Shares of sugar companies have surged by up to 5% on the bourses after the government plans to increase the cess on sugar by almost Rs 100 per quintal to fund its ambitious programme of paying Rs 4.50 per quintal directly into the bank accounts of growers.

The Sugar Cess (Amendment) Bill, 2015 was introduced in the Lok Sabha this week by Food Minister Ramvilas Paswan which would give powers to the Centre to raise the ceiling on such a cess from the existing Rs 25 per quintal to Rs 200 per quintal.

At present, the central government levies a sugar cess at the rate of Rs 24 per quintal, while the ceiling was at Rs 25.

Simbhaoli Sugars, Bajaj Hindusthan, Shree Renuka Sugars, Balrampur Chini Mills, Dhampur Sugar Mills and EID Parry have gained between 2-5%. The benchmark S&P Sensex was up 24 points at 25,063 at 1038 hours.