Maharashtra likely to abolish 25-km limit between two sugar units

State govt thinks the move if implemented will promote competition, entry of more private sector mills and spur efficiency

In a bid to bring competition and thereby efficiency in the sugar sector, the Bharatiya Janata Party (BJP) government in Maharashtra plans to do away with the 25-km mandatory aerial distance required to be kept between the two sugar factories.

Cooperation minister Chandrakant Patil, who comes from the sugarcane-rich Kolhapur district in western Maharashtra, told Business Standard: “The proposed relaxation in distance between the two sugar factories will spur competition and also promote the entry of the private sector in the sugar industry. Further, this will enable sugar factories to become professional and thereby pay the fair and remunerative price (FRP), which is mandatory, to sugarcane growers. The state Cabinet will take a final decision in this regard.”

Patil added the proposal was at a preliminary stage and would come into effect only after state Cabinet's approval.

The previous Congress-Nationalist Congress Party government had increased the mandatory minimum aerial distance from 15 km to 25 km to avoid poaching and to help secure sufficient cane area for individual factories.

Patil's move has evoked strong reactions from the state sugar sector comprising 179 registered cooperative and 65 private factories. Nearly 200 proposals from the private sector to establish sugar unit are reportedly pending with the state Sugar Commissionerate for clearance. Maharashtra contributes one-third of the total sugar output in India.

The Maharashtra State Co-Operative Sugar Factories Federation has appealed to the government to hold consultations before taking a formal decision in this regard.

Former cooperation minister Harshvardhan Patil warned that the state sugar sector would completely collapse with the removal of mandatory requirement of 25-km aerial distance. “This will lead to an unhealthy competition. Already, sugarcane needs five times more water compared to other crops.

A sugar mill has to run for at least 160 days to be economically viable. More than 50 factories are facing sugarcane shortage and they are unable to function with full capacity. If the increase in sugar mill numbers puts pressure on cane availability, then the efficiency of the mills will be affected. Maharashtra may go the Uttar Pradesh way. If private mills will decide not to start crushing on the lines of Uttar Pradesh, it will adversely impact cane growers, industry and the state as a whole.” He suggested the government discuss the issue with the stake holders and then take a final call.

Veteran cooperative leader and former minister Shankarrao Kolhe cautioned the government that the state sugar industry was passing through a major crisis. ''The mismatch between the cost of production and the sugar price is increasing day by day. In some districts, sugarcane production has increased while in others, it has been falling. With the removal of 25-km distance limit, there will be further pressure on land and water. Therefore, the government should not take any decision in haste, but it should be done only after taking all concerned into confidence,” he noted.

Welcoming the government move, Babanrao Pachpute, chairman of Saikrupa private sugar factory, said the 25-km rule should not be fully abolished but the distance be reduced to 15 km. “In the event of more sugarcane production, part of which can be used for the ethanol output. This will be a win-win situation for the industry as a whole.”