Indian sugar mills association

Uttar Pradesh sugar mills write to central, state governments for relief

Date:	22 Jan 2012

Source:	Financial Express

Reporter:	Deepa Jainani

News ID:	873

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Lucknow: The beleaguered sugar industry in Uttar Pradesh, battling the twin onslaught of high cane prices as fixed by the state government as well as ignominy of losing out to the farmers on the cane price issue in the Supreme Court, has written to both the central and UP governments, asking them for some form of relief to help it wade through the difficult times.
In a letter to the Union finance minister and the principal secretary sugar and cane development, UP government, Uttar Pradesh Sugar Mills Association (UPSMA) secretary Shyamlal Gupta has asked for “granting relief by way of subsidy/ interest-free loan or some other adequate reliefs, to help the industry come out of this difficult situation”.
He has also mentioned in his letter the fact that in “2006-07, when a similar situation had risen, the central government had given a substantial relief to the industry by providing interest-free loans”. Gupta has stated that “factories are already undergoing a huge financial stringency for the payment of excessively high cane price for the current season, which has already started going in arrears, because the difference between the cost of production of sugar and sales realisation is over R400 per quintal of sugar, which will result in huge losses to
the sugar industry in the current year estimated around R3,000 crore”.
“In view of the above position, the payment of over R900 crore as per the above order of the Supreme Court within three months, will put the entire industry in a severe financial crises, as its non-payment within time will involve interest liability of 18%. Since this will result in the accumulation of huge cane price arrears, which is not in the interest of sugarcane growers, the UPSMA is writing to the government to grant relief by way of subsidy/interest-free loan or some other adequate reliefs, to help the industry come out of this difficult situation.
It may be mentioned that in 2006-07, when a similar situation arose, the central government had given a substantial relief to the industry by providing interest-free loans,” he added.
It may be mentioned that the Supreme Court had, a few days back, directed the payment of the differential cane price for 2006-08 within three months, which would involve a liability of around R900 crore on the private sector factories.
In fact, the UPSMA has also been contesting the state government’s right to fix the cane price under the provisions of the UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 in SC.
Welcoming the three-judge bench verdict of the Supreme Court for accepting the contention of the association and referring the case to a seven-judge bench, Gupta said that “this will bring to an end a long drawn controversy on the issue of power of the state government to fix the cane price”.

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