Fortune smiles on India's sugar sector

These are heady days for the Indian sugar sector. Production in 2005/06 has rebounded powerfully following two seasons of low output. Attractive margins for sugar producers, robust growth in domestic sugar consumption and promising market developments for ethanol and cogeneration have combined to generate a wave of investment in the sector. India's sugar sector is clearly on a roll - yet it was not so long ago that the industry was in crisis. This article briefly explores how the sector's fortunes have changed, and examines some key factors that will influence its development and profitability in the years to come. Among other issues, consideration is given to the impact of some fairly radical ideas regarding sugar prices and market management that have been recently proposed by the government. In addition, given the industry's expectations for production and exports, the general outlook for world market sugar prices is also briefly examined.