UP sugar industry again threatens a shutdown over cane pricing

NEW DELHI: After facing the ire on law & order issues, UP government might face the closure of its sole and the largest agriculture based Rs35,000 crore sugar industry. UP sugar industry, the second largest in the country, has for the second time since the commencement of the sugar season 2013-14, decided to declare a shutdown, this time for a whole year, if their demand for rational cane price is not met. The sugar industry of the state, which houses noted names such as Bajaj HindustanBSE -1.43 %, Dhampur SugarBSE -1.47 %, Dalmia SugarBSE -0.55 % among others has complained that due to lack of a definite cane price linkage formula, the industry is in no position to pay “unreasonably decided cane price”.

The industry executives said that out of all the incentives announced by the central government, none will come to their rescue. “Of the Rs4,400 crore interest-free loan announced by the centre on Monday, only 30% i.e. Rs1,300 crore will fall in the kitty of the state. Others like ethanol blending is no financial aid and export subsidy is for sugar exporting state Maharashtra,” said a senior sugar industry executive.

The cane payment arrears in the state has touched Rs7,000 crore and the industry fears that it would cross the Rs10,000 crore mark by season end.”Under these circumstances, when our own State Government is not appreciative of the problems faced by the industry, and assurances given are not fulfilled, there seems to be no other alternative but to suspend crushing operations of our sugar factories during 2014-15 sugar season,” said the letter written by UP Sugar Mills Association (UPSMA) to the chief secretary, government of Uttar Pradesh. The letter reviewed by ET said that during 2011-12 and 2012-13 sugar seasons alone, the industry has lost around Rs4000 crore, only because there has been a total mismatch between the sugar prices fixed by UP Government and the revenue realization by the mills.