The Indian government has issued show-cause notices to more than 20 sugar companies/mills for selling sugar more in the open market than the allocated quota, according to sources. Action is likely to follow after replies are received from them as some companies have sold 30-40 per cent more sugar than the allocated quantity. Mails sent by businessline to four of the companies in the list have not evoked any response, so far.
The Food Ministry, responsible for monthly allocations of sugar sales for each mill in the open market, had assigned 98 lakh tonnes for the four-month period spanning October 2023 to January 2024 in the current season. However, while checking their monthly returns the Government found that some of the mills have sold more sugar above their allotted quantity, the sources said.
Powers under SCO
As this being an election year and there is likely to be lower sugar production compared with 2022-23 season, the Government has taken the matter seriously and has been contemplating actions based on the replies received from them, the sources said.
Though powers have been conferred on the government under the Sugar Control Order (SCO) to even seize the stock of the mills, there could be some penalty imposed and quota for those mills may be reduced, the sources said. However, overall quota for any month will not be reduced as it will impact prices, the sources said.
It is learnt that the Ministry found the excess sales of sugar during the verification of the monthly returns filed by the mills when it tried to match with their GST returns.
In a letter to all sugar mills, Sangeet, Director (sugar), reminded that monthly stock holding limits on sugar factories have been continuing since the last few years under the Sugar Price (Control) Order 2018, Sugar (Control) Order, 1966, under the Essential Commodities Act, 1955, so that sugar prices in the country should remain stable.
Deviation distorts
In the letter, he said a few sugar factories were not following the monthly stock holding limit and they are selling either higher or significantly lower quantity (less than 90 per cent) from their monthly quota. “Deviation from the monthly stock limits by sugar factories would distort the domestic sugar market and may also interrupt the steps taken by the Government in interest of sugar industry,” he said in the communication.
He also pointed out that the domestic sale as given in GST data is not matched with the data mentioned by some sugar factories in P-II form they file every month with the Food Ministry’s Directorate of Sugar though the online portal. Also, there is no uniformity in the quantity as sugar factories are using different weighing units such as tonnes, quintals, kg, packet, bags, boxes, while issuing the e-invoice under GST, he said. The Sugar Directorate issued guidelines last week making it uniform for all mills to use metric tonnes while filing returns.
Though the guidelines also made it mandatory for mills to to sell at least 90 per cent of their monthly release quota and to reduce the quota in subsequent month in case of failure, sources said in case of genuine problems the grace period of 15 days to complete the sale quota will also be granted.
However, the government has decided to take strict action against the non-compliant factories for selling of sugar quantity in excess of monthly release quota, the sources said.