The Uttar Pradesh government on Thursday issued an ultimatum to sugar mills, the second this month, to start crushing operations by December 4 in west UP, and December 7 in the rest of the state, or face "appropriate legal action." The government also ruled out the possibility of further talks between the government and mills, saying recovery notices will be issued against all mills that flout the deadline. "This decision has been taken after several rounds of meetings. There is no scope for further negotiations," said principal secretary, cane development, Rahul Bhatnagar.

Heavily dependent on the sugar industry for revenue as well as campaign fund generation, however, the Samajwadi Partygovernment, with an eye on the general elections, also initiated steps to keep the industry in good humour. Announcing several sops for the sugar industry - with cumulative financial implications of more than Rs 1,300 crore - the government said it has already taken steps to ease the sugar industry's losses. In an official statement on Thursday, the government said it has waived entry tax and purchase tax on cane, equivalent to Rs 2 per quintal. The government had earlier, Bhatnagar said, announced a reduction on levy sugar and relaxed the molasses quota for millers.

Adding a crucial rider to pressurize the mills to begin crushing, though, the government said the sops will only be available to those mills in west UP that start crushing cane by December 4, and others in the rest of UP, which start crushing by December 7 as per government orders. "After taking into account all fiscal sops offered to the mills, the government has found that all mills are capable of crushing cane at the state advisory price of Rs 280. As a result, the mills' demand to operate units at SAP of Rs 225 per quintal of cane has been out rightly rejected," Bhatnagar said. The government also dismissed mills' proposal to take over control of sugar mills and run it themselves.

The government did, though, move a step closer to the mills' original demand to link SAP with sugar prices. On Thursday, it announced that the state would, in three months, assess the market price of sugar and its by-products and initiate action accordingly. A high level committee of the state government, headed by the chief secretary and comprising representatives of farmers and mills, will also be constituted to make recommendations for SAP, for the next crushing season. "The sugar industry demanded that SAP should be linked to sugar prices. To arrive at a permanent formula on which this can be done, the high level committee will make its recommendations. On the basis of these recommendations, SAP will be fixed," Bhatnagar added.

Sources told TOI that though the government has also already agreed to reduce cane society commission from 3% to 1.5%, and to hike transport cost, the announcements are expected to be announced at a later date.

The state's announcements, however, caused some bitterness among the sugar millers. On Thursday evening, chairman of the Commission for Agricultural Costs and Prices (CACP), Ashok Gulati, said the Centre should stay away from the UP sugar crisis until it adopts the Rangarajan committee formula for sugarcane pricing and maintained that the SAP of Rs 280 per quintal will make most of UP's sugar mills unviable.

Sudhir Panwar, president of Kisan Jagriti Manch, however, said the Centre should implement a release mechanism to stabilise sugar price like it had done in 1979.

Annually, UP crushes around 80 million tonnes of cane in its 123 sugar mills. This year, though, as a result of the delay in crushing, only 21 sugar mills - 16 cooperatives, four private and one owned by the sugar corporation - are operational. Denying the possibility of a shorter crushing season this time, Bhatnagar said mills will have to, mandatorily, crush all the cane allotted to them by cane societies.