The draft amendments to the 60-year-old Act, which have been under works for a long time, among other things, also proposed a host of other changes that included regulation of the khandsari units by making licences mandatory for them and also subjecting them to regular checks and inspections.
Khandsari is a traditional, unrefined raw sugar derived from cane. Comments to the draft, which was floated on Monday, are required to be sent by May 20.
What are the key proposed changes in the sugarcane control draft?
According to rough estimates, around 31 per cent of India’s annual sugarcane production of 435 million tonnes is used by the gur, khandsari, and jaggery units.
The draft also proposed directing mills to pay interest to cane growers at the rate of 14 per cent per annum beyond the mandatory 14 days from the purchase of cane and also lays down that in case the sugarcane price remained unpaid on the last day of the sugar year in which cane supply was made to the sugar factory, the sugar producer should deposit the money with the district collector in which the sugar factory is situated, within three months of the close of the sugar year.
“The Collector shall pay, out of the amount so deposited, all claims, considered payable by him and preferred before him within three years of the close of the sugar year in which the cane was supplied to the sugar factory. The amount still remaining un-disbursed with the Collector, after meeting the claims from the suppliers, shall be credited by him to the Consolidated Fund of the State, immediately after the expiry of the time limit of three years within which claims therefor could be preferred by the suppliers,” the draft read.
Among other major changes, the draft also proposed linking the fair and remunerative price (FRP), as laid down by the Central government, to ethanol using the formula that 600 litres of ethanol from cane juice or syrup is equivalent to one tonne of sugar. FRP can now be determined based on ethanol output.
The draft also laid down fixed deadlines for Industrial Entrepreneur Memorandum (IEM) applications that include proposals such as three years for taking effective steps on acquisition of land, machinery, and construction, and five years to start commercial production.
The draft also prohibited selling or transferring of the IEM licence to a third party before commercial production starts to stop speculation.
That apart, the draft also said that if a sugar factory is closed for seven consecutive sugar seasons, its IEM would get automatically derecognised, which would free up the area for new entrepreneurs.
The draft also said that the imputed value of by-products such as bagasse, molasses, and press mud should be valued at transfer price (not final product profit) for FRP calculation, which is a more transparent method of FRP calculation.
Why is the industry concerned about increased regulation?
The draft, which has come months before the crucial state elections in Uttar Pradesh, one of India’s main sugar-producing states, is being read in many quarters as an attempt to strike a balance between the state’s sugarcane farmers and millers and also the largely unorganised gur and khandsari units.
Sources said the sugar industry is expected to frame a formal response to the draft and send it by May 15 to the government, but the widespread sentiment is of wariness of increased controls and punitive provisions, including searches and seizures.
It is also not very comfortable with the 25-km distance criteria and wants it to be reduced to 15 km, as is the practice in several states.
Sources said the industry has also voiced concerns on the unorganised gur and khandsari units, saying that they must be properly covered under the Act and that molasses, which is a by-product, should also be brought under necessary regulations.
“There are some of the preliminary concerns regarding the proposed amendments, but a final view will emerge from our one-day brainstorming session in Pune to be scheduled for May 15,” a senior industry official remarked.
 "sugarcane farmers")