Sugar industry hit hard by imposition of VAT

The sugar industries in Orissa are finding it hard to sell their products due to the recent imposition of value added tax (VAT) on sugar at the rate of four percent. There are six sugar industries in the state at Aska, Dhenkanal, Bargarh, Bolangir, Nayagarh and Badamba.

“Sugar has become dearer in Orissa than other states after the state government imposed VAT on it from April 8 this year”, said officials of Orissa Federation of Sugar Industries (OFSI).

The state government imposed VAT at four per cent on sugar and textile fabrics after the Central government merged the Additional Excise Duty (AED) with the Basic Excise Duty (BED) in this year's budget.

Even though the Central government had given permission to sell 5,527 quintals of sugar to the Aska Cooperative Sugar Industries Limited (ACSIL) in May, the factory could not sell the entire quantity. Around 540 quintals could not be sold as no buyer was willing to take it at a higher rate, said the factory sources.

Presently, around 42,000 quintals of sugar is stocked in ACSIL.

Other sugar factories in the state are in a similar position. Since no buyer is interested to purchase our stock, we have sold only a small quantity of sugar last month, said the director of a privately run sugar industry.

With the sugar industries facing problem to sell their products, thousands of sugarcane growers in the downlink will also be hit hard in future, he warned.

Meanwhile, the Orissa Textiles Merchant Association (OTMA) organized strikes across the state and closed their shops for two days recently in protest against the imposition of VAT on textile fabrics and sugar.

The chambers of commerce in different districts had also urged the government to roll back VAT on sugar and textile fabrics.

The sugar traders in Berhampur said, it would ultimately encourage the unscrupulous traders to smuggle sugar from the neighboring states, where it is available at a cheaper rate.

“The prevailing situation will encourage the black marketers to smuggle sugar and textile fabrics from West Bengal or Andhra Pradesh and sell it here”, said president of Ganjam Chamber of Commerce (GCC), Chaudhury Rabindra Nath.