Sugarcane cultivators in the region want dynamic fixation of import duty on sugar to prevent stagnation of sugar stocks in the national kitty caused by international depression in sugar prices. Import duty must be calibrated to suit domestic production and procurement, as and when need arises.
The Central government’s recent decision to increase import duty from 25 per cent to 40 per cent under Open General Licence (OGL) is not going to free farmers from sufferings caused by failure of mills to pay them their dues, the farmers say.
However, they are relieved over the Centre removing excise duty on ethanol supplied for blending, and passing on the price benefit of 12.36 per cent central excise duty to sugar mills to improve their liquidity and clear arrears of cane dues to farmers.
Dues to farmers
Over the last four years, surplus sugar production and lesser import duty has spelt doom on the sector, causing difficulties for the mills to clear cane dues to farmers.
The government has been assisting the mills to overcome liquidity constraints by providing interest-free working capital loans and incentives for raw sugar exports. Yet, the cane dues arrears have escalated due to the adverse price sentiments.
The Central government is to blame for the situation since it has allowed the price of sugar to fall below Rs. 3,200 per quintal despite fixing Fair and Remunerative Price at 2,200, the farmers say, rueing that the situation in Tamil Nadu is worse still.
VAT
Even after passage of two crushing seasons, the State government has not only failed to prevail upon mills to abide by the State Advisory Price, but has also imposed 5 per cent Value Added Tax on sugar due to which mills in Karnataka enjoying price advantage dump the product in Tamil Nadu, says K.V. Ponnaiyan, president of Tamil Nadu Swadeshi Farmers’ Association.
The mills in Tamil Nadu are at a disadvantage also because payments for power procured at Rs. 3.50 per unit from the co-generation plants are delayed.
Also, ethanol stock has stagnated in the mills because the tax has been fixed at 14.5 per cent in Tamil Nadu compared to just 2 per cent in Andhra Pradesh and Karnataka.
Tamil Nadu must not only set right the anomalies, but also take the cue from Karnataka and Uttar Pradesh governments that are paying SAP to cultivators directly.
Loan assistance
On its part, the Centre must step in decisively at this juncture to settle all outstanding dues to farmers by offering soft loan assistance to mills from the Sugar Development Fund, says Mr. Ponnaiyan.
