Mills skeptical about policy

The UP Sugar Mills Association (UPSMA), a powerful body of private sugar mills, has voiced serious concern at the new sugar policy of the state government, saying the policy has been designed to suit the interests of the big players of the industry.

The sugar policy has been effective from April last year. The policy provides for tax concessions for a period of three years for the units investing a minimum of Rs 350 crore, and for 10 years for those investing Rs 500 crore. The concession will be available from the date of commencement of commercial production.

After the announcement of the policy in August last year, the Bajaj group has emerged as the biggest investor in UP and is likely to be the biggest sugar-producing group in India by 2007.

The association had set up a committee for the analysis of the policy and has recently submitted a memorandum to the government listing its fears and reservations. GK Thakur, assistant secretary of the association, said, "The minimum investment criteria only suggest this policy is for top guns, leaving out a vast majority."

Thakur said to get the benefits of this scheme, some groups in Western UP had undertaken an expansion of the existing units up to 10,000 tonnes crushed per day. "It is clear that the new sugar mills will take away large chunks of the cane area, thus rendering the existing factories sick."

In its submission against the new policy, the association has cautioned the government that with the present policy, the negotiating power of the farmers will get eroded in the long run.

The incentives provided for those investing Rs 500 crore are exemption from the purchase tax and the trade tax on sugarcane purchase, no entry tax on sugar, no stamp duty on the purchase of land for the new mill, and no administration charges on molasses produced in captive distilleries. These concessions will hold good for 10 years.

The state government will also give a capital subsidy of 10 per cent of the total investment, commissions paid by the mills to cane co-operative societies will be reimbursed, and the cost of transporting cane up to 600 km and charges from the field to the sugar factory will also be reimbursed.