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MUMBAI, July 24 (Reuters) - India will build a buffer stock of 4 million tonnes of sugar in an attempt to cut a surplus of the sweetener and support local prices that are under pressure due to record production, the government said in a statement on Wednesday.
The world’s second biggest sugar producer will spend 16.74 billion rupees ($242.68 million) on buffer stocks in the year starting Aug. 1, it said.
India had a buffer stock of 3 million tonnes of sugar in the current year.
Years of bumper cane harvests and record sugar production have hammered sugar prices in India, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
India also decided to keep minimum cane buying price steady at 275 rupees per 100 kg for the next marketing season starting from Oct. 1, the government said.
The south Asian country is expected to start the new season with inventory of more than 14.7 million tonnes and could produce another 28.2 million tonnes in the season, against local demand of around 26 million tonnes, the Indian Sugar Mills Association (ISMA) estimates.
$1 = 68.9810 Indian rupees Reporting by Rajendra Jadhav; Editing by Shounak Dasgupta