The Punjab government is planning to impose entry tax on sugar coming from other states. A bill was to be moved on the last day of the budget session on Wednesday, but it was deferred so that the issue could be discussed threadbare and the interests of all stakeholders – sugar manufacturers, sugarcane farmers and consumers – are protected.
The idea of entry tax on sugar emerged after mill owners met Punjab chief minister Parkash Singh Badal a fortnight ago and gave him an ultimatum that they would close the mills as the industry was facing a crisis.
“The state’s industry is hit by lower-priced sugar coming from Uttar Pradesh,” said Rana Inderpartap Singh of Rana Sugar mills, part of the delegation that met CM. He added that price of sugarcane was `29 a kg, while sugar was selling for Rs 26 per kg.
“So, the idea to impose entry tax on sugar from outside states was discussed within the government,” said Inderpartap’s father Rana Gurjeet Singh who is a Congress party MLA.
“We did not want to take any decision in a hurry, so we deferred the introduction of the bill,” Punjab industries minister Madan Mohan Mittal told HT.
“Punjab’s sugar manufacturers are suffering because sugar entering the state’s market is priced `3-4 lower per kg, compared to the state-produced sugar,” he added.
He added that the government planned to impose up to 20% entry tax on the difference in price of sugar coming from outside the state and that manufactured in Punjab.
Estimates by the industry department suggest that the state could collect between rs 150 and Rs 200 crore from the levy, besides proving a level-playing field to the state sugar industry.
The entry tax would go into a corpus fund used to make payment to the sugarcane farmers. “Interest of two stake holders — the sugar manufacturer and the farmer is being guarded with the proposal, and we want consumers interest also to be protected, so the issue would be discussed in detail in a meeting of council of ministers,” said Mittal.
Sources said the bill was withdrawn when deputy CM Sukhbir Singh Badal and industries minister Madan Mohan Mittal decided to take up the matter in the cabinet.
“Mills owners have threatened to shut down, so where would the sugarcane farmer go, the government must act fast and support the farmers,” said state agriculture minister Tota Singh.
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, said Singh.
There are 16 sugar mills in Punjab – nine cooperative and seven private. A total of 7.5 lakh tonne of sugar is manufactured in Punjab and 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,” added Rana Inderpartap, claiming that the entry tax was the only way to save the mills.
NOT SO SWEET
• Punjab’s sugar manufacturers are suffering because sugar entering the state’s market is priced Rs 3-4 lower per kg, compared to the state-produced sugar
• Raw material cost is also a concern. The price of sugarcane is Rs 29 a kg, while sugar sells at Rs 26 a kg.
• The government planned to impose up to 20% entry tax on the difference in price of sugar coming from outside the state and that manufactured in Punjab.