These measures form part of a package of incentives proposed by the group to help the sugar industry tide over the present glut in production.
The proposals include reduction in import duties and enhancement of export-related subsidies. Excess production of sugar in five consecutive years has led to collapse of prices.
The package has asked for additional release of levy-free sugar to the extent of 10 per cent for six months in states where factories were finding it difficult to pay state-advised prices (SAP) to cane growers.
This one-time measure will give mills extra cash of about Rs 270 crore to pay off cane price arrears partially.
However, the group has turned down the sugar industry demand for permission to retain excise duty on sugar and molasses for two years and creation of a development fund for industry and cane growers.
The group was set up following the promise made by finance minister Jaswant Singh in his budget speech to come up with a comprehensive scheme to help the sugar sector overcome its problems.
The group comprised secretaries of departments of food, expenditure, revenue, banking and agriculture besides chief economic adviser in the department of economic affairs.
The group held its last meeting on July 9 and submitted its report recently. The group said it was necessary to step up sugar exports. It recommended reimbursement of handling and marketing charges at the rate of Rs 500 per tonne on export shipments.
Anticipating total sugar exports of over two million tonnes in 2003-04, the group estimated expenditure of over Rs 100 crore to be paid from the Sugar Development Fund (SDF).
The group said SDF funds should also be disbursed to fund investments in co-generation of power and ethanol production besides reimbursement of internal transport and freight charges for export consignments.
The total expenditure was estimated at Rs 877 crore, against earlier estimates of Rs 677 crore for 2003-04.
To encourage sugar mills to invest in co-generation facilities using waste, and diversify their product range, the group has recommended reduction in basic customs duty on imported equipment for co-generation and diversification projects from 25 per cent to mere 5 per cent.
