Tribune News Service

New Delhi, April 29:   With sugarcane arrears crossing the Rs 20,000 crore-mark as on March 31, the Cabinet Committee on Economic Affairs (CCEA) today raised the import duty on sugar from 25% to 40% and removed the central excise duty on ethanol supplied for blending with petrol to help mills clear the dues of farmers.

Sugar prices are depressed due to surplus domestic production in the past four years. Mills have been constrained for liquidity and are facing difficulties in clearing the arrears due to farmers.

“This has affected the income of 50 million sugarcane farmers. Similar conditions of subdued prices prevail in the global markets,” the government said adding as on March 31, cane dues arrears stood at Rs 20,099 crore — higher than the previous year.

Cash-starved sugar industry welcomed the decision to remove the excise duty on ethanol and increase in import duty on sugar. However, Indian Sugar Mills Association (ISMA) director-general Abinash Verma said these were not enough to address immediate needs of the industry. Verma said the decision to remove excise duty on ethanol would increase net realisation to sugar mills by around Rs 5 per litre of ethanol.

This should incentivise some mills to divert ‘B’ heavy molasses or cane juice into ethanol which will reduce some surplus sugar production from next year.

“Benefits of both these decisions would be realised by the industry in the long run,” he said.

But he urged the government to decide upon its demand to buy out 10% of the current year’s sugar production to fulfil its immediate needs.

“The immediate need to reduce the surplus 35 lakh tonne of sugar blocking almost Rs 10,000 crore of cash flows and to improve the current ex-mill sugar prices, which are at its lowest in the past six years, will not get addressed by the above decisions,” he said.

“Only this step will help the industry come out of the crisis in the short run and ensure that a major portion of cane price arrears are cleared before the start of the next sugar season,” he added.

The government today decided to increase the duty on import of sugar under the OGL (open general licence) to 40% as against the current level of 25%.

“This would prevent any import in case international prices of sugar were to depress further,” officials said.

It also decided to remove “excise duty on ethanol supplied for blending”. At present, 12.36% excise duty is levied on ethanol.