ISMA insists prices should be viable for sugar mills to start

The apex sugar industry body aid the government should give a subsidy of Rs 55 a quintal to the industry

Apex sugar industry body ISMA today called the tax sops offered by the Uttar Pradesh government insufficient and said mills won't start operations until the state fixes reasonable cane prices or links them to market rates.

Indian Sugar Mills Association (ISMA) Director General Abinash Verma said the government should give a subsidy of Rs 55 a quintal to the industry because millers can pay only Rs 225 per quintal of cane against Rs 280 per quintal fixed for the 2013-14 marketing year (October-September).

The association demanded that the state government link cane rates with market prices of sugar, as recommended by the Rangarajan panel on decontrol of the sugar sector.

Of the state's 122 sugar mills, 99 private units have refused to start cane crushing from October as they found the mandatory purchase price unviable.

The Uttar Pradesh government today announced tax breaks in a bid to end the impasse in the industry and warned of legal action if mills did not start operations by next week.

Briefing the media here after the UP government press conference in Lucknow, Verma said: "We will not start crushing operations unless a reasonable price is fixed and the Rangarajan committee's recommendations are accepted."

"We are prepared for all kind of actions. We have offered the state our mills if they think they can operate better at current cane prices," he added.

The state government offered a waiver of entry tax and purchase tax to soften the cane procurement price. The sops will lower the burden of millers by Rs 6 a quintal, ISMA said.

"I don't think the state government has come with anything new. This does not address any of our problems. Please implement Rangarajan panel's recommendation and get out of the politics of fixing cane price," Verma said.

Verma said cane arrears would reach Rs 15,000 crore by March-April if the millers are forced to pay Rs 280 per quintal of cane. "We do not want this situation."

The association said the procurement price was unviable even last year, when sugar prices were higher.

"Sugar prices have fallen to Rs 29.50 per kg now from Rs 36 per kg level and hence not viable," Verma said.

At the current price of cane, mills cannot take care of liabilities such as cane arrears, loans, maintenance costs and salaries.