Globally, India is the second largest sugar producing and the largest sugar consuming country in the world. The production of sugar is spread across the country. Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu, Gujarat and Andhra Pradesh are the major sugar producing states in country. The production of sugar in India depends on various factors like monsoon, sugarcane acreage, pricing of sugarcane, yield, recovery rate etc. Hence, the sugar industry in India is supply-driven and cyclical in nature. The cyclicality of the industry is attributable to the regulated nature of the industry. The sugar industry in India was regulated right from cane procurement to cane pricing, allocation of cane area to the distribution of sugar in the market. The heavy regulations in the sector had impacted the demand-supply scenario. Sensing this problem, the regulations have been progressively eased. The government in April 2013, partially de-controlled the sugar industry by abolishing the levy quota mechanism and the release mechanism. Partial de-control will help the sugar companies to earn additional revenue from the sugar sold in the open market.
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