The Food ministry would recommend a hike in import duty on sugar to 40 per cent from the current 25 per cent to check sliding price of the sweetener and enable mills to clear mounting cane arrears that has reached almost Rs 20,000 crore so far.
Addressing the media after meeting various farmers' bodies to understand the problems afflicting the sugar industry, Food Minister Ram Vilas Paswan said he would write to Finance Minister Arun Jaitley proposing hike in import duty.
In August last year, import duty on both raw and refined sugar was raised to 25 per cent from 15 per cent to bail out the cash-starved sugar industry.
"Problems of cane farmers are complex. There were 14 farmers organisations present in the meeting. They made five key demands, including complete ban on sugar import or hike in import duty and creation of buffer stock of three million tonnes," Paswan said.
Farmers organisation also demanded focus on ethanol and government control on supply of sugar in the domestic market. They also suggested the government to provide assistance to farmers directly and not to mills, he said.
Asked about his response to the demands, Paswan said: "We will write a letter to Finance Minister proposing an increase in import duty on sugar to 40 per cent."
He, however, added that there is not much imports happening at even 25 per cent duty.
"We will take all measures to protect farmers' interest," Paswan said, adding that other demands would be discussed tomorrow with the chief ministers of 13 cane producing states.
Union Ministers Nitin Gadkari and Dharmendra Pradhan would also be present in the meeting.
Paswan has called two separate meetings of farmers and chief ministers to resolve the cane arrear crisis.
The sugar industry is finding difficulty in paying cane price to farmers as mills have been incurring losses for the last few years due to low realisation and high production cost.
The Centre has recently provided a subsidy of Rs 4,000 per tonne for the exports of 1.4 million tonnes of raw sugars to improve the cash-flow of the millers.
Industry body ISMA has been demanding that the government give exports subsidy on white sweetener, create buffer stock of 2 million tonnes and also restructure millers' debt.
Ex-mill prices of sugar have fallen to Rs 21-24/kg in the country, while the cost of production is over Rs 30/kg.
Sugar production of India, the world's second largest producer, is estimated to be higher than the domestic consumption for the fifth year in a row.
The government has pegged sugar output at 26.5 million tonnes for the 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year. The annual domestic demand is about 24.8 million tonne.
