Sugar industry demands removal of levy obligation

The levy removal can increase the industry's revenue by Rs 3,000 cr annually

Coming together on a common platform, the private and cooperative sugar sectors today demanded an immediate removal of the levy obligation and release mechanism as recommended by the Rangarajan Committee last month. The levy removal can increase the industry’s revenue by Rs 3,000 crore annually.

“We urge the government to implement the recommendations of the Rangarajan committee on levy sugar and release mechanism at the earliest,” Gautam Goel, president of the Indian Sugar Mills Association (Isma) and managing director of Dhampur Sugar Mills, told reporters.

Jayantibhai Patel, chairman of the National Federation of Cooperative Sugar Factories, said the two controls should be withdrawn in the interest of industry and farmers. The sugar industry is required by law to sell 10 per cent of its produce to the government at a price much lower than the open market price for distribution through the public distribution system. This is called levy sugar and its price is around Rs 1,800-1,900 per quintal against the market price of Rs 3,400-3,500 per quintal. The gap is borne by the industry. At the same time, the government regulates the quantity of sale that each sugar mill can undertake every month under its power of release mechanism.

Isma director general Abinash Verma said the Rs 3,000-crore levy burden is a straight financial loss to the industry, but one could not ignore associated factors like the cost of carrying the inventory and interest burden related to levy.

On the committee’s recommendation to share realisation from sugar and by-products with the farmers, Goel said the industry was open to take it forward after wider consultations with farmers and state governments. “We are ready for any system (of deciding cane price) that is fair and transparent. Cane price has to be a function of the economy. It can’t be a political function,” he said.

Food Minister K V Thomas said earlier this week the government was considering the Rangarajan committee report on sugar decontrol and would take a decision on removing some of the curbs on the sector by next month.

In addition to recommending removal of levy, the committee has suggested giving freedom to mills to sell sugar in the open market and having a stable export and import policy. In the long term, it has recommended doing away with the cane area reservation and minimum distance criteria for setting up sugar mills, besides suggesting removal of controls on by-products like molasses. It also suggests a linkage between sugarcane and sugar prices. The Rangarajan panel is not the first committee set up by the government to study reforms in the sugar industry. Recommendations of the Tuteja Committee and the Thorat Committee have not yet seen the light of day.