Maharashtra sugar mills get Rs 250 crore tax relief

In an effort to bail out the sugar industry, Maharashtra government has waived purchase tax for the 2006-07 (Oct-Sep) season, said state finance minister Jayant Patil.

At present, sugar mills are required to pay 3 per cent of sugarcane prices as purchase tax. The waiver of purchase tax is expected to result in substantial savings for the sugar industry, thereby mitigating some of the losses faced by it this season.

"On an estimate of 72.6 million tonne sugarcane to be crushed, this waiver of purchase tax would result in savings of Rs 254 crore this season," said Prakash Naiknavare, managing director, Maharashtra State Co-op Sugar Factories Federation.

At present, sugar mills in the state are incurring a net cash loss of Rs 2 a tonne of sugarcane crushed, he said.

So far, 62.38 million tonne of sugarcane has been crushed this season and at an average recovery of 11.46 per cent the sugar production has already touched 7.15 million tonne, Naiknavare said.

According to the state minister for cooperation, the crushing of balance 1 million tonne sugarcane is likely to be completed by April end and total sugar output will reach an all-time record of 8.1 million tonne.

Maharashtra is on course for a record sugarcane crop of 73.72 million tonne in 2006-07, according to government estimate.

However, the crushing season scheduled to start in October was delayed by a month due to farmers' agitation demanding higher prices for sugarcane.

This has resulted in a fall in recovery rate in sugarcane in some areas and availability of surplus cane beyond the crushing season, which normally ends in March.

The state's chief minister had recently announced subsidies on additional transport expenses and to compensate losses due to fall in recovery rate.