Uttar Pradesh government and sugar millers are headed for a showdown with the industry refusing to start operations despite tax incentives to break the impasse over cane prices.
The government also warned mills of legal action if they did not start operations by next week.
Worried over farmer backlash over sugar mills not buying standing sugarcane crops, the Akhilesh Yadav government announced waiver of entry tax and purchase tax to soften the high procurement price.
However, millers are not happy with the tax sops saying the incentive only translates to Rs 6 per quintal reduction in sugarcane rate compared to requirement of Rs 55 per quintal subsidy to run their factories.
Striking a confrontationist note, they said they will not operate mills and were ready to "face any action".
Most of the 99 private mills out of state's 122 units have refused to start sugarcane crushing from October as they found the Rs 280 per quintal price set by state government as unviable, prompting even Centre to consider a financial bailout package for the industry.
The sops announced today after three rounds of talks with factory owners, however, came with the caveat that the price of Rs 280 per quintal to be paid to farmers was not negotiable and millers will face action if they do not start operations.
"There is no scope for further talks (with millers). We are giving direction to start mills or face action," state Principal Secretary Sugar Industry and Cane Development Rahul Bhatnagar told reporters in Lucknow.
Soon after, Indian Sugar Mills Association Director General Abinash Verma said: "We will not start crushing operations unless a reasonable price is fixed and Rangarajan committee's recommendation (on linking cane rates with sugar prices) are accepted".
He said the current market price was not viable for buying sugarcane at Rs 280 per quintal and urged the state government to "get out of the politics of fixing cane price."
In New Delhi, Food Minister K V Thomas said the Centre was working on a financial package that may include interest free loans to the millers to break the logjam that not only was threatening sugar output, but also sowing of wheat.
