Andhra to levy entry tax on sugar

The Andhra Pradesh government has decided to levy entry tax on sugar to protect local mills from the alleged dumping by the neighbouring states.

Chief minister YS Rajasekhara Reddy, while agreeing in-principle to the request of the state sugar mills association on entry tax at a meeting on Tuesday, has deputed a group of officials to decide the right level of tax.

It may be recalled that the state unit of the South Indian Sugar Mills Association has demanded an entry tax of Rs 300 per quintal.

The government has also agreed to clear the long-pending applications of the managements of private sugar mills to set up ethanol plants and distilleries to sustain the ups and downs in sugar prices.

"It was a bargain deal for maintaining the last year's cane prices offered by these sugar mills to the cane growers during this season as well," a senior government official told Business Standard. The cane growers in the state last year could get up to Rs 300 over and above the minimum cane price.

The sugar mills in the state hope to maintain the current price of close to Rs 1,300 if the entry of low-priced sugar, mostly from co-operative sugar mills of Maharashtra, is contained.

According to industry estimates, about 3.5 lakh tonne of sugar is entering the state when compared with a total consumption of 1.2 million tonnes.

The sugar production is expected to be around 1.5 million tonnes. "Sugar prices are mostly dependant on trader sentiment. Once the sugar mills in Maharashtra announce Rs 1,000 per quintal, the prices in local market will automatically come down," RS Bhalerao, secretary, South Indian Sugar Mills Association (SISMA)'s state unit, said.