The Karnataka chapter of the South Indian Sugar Mills Association (Sisma) has urged the state government to intervene and bail them out by providing a solution for enormous stock accumulation.
Following their request, a cabinet sub-committee has been formed under the leadership of the sugar minister. A state delegation would soon be heading for the centre, seeking waiver of purchase tax on sugarcane.
Currently, the purchase tax is Rs 55 per tonne of sugarcane purchased for those factories with an extraction rate of 10.5 per cent. Units with less than 10.5 per cent extraction rate are being levied at Rs 40 per tonne, according to V Venkata Reddy, the president of the association.
The association has also sought an incentive of Rs 1,000 per tonne on export of sugar, as extended in Maharashtra. With an average annual production of 16 lakh tonne of sugar, Karnataka is the fourth largest producer after Maharashtra, Uttar Pradesh and Tamil Nadu. In India, nearly 90 per cent of the total sugar produce is sold in the free market at an average price of Rs 1,070 per quintal.
Interestingly, in the levied market, where about 10 per cent of the produce is sold, sugar is priced around Rs 1,185 per quintal.
The fall in sugar prices has reduced the price difference in these two markets to a mere Rs 100, when all along the difference had been in the range of Rs 200-300.
