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Govt mulls MSME status for local crushing units

Hopes to provide sugarcane growers an alternative source

Sanjeeb Mukherjee  |  New Delhi 

A worker loads sugarcane into a load carrier at a wholesale market in Ahmedabad. Photo: Reuters
A worker loads sugarcane into a load carrier at a wholesale market in Ahmedabad. Photo: Reuters

In an effort to provide an alternative source of earning to the sugarcane growers of Uttar Pradesh, the central government is mulling revival of localised cane crushers by including them in the micro, small and medium enterprises (MSME) category. Once categorised as an MSME, sugarcane crushers, used to make jaggery and khandsari, will be entitled to government benefits and tax concessions.

A pilot project to restart the localised jaggery making units is being planned in the districts Muzaffarnagar, Baghpat and Shamli in western Uttar Pradesh from the next sugar season, which starts from October.

All three districts are known for jaggery and khandsari and are also big sugarcane growing regions of Uttar Pradesh. The districts are also home to some of the biggest private sugar mills. In fact, Muzaffarnagar alone has around 14 mills, the highest in any district of the state.

Officials said the state government will also explore the possibility of relaxing norms for setting up crushers and also lower taxes on these. "The idea is to provide sugarcane growers of western UP an alternative source of income," Minister of State for Agriculture Sanjeev Kumar Balyan, who is spearheading the proposal, told Business Standard. He said the preliminary discussion is being planned with the minister of MSMEs, Kalraj Mishra. Mishra is a member of Parliament from Deoria also in UP.

In their heydays, crushers numbered around 850 and dotted the landscape of western UP, largely concentrated around Muzaffarnagar district. However, old-timers say in February 1982, the then finance minister V P Singh abolished the additional excise duty on khandsari, which was countered by chief minister Sripathi Mishra with a four per cent sales tax.

This immediately pushed up the cost by Rs 32 per 40 kg bag. The downfall of localised cane crushers also coincided with the growth of mills, which gathered pace after liberalisation of the Indian economy. Gur now is produced locally as a cottage industry by around 25,000 small units in UP. Before liberalisation, mills consumed around 20-25 per cent of the cane grown in western UP, which has now risen to about 60 per cent, while gur units consume another 30 per cent.

"The proposal, though it sounds good, is unviable because crushers can't have a recovery rate of more than five-six per cent and with sugarcane prices ruling at around Rs 280 a quintal, they won't survive when even big sugar mills, who have recovery rate over 10 per cent, are finding it difficult to make ends meet," Arun Khandelwal, president of Muzaffarnagar Gur Manufacturers Association said.

He said unless there is a big technological innovation in crushers, it will be very difficult to make the business viable. But, the government seems convinced. "Our assessment shows that with an investment of around Rs 10 lakh, a mechanised crusher can provide employment to about 20 people, which can help in generating jobs in rural areas," Balyan said.



SWEET DEAL
  • Centre looking to put sugarcane crushers into the category of MSME to revive them
  • A pilot project on sugarcane crushers might be launched from the next sugar season
  • Sugarcane crushers are mostly used to make jaggery and khandsari
  • In their heydays, there were more than 850 sugarcane crushers in western UP alone
  • Official assessment shows that a sugarcane crusher with an investment of Rs 10 lakh can employ more than 20 people
  • Sugarcane crushers have recovery rate which is much lower than modern mills

First Published: Tue, May 17 2016. 22:33 IST
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