The Centre is exploring alternative measures to bail out the sugar industry, including a significant reduction in the time period for re-export of imported sugar under advance licensing scheme from the present 18 months to three months.

It is also considering increasing duty drawback on exports to rescue the crisis-ridden industry.

Also, sugar mills may be allowed to get loans to the extent of excise duty paid by them last year for which interest subvention would be provided from the Sugar Development Fund (SDF). These were some of the measures discussed by the Centre on Wednesday following a threat of shutdown by about two-thirds of the private sugar companies in Uttar Pradesh.

Finance Minister P. Chidambaram, Agriculture Minister Sharad Pawar and Civil Aviation Minister Ajit Singh, apart from Food and Commerce secretaries deliberated on the current sugar crisis in Uttar Pradesh and discussed these potential interventions, but no decision was taken on Wednesday.

“We have to study the impact of these alternatives. This information we will get in next 8-10 days and again we will sit and finalise,” said Pawar, while stating that the cane crushing should start soon.

In anticipation of some kind of a bailout for the industry, the scrips of sugar companies, such as Balrampur Chini Mills Ltd and Bajaj Hindustan Ltd staged a rally on the bourses. Balrampur ended 9.64 per cent higher at Rs 48.90 on the BSE, while Bajaj Hindustan gained about 14 per cent to close at Rs 14.88. Dalmia Bharat Sugar gained 6 per cent to end at Rs 15.35, while DCM Shriram ended 3.61 per cent higher at Rs 53.10 on BSE.

“We discussed various alternatives but have not taken any decisions,” said Ajit Singh, stating that eventually the Union Cabinet will decide on the issue.

Among the measures discussed include increasing the duty drawback on export from the present 1.3 per cent to around 4 per cent.

Assuming that sugar mills are allowed to avail themselves of loans based on the excise duty paid, they could raise about Rs 1,775 crore. For every quintal of sugar produced, the mills pay a central excise duty of Rs 71 and cess of Rs 24 toward SDF. At last year’s sugar production of 25 million tonnes, the excise duty collected by the Centre is estimated to be around Rs 1,775 crore.

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