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The government will take a call on a host of measures including revising the duty drawback rate for sugar exports, providing interest free loans for millers and lowering time frame for re-export of imported raw sugar in the next 8-10 days to bail out the sector facing crisis in Uttar Pradesh and other parts of the country. The crisis, caused by mounting cane arrears and huge unsold stock, prompted senior ministers of the UPA regime to discuss these measures today.
"We discussed a slew of measures to address the problems related to the sugar industry and a final decision on the same will be taken in the next 8-10 days," agriculture minister Sharad Pawar told reporters after the meeting.
Finance Minister P Chidambaram, Civil Aviation Minister Ajit Singh, and senior officials from the department of food and commerce also participated in almost an hour-long meeting.
Officials said mills have to approach a committee under the chairmanship of Planning Commission member Saumitra Chaudhuri on raising the duty drawback rates for sugar. The committee will take a call on the same.
Millers are demanding that the drawback rate should be raised to 4% from the current 1.3%. "We have asked the millers to go with their suggestions to the high powered committee and they will start doing the same from tomorrow onwards," Ajit Singh, whose Rashtriya Lok Dal has a strong base in the main cane producing areas of Uttar Pradesh, said.
Among other suggestions, discussed in the meeting, was allowing mills to access loans against the excise duty paid by them interest on which will be adjusted from the Sugar Development Fund (SDF), and not from the millers.
"This, in a way, will make such loans interest-free," a senior official said. He said relaxation could also be granted to the mills by way of lowering the time-frame for re-export of raw sugar into processed sugar from the existing 18 months to 3-4 months.
"This will squeeze imports, which have soared to almost 170,000 in October further adding on to the glut," the official said.
On Wednesday, most sugar mills in UP submitted notices for suspending their operations owing to impasse over the announcement of state sugarcane price. In Maharashtra too, mills have shown reluctance to start crushing because of dropping returns. UP along with Maharashtra contributes more than 80% of total sugar produced in the country.
In UP, the millers are are aggrieved by the “action initiated and letters issued” by the state cane commissioner for commencing of mills without considering the “extremely difficult situation and problems faced by the sugar mills and also without our participation in the cane reservation process.”
Officials said millers across India owe around Rs 3,400 crore to farmers on account of sugarcane purchased from them last year. In UP, cane was purchased at Rs 280 a quintal in 2012-13 (October-September).
Even though farmers are demanding a higher price in excess of Rs 300 per quintal, an industry source said the millers can’t pay more than last year’s price (Rs 280 a quintal). “We are in no position to pay a higher sugarcane price this year as our cash position is precarious due to drop in sugar rates both in the domestic and international markets.”
“We urgently need to dispose of 1.75 million tonnes of unsold sugar stocks lying with us, only then can there be any crushing,” he added. India produced over 25 million tonnes of sugar in 2012-13 (October-September), while in 2013-14, production is expected to be much more.
