The Punjab government, in an effort to save sugarcane growers and sugar manufacturers, is planning to impose entry tax on sugar coming from the outside states. It has moved an ordinance for the governor’s approval.
It is being proposed to impose about 15% entry tax to offset the difference in price of sugar coming from outside the state and that manufactured in Punjab. The state cane commissioner is preparing a draft proposal.
Though, the BJP, the coalition partner of the Shiromani Akali Dal (SAD) in the state government, doesn’t seem keen on the proposal.
Industries minister Madan Mohan Mittal told HT, “The state government wants to do it but it is taking time as we have to gauge the mood of people living in the state as it would lead to increase in sugar prices. Are they willing to bear the additional cost is to be seen.”
The industries department would collect the tax that would go into a corpus account from which the payment would be made to the farmers. Punjab owes Rs 600 crore to sugarcane farmers and it has kept budgetary provision of the same amount to be paid to cooperative sugar mills.
Also, the increase in the price of sugar from outside would lead to a hike in price of sugar manufactured in the mills of the state, helping them in stabilising the business which these days is running in heavy losses as they are not been able to break even.
“We are buying sugarcane at a high price and selling sugar at a price less than that of the sugarcane,” said Rana Inderpartap Singh, a sugar mill owner, claiming that the entry tax was the only way to save the mills. In March, he had led a delegation to chief minister Parkash Singh Badal to talk about the plight of sugar mill owners and also threatened to shut down mills in the forthcoming kharif season when the sugarcane crop is harvested. It led to the idea of imposition of entry tax on sugar coming from outside states.
On the last day of the budget session on March 25, the bill for imposition of entry tax was deferred and the matter was to be discussed in the council of ministers. “A thorough discussion should be held on the matter, that is why the bill was deferred in the house,” said local bodies minister Anil Joshi, adding that so far no discussion had taken place on the issue. Mittal and Joshi belong to the BJP.
Meanwhile, agriculture minister Jathedar Tota Singh of the SAD wants that the decision on entry tax be taken swiftly so that a system is put in place before the sugarcane crop arrives. According to him, “Mill owners have threatened to shut down so where would the sugarcane farmer go.” He suggested to the government to act fast.
Punjab’s sugar manufacturers are suffering as sugar entering the state’s markets from outside is priced lower by Rs 3-4 per kg as compared to the state-produced sugar.
Estimates by the industry department suggest that the state could collect between Rs 150 crore and Rs 200 crore from the levy, besides it proving a level-playing field for the state sugar industry.
There are 16 sugar mills in Punjab – nine cooperative and seven private. A total of 7.5 lakh tonne of sugar is manufactured in the state whereas the total consumption is 10 lakh tonne. “More than 2.5 lakh tonne sugar enters the state’s market at lower rates, disturbing the market,” Rana Inderpartap said.