Sugar industry seeks excise duty deferral to stay afloat

Chennai, May 30 | Updated: May 31 2007, 05:30am hrs
The beleaguered sugar industry, struggling to come to terms with low realisation and surplus production, has sought deferral of excise duty for a period of two years in a bid to extricate itself from the financial mess it finds itself in.

A memorandum seeking such a relief has been submitted by the Indian Sugar Mills Association (ISMA) to the food ministry a few days back. Confirming the development, ISMA secretary-general SL Jain said that the industry is facing an unprecedented situation with sugar prices declining steeply.

Today the selling price of sugar in many states is even lower than the cost of cane and in this situation, without significant relief, it will be very difficult for the mills to meet their financial commitments, he said.

Cane arrears, which has been piling up for some time now, is to the tune of Rs 6,000 crore across the country with Uttar Pradesh mills alone owing the farmers more than Rs 2,000 crore. With sugar crushing across the country in its last stages, it is estimated that the sugar production would finally end up at around 270 lakh tonne.

This would result in the industry carrying forward a stock of 120 lakh tonne which is equivalent to eight months domestic consumption.