UPSMA demands tax relief for payment of sugarcane dues

Lucknow, Feb 11 (UNI) Alarmed over the slump in sugar price in the domestic and international markets, the Uttar Pradesh Sugar Mills Association (UPSMA), affiliated by ISMA, has petitioned the Mulayam Singh Yadav government for immediate relief in taxes, to avoid the delay in payment of the sugarcane prices to the farmers in the crucial election year.

The UPSMA in its memorandum to the state government recently has specifically pointed that the delay in payment of arrears to the farmers will have adverse impact on the electoral prospects of the ruling Samajwadi Party (SP) in Assembly elections slated to be held in April.

The Association has demanded relief from the Purchase Tax levied at Rs 2 per quintal, Society Commission which is levied at the rate of 3 per cent of the Statutory Minimum Price (SMP) of the sugar fixed by the Central government and the exemption from the Entry Tax.

Altogether 22 sugar mills, set up after the new sugar policy was announced in August 2004, have already been exempted from the Entry Tax.

If the demands of the UPSMA are fully conceded by the state government, then it could bring relief of Rs 1,500 crore on account of the Purchase Tax and little over Rs 2,000 crore by way of Society Commission and close to Rs 100 crore if exempted from the Entry Tax.

On an estimated production of 73 lakh metric tonne sugar during the current season 2006-07, the loss to the sugar industry could be as high as Rs 1,500 crore due to slump in prices. The sugar industry in UP also includes the mills in public sector undertakings and co-operative sector.

''The sugar industry in UP is at the verge of a financial crisis during the current crushing season as the sugar prices have declined by Rs 300 per quintal as compared to the same period during the last season 2005-06'', said the UPSMA memorandum to the government. It added each sugar bag sold by the sugar factory is causing a loss of Rs 200 per quintal.

A senior official of the sugar company said the state government had increased the support price for the sugarcane for the current season by Rs 10 per quintal which was not considered to be very high in view of the prevailing prices of the sugar in September 2006 but the situation had deteriorated with a steep fall in prices which are now ruling at Rs 1,450 per quintal in Central UP, and around Rs 1,500 per quintal in Western and Eastern UP.

As per the UPSMA, the average cost of production in UP is estimated to be Rs 17,06 per quintal against which the average selling price for the whole year is not expected to be more than Rs 1,500 per quintal.

''Lifting of restrictions on export of sugar by the UPA government would bring no benefit to the sugar mills in UP as the sugar prices in international markets were ruling at 330 dollars For One Bag (FOB) which works out to be ex-factory realisation of not more than Rs 1,350 per quintal, therefore the export route is closed as far as sugar industry in UP was concerned'' the memorandum further submitted.

The UPSMA memorandum said it is high time for the state government to take some corrective measures by providing some relief to the sugar industry as has been done in the past in such situations like exemption from the Purchase Tax, Society Commission and Entry Tax.

UNI