The Hindu Business Line : UP moves SC against quashing of sugar delicensing policy

THE Uttar Pradesh Government has filed a special leave petition in the Supreme Court against a ruling by the Allahabad High Court quashing the Union Government's sugar de-licensing policy.

On Wednesday, the apex court fixed as September 12 the date for hearing the petition.

In its petition, the UP Government has contended that the immediate consequence of quashing the de-licensing policy, with retrospective effect, include cancellation of capital inflow to the extent of Rs 3,500 crore to the State and closing down of 12 units set up (or continuing) on the basis of IEMs (Industrial Entrepreneur Memoranda), leading to chaos and adversely affecting workers and farmers.

Pointing out that demand for sugar was expected to touch a high of 276.2 lakh tonnes by 2010 as against 200 lakh tonnes in 2002-03, the petition said UP was the largest sugar-producing State and contributed about 40 per cent of national sugar output in 2004-05.

With increase in demand and UP accounting for a third of the country's sugar production, the State must produce around 75 lakh tonnes of sugar by 2010, it said.

With UP's industry promotion policy and the expected increase in demand, investments close to Rs 3,500 crore had been committed by various companies that would add around 1,40,000 tonnes of sugarcane crushed per day (TCD) of fresh capacities translating into an additional 17 lakh tonnes of sugar in the State.

The investments had been committed by Bajaj Hindusthan at Thana Bhawan, Burhna and Bilai; Balrampur Chini at Akbarpur, Uttam and Dwarikesh in Bijnore; Triveni Engineering at Sabitgarh; DCM Shriram at Naglamal and Parle at Percendy in District Bhairaich, among others.

The sugar industry promotion policy expects farmers to receive an extra amount of up to Rs 2,000 crore, the petition added. During 2004-05, mills purchased 514 lakh tonnes of sugarcane valued at Rs 5,400 crore in UP.

Following the new sugar policy, about 16 new sugar plants are in the pipeline, with most preparing to commence production from October 2005.

The SLP said the Union Government was empowered to regulate the industries, including sugar, in terms of the 1951 Act by way of the Industrial Policy Resolution, Notifications and Guidelines or by way of Press Notes issued from time to time.

The Industrial Policy Resolution was announced by the Government in 1991 bringing forth all round liberalisation of policy. Moreover, a Standing Committee on Food, Civil Supplies and Public Distributions (1995-96) published its report emphasising on de-licensing of sugar industries, it said.

After taking into account the findings of the Committee, the Centre issued a Press Note dated August 31, 1988 de-licensing the industry.

On August 24, 2005, a two-judge Bench of Allahabad High Court, disposing of a writ petition filed by Monnet Sugar Ltd against the Centre, the Uttar Pradesh Government and others, said de-licensing of sugar industry could be done only by an Act of Parliament and not through an executive order. According to the Bench, no condition "is attached to the law nor any power of delegation has been given by Parliament by law to the executives to de-licence the industry".

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