a partner in progress.


Yet, geopolitical turmoil has often tested these bonds. The Soviet occupation (1979–1989), the U.S.-led invasion in 2001, and the Taliban’s resurgence in 2021 have repeatedly thrown Afghanistan into turmoil. Through these upheavals, India maintained a pragmatic approach, engaging with various regimes to protect its interests. The chaotic U.S. withdrawal in August 2021 created a power vacuum, enabling China and Pakistan to increase their influence—a development that New Delhi could ill afford to ignore.


Strategic Recalibration

India’s cautious engagement with the Taliban underscores its realpolitik. Despite being excluded from U.S.-brokered mediation talks, India quietly cultivated contacts with Taliban officials. This persistence paid off when Indian Foreign Secretary Vikram Misri recently met Afghan Foreign Minister Amir Khan Muttaqi. The discussions indicated a mutual willingness to strengthen ties, particularly on issues of security and development.


Afghanistan’s assurance that its soil would not be used for anti-India activities was a key outcome of these talks. This commitment is critical for India, given the long-standing nexus between the Taliban and Pakistan’s Inter-Services Intelligence (ISI). With tensions simmering between Afghanistan and Pakistan over border clashes, India finds a window to counter Islamabad’s influence while reinforcing its own security imperatives, particularly concerning Jammu and Kashmir.


Beyond security, Afghanistan’s untapped natural resources represent a strategic prize. China’s aggressive entry into the Afghan landscape poses a significant challenge. Through its Belt and Road Initiative, Beijing seeks to dominate Afghanistan’s mineral wealth, from rare earths to lithium—resources crucial for the global energy transition. India must bolster its economic engagement to counterbalance China’s ambitions.


New Delhi’s infrastructure projects in Afghanistan are not merely altruistic; they are vital to reducing Kabul’s dependence on Pakistan for trade access. By developing alternative routes to Central Asia, India envisions a corridor of connectivity that bypasses its adversaries while opening new energy markets. However, the Taliban’s outreach to other regional powers, including Russia and Iran, complicates this calculus, demanding deft diplomacy from New Delhi.


Soft Power

India’s influence in Afghanistan extends beyond bricks and mortar. Through education, healthcare, and cultural diplomacy, India has built reservoirs of goodwill. Thousands of Afghan students have studied in Indian universities, while patients from Afghanistan frequently seek medical treatment in Indian hospitals. Bollywood, too, has left an indelible mark, creating a cultural bridge that fosters mutual affinity.


This soft power has given India an edge over Western nations, whose presence in Afghanistan is often viewed with suspicion. As security dynamics evolve, India must leverage this goodwill to maintain its foothold and counter growing Chinese and Pakistani influence.


Afghanistan’s turbulent past offers cautionary tales. The Soviet Union’s misadventures and America’s hasty exit underscore the perils of overreach and underestimation. India must tread carefully, avoiding the mistakes of its predecessors while charting a course that prioritizes Afghan stability and self-reliance.


As ancient Indian strategist Chanakya wisely noted: “Learn from the mistakes of others. You can’t live long enough to make them all yourselves.” This principle should guide India’s approach, emphasizing patience, pragmatism, and partnerships.


India’s engagement with Afghanistan is not merely about bilateral ties but a linchpin for regional stability. A peaceful Afghanistan can serve as a bulwark against terrorism, a hub for trade, and a bridge to Central Asia. Conversely, an unstable Afghanistan risks becoming a breeding ground for extremism, undermining security across South Asia.


The stakes are high, and the path ahead is fraught with challenges. But India’s commitment to Afghanistan, rooted in shared history and strategic necessity, remains unwavering. As New Delhi deepens its engagement with Kabul, it must navigate this complex relationship with the deftness of a chess master, always keeping its long-term interests in sight.


In the grand game of politics, there are no permanent victories, only enduring strategies. India’s relationship with Afghanistan is a microcosm of its broader foreign policy challenges—a balancing act between ideals and interests, between history and modernity. In the ever-shifting sands of Afghanistan, India’s steady and pragmatic approach may well be its most potent weapon.


(The author is a retired Indian Naval Aviation Officer and a geo-political analyst. Views Personal.)

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