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Carrot-&-stick for sugar mills

Lucknow, Nov. 28: The Uttar Pradesh government today tried the carrot-and-stick formula with sugar mill owners by announcing tax sops for them, while ruling out any negotiation on cane rates and also warning of legal action if crushing operations did not start by next week.

The state has waived entry tax and purchase tax to soften the high procurement price for mills. However, it is in “no position to carry out further talks with the sugar mill owners as the demand to lower the sugar support price from Rs 280 to Rs 225 has been rejected once and for all,” cane commissioner Subhas Chandra Sharma told reporters this evening.

Rahul Bhatnagar, the principal secretary to the department of cane development, said: “I don’t see any further scope for talks on this. The industry has two options before it: start mills or face legal action.”

Bhatnagar said the mill owners were granted a purchase tax waiver amounting to Rs 809 crore. The waiver on entry tax will mean a gain of Rs 219 crore for mill owners. However, mill owners can avail themselves of the entry tax waiver only if they start crushing immediately.

However, millers are not happy with the tax sops saying the incentive only translates to Rs 6 per quintal reduction in sugarcane rate compared with a subsidy of Rs 55 per quintal required to run their factories.

Striking a confrontationist note, they said they would not operate mills and were ready to “face any action”.

Soon after, Indian Sugar Mills Association director- general Abinash Verma said: “We will not start crushing operations unless a reasonable price is fixed and the Rangarajan committee’s recommendation (on linking cane rates with sugar prices) are accepted.”

He said the current market price was not viable for buying sugarcane at Rs 280 per quintal and urged the state government to “get out of the politics of fixing cane price”.

In New Delhi, food minister K.V. Thomas said the Centre was working on a financial package that might include interest-free loans to the millers.

 
 
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