The sugar industry, with its current surplus production and depressed global prices, needs the impetus of a ‘Make in India’ budget. With an annual production of 25 million tonnes, it needs to be globally competitive. I feel the Government has a great opportunity to put into practice its stated intention of making more in India.

The industry hopes that the financial assistance for export of up to 2.5 million tonnes of raw sugar continues and import duty is hiked to 40 per cent to protect domestic mills, as global prices are at a low. To tackle domestic surplus and ensure cash flow to mills, sugar can be diverted to ethanol production for use in the ethanol-blended fuel programme. But the mills will have to be compensated for the revenue loss. Currently, the central excise duty on ethanol is around ₹5 a litre. The molasses excise duty of ₹750 a tonne has to be waived as an incentive.

The Centre should consider using the Sugar Development Fund and other agricultural support programmes to create a strategic sugar stock of 2 million tonnes to bring retail prices to reasonable levels and ensure that farmers also get their due for cane. This will prevent cane payment arrears to farmers and subsequent NPAs with banks.

Pricing policy of sugarcane should be brought on a par with other competing crops like wheat and paddy to check distortions. If a State government sets sugarcane price higher than the Fair and Remunerative Price fixed by the Centre, it should pay the balance. For instance, in the case of wheat and paddy, State governments pay farmers a bonus over and above the minimum support price fixed by the Centre. States can directly transfer the subsidy to farmers’ bank account as all cane payments to farmers are even now made through banks. The NDA Government recently allowed the Food Corporation of India to decide against procuring wheat and paddy in States that announce a bonus over the MSP.

(As told to R Balaji)

A Vellayan is Chairman E.I.D.-Parry (India) Ltd

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