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Sugar futures rise after government removes curbs

NEW DELHI (Reuters) - Indian sugar futures rose on Friday after the government removed curbs on the tightly regulated sector months after Prime Minister Manmohan Singh's top economic adviser recommended reforms.

The government will no longer force mills to sell sugar to the government at a discount and will not limit the amount they can sell in the open market, Food Minister K.V. Thomas said on Thursday after the cabinet agreed the changes.

"Sugar futures have gone up because of the government decision last night but going forward I see prices coming down as we are in a surplus year when exports have come to a halt because of lower global prices," said Praful Vithalani, who owns Indian brokerage Jagjivan Keshavaji.

The most-active sugar contract for May delivery on the National Commodity and Derivatives Exchange was 0.17 percent up at 3,013 rupees per 100 kg at 0800 GMT.

Shares of India's sugar producers, including Shree Renuka Sugars Ltd(SRES.NS), surged on Friday after the government took steps to remove curbs on domestic sugar supplies.

Sugar mills in India produced 23 million tonnes of the sweetener in the first six months of the current crop year, about 2 percent less than a year earlier.

India is likely to churn out 24.6 million tonnes of sugar in 2012/13, an industry body has said, against an annual demand of about 22 million tonnes.

Spot sugar rose 24 rupees to 3,100 rupees per 100 kg in the Kolhapur market in top-producing Maharashtra.

(Reporting by Mayank Bhardwaj; Editing by Jijo Jacob)