The financial predicament of the sugar millers across the country and especially in UP is no more confined in closed room discussions. It is fast snowballing into a national crisis as the sugar mills stare at an imminent collapse unless something is done to pull them out of the deep financial mess. The sugar mills in the country are in dire strait, and with every passing day, the condition is only worsening.
The two apex bodies of the sugar industry, ISMA and NFCSF Ltd, representing almost 90% of the sugar millers in the country, have upped the ante to bring about some relief to the sputtering sugar mills. Both the apex bodies have been requesting the Government for some time now, to increase the import duty of sugar in the current season to block cheap sugar imports into the country. Till 15th January, 6.26 lakh ton of sugar has already been discharged at Indian ports, though about 1.90 lakh tons are meant for domestic sales. Another about 3 lakh ton is expected to arrive shortly. The Indian sugar industry has argued that there is absolutely no need to import sugar in the current season, which is expected to be a surplus production year in a row. Cheap sugar imports will only further hit the struggling domestic sugar mills, which are already making huge losses on account of high cost of production of sugar. If this continues, the sugar mills will not be able to make timely payment to cane farmers and as a result, cane price arrears will mount to high levels. The cane price arrears in UP have already reached Rs. 3000 crores by 15th January, 2013. The Regional Associations of Maharashtra, Karnataka, Tamil Nadu and UP, which account for 80% of sugar production, have also requested for an increase in the import duty of sugar. The coastal States of Tamil Nadu, Maharashtra and Karnataka, which are the usual importers of sugar, are also against any sugar imports in the current season. The sugar mills operating in these coastal States don’t see any rationality in importing sugar from international market.
Last week a high-level delegation met UP Chief Minister Shri Akhilesh Yadav, with a list of suggestions to keep the sector afloat, like- exemptions on purchase and entry tax on sugar, including molasses administrative charges and a reduction in levy molasses from 20% to 10%. The delegation apprised the Chief Minister of the acute financial constraints the sugar millers are facing in the State. The Chief Minister of UP, Shri Akhilesh Yadav, has accordingly written a letter to the Prime Minister for withdrawing the compulsory 10% levy on sugar mills and to also impose 60% import duty on raw sugar instead of the current 10% so as to restrict import of raw sugar in the country. The Chief Minister of Bihar, Shri Nitish Kumar, has also similarly written to the Prime Minister for an early intervention to protect the cane farmers from cheap raw sugar imports.
However, any decision on hiking the sugar import duty would have to be taken by the Finance Ministry. How fast the Finance Ministry wakes up to the clarion call of the sugar industry is anybody’s guess. Meanwhile, pressure is building up from all quarters for an early decision by the Government to increase the import duty on sugar.