Pay arrears, will raise import duty: Paswan to sugar barons

The Government on Thursday said it would raise import duty on sugar only if mills, particularly in Uttar Pradesh (UP), cleared outstanding cane arrears to farmers. It gave a deadline of September 30, the end of the 2013-14 crushing season, to the mill owners.

Addressing a press conference here after a meeting with mill owners from cane-growing States as well as industry representatives, Food Minister Ram Vilas Paswan said: “We are ready to raise the import duty to 40 per cent from 15 per cent, maintain export incentives for raw sugar, allow ethanol blending up to 10 per cent from the current 5 per cent but the mills have to give an assurance that they will clear the farmers’ dues.”

As of August 11, the total outstanding cane arrears to farmers for the 2013-14 crushing season stood at ₹8,703 crore. Mill owners in UP, the country’s second-largest producing State, owe farmers ₹5,304 crore which forms the majority of the arrears. Five UP sugar companies – Bajaj Hindusthan, Modi Sugar Mills, Mawana Sugars Ltd., Simbhaoli Sugars Ltd. and Shamli Sugar – owe the bulk of the arrears at a combined ₹2,941 crore.

Paswan urged the UP Government to take a tough stand against the mill owners. “The UP Government has taken soft action so far and should be tougher to make sure they clear the cane arrears,” he said.

The mill owners, however, blame the State Government for fixing cane price at ₹280 a quintal, far higher than the Union Government suggested Fair & Remunerative Price (FRP) of ₹210/quintal. They claimed that this State Advised Price (SAP), coupled with depressed sugar prices, locally and abroad, had resulted in sizeable losses, as a result of which they were unable to remunerate cane farmers.

“We’re taking steps to resolve the problem but the mills will have to do their bit as well,” said Paswan. He said the mills had not yet provided a written assurance that they would clear the arrears.

At a meeting earlier this month, representatives from the UP sugar industry had announced suspension of crushing operations during the season beginning October, demanding that the State Government follow the Rangarajan Committee’s formula that links the price of cane with that of sugar.

“I think the problem is far too complex and the meeting on Thursday was the beginning of a dialogue. My company’s interpretation of the issue is different and I would not like to comment as the matter is sub judice,” said Gursimran Mann, Executive Director of Simbhaoli Sugars Ltd.

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