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Harish Damodaran

15-km minimum distance norm to be made mandatory

New Delhi , Sept 25

The Union Government plans to amend the Sugarcane (Control) Order, 1966 to make the 15 km minimum radial distance norm between two sugar mills a mandatory provision rather than just a guiding principle as it is now.

Press Note No. 12

Sugar is currently a de-licensed industry, with companies having to only file Industrial Entrepreneurs Memoranda (IEM) with the Secretariat of Industrial Assistance in the Ministry of Industry before starting any mill. At the same time, to avoid unhealthy competition among factories to procure sugarcane, the Ministry's "Press Note No. 12", dated August 31, 1998, provides for a minimum distance of 15 km between an existing mill and a new mill.

However, as per an Allahabad High Court ruling of February 1, 2006, the distance norm in the Press Note is only directive in nature and does not have mandatory backing from any statute. While Clause 6 of the Sugarcane Order empowers the Centre to reserve cane area for any factory, there is no explicit mention of enforcing a minimum distance between two mills.

Powers delegated

Further, Centre has delegated its powers to regulate distribution and movement of cane under Clause 6 to State Governments through a separate notification, dated July 16, 1966. "It was expected that the States would implement the Press Note directive. But this has not happened," officials told Business Line. It is being proposed now to suitably amend the Sugarcane Control Order to incorporate the minimum distance criteria and provide it statutory backing.

But there are grey areas to be sorted out before that. The Centre, for one, has to decide whether the minimum distance to be maintained between an existing and a new mill would also apply for two proposed plants. There is no consensus here, with the country's two sugar majors, Bajaj Hindusthan Ltd (BHL) and Balrampur Chini Mills, locking horns over the issue.

TIME LIMIT

This follows Balrampur Chini constructing factories at Kumbhi and Rudrapur-Gularia in central Uttar Pradesh (UP) that are 18 to 24 km from BHL's Gola and Palia Kalan plants and, thus, conforming to the 15 km distance norm between an existing and new mill. BHL has, however, contended that the new mills lie within 15 km of locations where its affiliate, Ojus Industries Private Ltd, had filed IEMs much before Balrampur.

"If the distance criteria is extended to two proposed units, a time limit has to be set for taking effective steps to implement an IEM. Otherwise, we will have companies filing IEMs simply to block sites and stifle competition, defeating the purpose of de-licensing", the officials noted. There have been cases of individual groups filing up to 250 IEMs in UP alone.

The officials added that the views of individual mills, industry associations and States were being sought before the Order was amended. The meeting convened last week by the Agriculture Minister, Mr Sharad Pawar, with BHL's Chief Executive, Mr Kushagra Bajaj, and the Managing Director, Mr Vivek Saraogi, is said to be part of this consultative process.

More Stories on : Sugar | Agricultural Policy

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