Firms hail hike in registration fee

Sugar companies and associations have welcomed the government's decision to raise the registration fees for setting up new mills from the current Rs 1,000 to Rs 1 crore.

The government move mandates that sugar companies need to submit a guarantee of Rs 1 crore as a surety for the implementation of the Industrial Entrepreneur Memorandum (IEM) within a stipulated period, failing which the amount would be forfeited.

According to them, this would curb the unnecessary litigation that has been witnessed between companies.

"There have been cases of large sugar companies obtaining IEMs in hundreds just to block a site and prevent other companies from setting up a mill in that area. Now, with a timeframe and required money, only those companies that are serious about setting up a mill would apply for it ", said the president of Indian Sugar Mills Association (ISMA) and chairman of Oudh Sugar Mills CSNopany.

"The move would put a check on the bogus IEMs that have been piled up by some companies and prevent unnecessary litigation", said the director (Finance) of Simbhaoli Sugars Sanjay Tapriya.

The union government has amended the Sugarcane (Control) Order, 1966 via a notification dated November 10, 2006. The amendment provides that "no new sugar factory shall be set up within the radius of 15 kms of any existing sugar factory or another new sugar factory". A new sugar factory is one that has filed the IEM as prescribed by the Ministry of Industry and has submitted a performance guarantee of Rs 1 crore.

Before filing the IEM, the concerned person should obtain a certificate from a specified authority of the concerned state government that the distance between the existing sugar factories and the new factories is not less than 15 kms.

After filing the IEM, the concerned person should submit a performance guarantee of Rs 1 crore within 30 days as a surety for implementation of the IEM within the stipulated time of 2 years.

Further, commercial operation should commence within 4 years from the date of filing an IEM, failing which the IEM shall stand de-recognised and the amount would be forfeited.

Before this amendment, sugar was a de-licensed industry and a person just needed to obtain an IEM after paying a nominal fee of Rs 1000 to the Ministry of Industry for starting a new mill. A section of the sugar industry is of the view that after this amendment would in effect mean "indirect licensing" for the sugar industry.

"We had demanded that there should be a freeze on new licenses in the sugar industry. Yet we welcome the efforts", said the managing director of the National Federation of Cooperative Sugar Factories Vinay Kumar.