The Hindu Business Line : TN sugar industry seeks Govt intervention

Soon after assuming office as President of the South Indian Sugar Mills Association (SISMA), Ms Rajshree Pathy, reiterated that the Centre’s measures alone were not enough to bail out the sugar mills in the State from its present crisis.

“We need the immediate intervention of the Tamil Nadu Government. The Government would have to act fast, otherwise the industry would slip into the quagmire of financial difficulties impacting both the social and agrarian economy adversely,” she told Business Line.

Crisis facing the sector

The State has produced a bumper sugarcane crop of over 25 million tonnes (mt) and sugar production is expected to touch 2.5 mt during the current sugar season (October 2006 to September 2007).

“The current price of the domestic wholesale sugar at just around Rs 12.50/kg is far below the cost of production. It has plunged from around Rs 18/kg in the last 12 months. With consumption hovering at around 10 mt and an anticipated bumper crop during the next sugar season (28 mt), not only are the inventory levels rising, the mills in the State are forced to pay high taxes as compared to Karnataka, Andhra Pradesh, Maharashtra or Uttar Pradesh,” she said.

Sharing a table, she pointed out that the taxes and levies on sugarcane and molasses in TN were as high as 130.4 per cent compared to 68 per cent in Karnataka, 31.1 per cent in Maharashtra, 21.6 per cent in Uttar Pradesh and 5.2 in Andhra Pradesh.

“Surplus stocks coupled with declining price levels both in the domestic and international markets, realisations dipping below the cost of production and mounting inventories is adding to our woes,” she said.

Citing the KPMG report which held that sugar could not be classified as an essential commodity when a major chunk of it was being consumed by institutions and should therefore be removed from the purview of the Essential Commodity Act, she said “nine states produce sugar, whereas all States consume this produce.

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