Sugar sector has welcomed the central government's decision to hike the buffer stock to 5 million tonnes.

Sugar industry, which is under pressure due to a bumper stock, wanted more measures to correct the demand-supply mismatch. The Centre had approved the financing of an additional 30 lakh (3 million) tonnes sugar buffer over and above the 20 lakh tonne created earlier in April.

The decision, taken at a meeting of the Cabinet Committee on Economic Affairs, would involve an outgo of roughly Rs 570 crore from the Sugar Development Fund.

The step is in right direction. But a lot more needs to be done to correct the imbalance between supply and demand," Indian Sugar Mills Association said.

The government should take additional measures such as creating infrastructure at ports, which would get affected during the monsoon, to maximise exports, the association said.

"It is a timely step. We welcome the decision as it would give some relief to the sugar industry. This will arrest the decline in sugar prices," Maharashtra State Cooperative Sugar Factories Federation said in Mumbai.

Maharashtra's sugar production for the 2006-07 season ending September is the highest in the country, with an estimated output of 92-94 lakh (9.2-9.4 million) tonnes.