UP jaggery units plan stir against VAT levy

The owners of thousands of jaggery units in Uttar Pradesh are planning a statewide stir against Mayawati government's proposal to levy value-added tax (VAT) in the new year.

They are meeting the state's agriculture secretary on Wednesday in Lucknow to apprise him of the problems affecting the jaggery sector, which is reeling under low sugarcane prices.

The state government has proposed a levy of 4 per cent VAT effective from January 1, abolishing the earlier 2.5 per cent multi-tax. In November, jaggery producers in the state had observed a two-day token strike.

The state produces about 30 per cent of the country's total jaggery output at 2.25-2.5 crore tonnes. During the current season, however, India's total production is likely to decline marginally by 25-30 lakh tonnes as the season started late.

Traders are apprehensive that jaggery producers may find a glut of cane supplies after the sugar mills close the season in late March or early April.

"No VAT is levied on this sweetener in the neighbouring states including Haryana and Punjab. The state government is following the lead of Rajasthan, where the state government is levying VAT," said Arun Khandelwal, the president of the Federation of Gur Traders and the co-ordinator of the Uttar Pradesh Gur Sangharsh Samiti.

Khandelwal said the farmers were under stress from the sugar mills to supply cane at a price as low as Rs 50-60 a quintal compared with Rs 110 per quintal last year.

About 60 per cent of the total jaggery produced in the state was sold through unfair trade practices because of the existing 2.5 per cent multi-tax levied by the local government. The proposed 4 per cent VAT, according to him, would force producers to sell only in the black market.

It would also force them out of the market as the produce from the state would become uncompetitive in comparison with the neighbouring states, he said.

Meanwhile, jaggery prices are likely to decline by at least Rs 60 a quintal on huge arrivals from all parts of the country.

Last week, weather disturbances had taken the prices up by Rs 110 a quintal as thick fog and cold winds resulted in lower arrivals in mandis. Today, gur chaku (the premium variety) in Muzaffarnagar quoted in the range of Rs 850-970 a quintal while khudpa sold between Rs 820-850 a quintal.