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Sugar industry-government standoff continues in UP

The first meeting between the promoters of top Uttar Pradesh sugar companies and Chief Minister Akhilesh Yadav on Sunday evening ended inconclusively.

Ajay Modi | November 25, 2013 | Updated 15:31 IST
Sugar industry-government standoff continues in UP

The standoff between the sugar industry and the Uttar Pradesh government over sugarcane pricing continues. The first meeting between the promoters of top Uttar Pradesh sugar companies and Chief Minister Akhilesh Yadav on Sunday evening ended inconclusively. Another round of meetings is slated for Tuesday evening.

The meeting in Lucknow was attended by Kushagra Bajaj, Vice Chairman and Joint Managing Director of Bajaj Hindusthan; Vivek Saraogi, Managing Director of Balrampur Chini; and Tarun Sawhney, Joint Managing Director of Triveni Engineering, among others.

"The CM is keen to get mills started first and then look into providing relief in due course of time. But the industry stuck to its stand and therefore the meet ended without a resolution," said an industry official.

The state government had set a November 25 deadline for mills in Western Uttar Pradesh to start but none of the private millers have started so far.

Last week, the state Cabinet announced that the sugarcane price for this year would remain unchanged at Rs 280 a quintal. It also said that mills will not be required to pay a Purchase Tax of Rs 2 on every quintal of sugarcane. However, the industry has said it can offer farmers a price of Rs 225 per quintal due to low sugar realisations.  

If the state government makes up for this gap of Rs 55 per quintal, it will have to fork out Rs 4,000 crore as a subsidy.

"Last year, the industry paid Rs 280 as sugarcane price and realised Rs 3,150 for a quintal of sugar. We ended the year with a loss of Rs 3,000 crore. This year, we are realising Rs 2,900 for every quintal of sugar. If we buy sugarcane at Rs 280, our losses will be Rs 5,000 crore," said the official.

Uttar Pradesh is the second-largest sugar-producing state and accounts for 30 per cent of output. A prolonged delay in the state's crushing operations could trigger a rise in sugar prices. 

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