Food, PDS and civil supplies minister Sharad Pawar made a big pitch to Prime Minister Manmohan Singh here on Thursday on sugar sector decontrol. He placed a plan for the Centre to buy sugar at prevailing market price for the public distribution system (PDS) directly from the open market in the new sugar year starting October.

If this goes through in the coming season, sectoral decontrol would be attained after 15 years of waiting for the right environment. Past attempts to remove government control on the sweetener have so far failed because of acute concerns over price fluctuations and food inflation.

But the chances of higher output in the next year is giving room for the government to consider the major change.

While pushing the case for decontrol, Mr Pawar is understood to have made a “detailed presentation” to the prime minister on the advantages of sugar sector decontrol to the retail consumers and to the cane farmers.

Farmers will be able to sell sugarcane to the mill that pays the highest and not stick to a specific cane area under the decontrol scenario, Mr Pawar said. Mills had asked that the designated cane area for each sugar mill not be disturbed under decontrol. He is also believed to have maintained that sugar prices would become less volatile after decontrol.

Crucially, Mr Pawar had made it clear that the Centre would continue to fix the fair and remunerative price (FRP) for sugar cane even after decontrol.

According to the industry, the big sugar output projections made for 2010-11 is the “ideal environment” for pricing and marketing decontrol, a move that would allow sugar price to be dictated entirely by the market. While the government has pegged sugar output for the coming year at 23mt, sugar industry, including global analyst Kingsman SA, has pegged production at anywhere between 23mt and 28mt.

At present, mills are obliged to sell 20% of their produce to the government for distribution through PDS. Purchase of sugar for PDS from the open market by the Centre would mean that sugar mills will no longer be directed each month by the government’s release system. In short, a cornerstone of sectoral deregulation would be conclusively laid by the government.