Sugar barons lobby for sops from UP
The sugar industry is lobbying to create a pre-2007 era with Uttar Pradesh chief minister Akhilesh Yadav. Promoters of top sugar companies like Balrampur Chini, Dhampur Sugar, Dwarikesh Sugar and Birla Sugar have met Yadav, individually, seeking relief and sops for the ailing industry. A formal delegation will meet him again soon.
UP is the second biggest producing state and has seen investments worth Rs 6,000 crore during the Samajwadi Party’s government (2002-2007). This was triggered by a Sugar Industry Promotion Policy, 2004, which promised several sops for setting up new mills, including a 10 per cent capital subsidy, reimbursement of transport cost of sugar from the factory up to a distance of 600 km from the border, remission of stamp duty and registration charges on land purchase, reimbursement of cane purchase tax and society commission, and exemption of entry tax on sugar and trade tax on molasses.
The policy was scrapped by the Bahujan Samajwadi Party government after coming to power in 2007.
In a letter to Yadav last week, the Uttar Pradesh Sugar Mills Association sought a incentives like remission of purchase tax on sugarcane, transport rebate on out-centre cane and subsidy in sugarcane price to be directly given to growers.
It is also seeking interest-free loans with a five-year moratorium to make payment of previous years’ arrears.
“According to the association's calculation, the sugar industry in UP is likely to incur a loss of Rs 3,570 crore in the current season,” chairman of the association C B Patodia wrote in the letter. The industry had incurred a loss of Rs 1,200 crore in the 2010-11 season (October-September).
High sugarcane price is the main reason behind the problems the UP millers are facing. Before heading for the Assembly polls, the Maywati government increased sugarcane price by 19 per cent ignoring the sugar price realisation.
“Long-term remedial measures are required for the sugar industry. The current sugarcane price is not sustainable,” said
Kishor Shah, chief financial officer at Balrampur Chini, which owns 10 sugar mills.
Chairman and managing director of Dwarikesh Sugar, G R Morarka, said, “We have a lot of hope from the new government. Since the 2004 incentive policy was brainchild of Mulayam Singh Yadav, the Samajwadi Party government should consider bringing it back.”
A loss of Rs 400-500 per quintal of sugar has affected the industry’s paying capacity to farmers. Patodia said the sugarcane arrears of Rs 3,500 crore may cross Rs 5,000 crore by the time mills stop crushing later this month if sugar prices do not improve. Reacting to the industry’s negative cash flow, banks are not increasing the cash credit limit of mills.