The decision would give sugar companies the right to sell their product in open market and help them save around Rs 3,000 crore.

Union minister of state for civil supplies KV Thomas told reporters that decontrolling sugar was part of Rangarajan Committee's Report for larger economic reforms. "It was a demand by industries and farmers as well," he said.

Meanwhile, the minister added that the government would continue to sell sugar at subsidised rate from PDS shops and this decision would not lead to rise in sugar prices. While the levy mechanism is being done away with, the state governments will be needed to purchase their requirements for PDS from the open market and the Centre will reimburse them the difference.