Lok Sabha Question No. 228 (STARRED), answered on 2017-03-17
Subject: Tax Incentives to Sugar Industry
Ministry: FINANCE
Asked by: C.S. PUTTARAJU

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE *****

## LOK SABHA

## STARRED QUESTION NO. *228

## TO BE ANSWERED ON FRIDAY THE 17 TH  MARCH, 2017 PHALGUNA 26, 1938 (SAKA)

## TAX INCENTIVES TO SUGAR INDUSTRY

## *228. SHRI C.S. PUTTA RAJU:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has taken note of the pitiable condition of sugar industry in the country and if so, the details thereof;
- (b) whether the Government proposes any time bound action plan for tax incentives for the development of sugar industry in the country; and
- (c) if so, the details thereof and the steps taken / proposed to be taken by the Government in this regard?

## ANSWER

## MINISTER OF FINANCE (SHRI ARUN JAITLEY)

- (a), (b) and (c): A statement is placed on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO.228  RAISED  BY  SHRI  C.S.  PUTTA  RAJU  FOR  17TH  MARCH,  2017  REGARDING TAX INCENTIVES TO SUGAR INDUSTRY

Parts (a), (b) and (c): Sustained surplus production over domestic consumption since 201011 sugar season had led to subdued sugar prices, which had stressed the liquidity position of the industry throughout the country leading to build up sugarcane price arrears, reaching to a high of Rs. 21837 crore as on 15.04.2015 for sugar season 2014-15.

To mitigate  the  situation,  Government has  taken  the following  measures  in  past  three years to improve the liquidity position of the sugar industry enabling them to make timely payment of cane dues:

- (a)  In August, 2014, basic customs duty on raw and white/refined sugar was increased from 15% to 25% and subsequently to 40% in April 2015.
- (b)  Financial assistance was extended to the sugar mills in the form of interest free loan through banks under Scheme  for Extending Financial Assistance to Sugar Undertakings  (SEFASU),  2014.  Loans  amounting  to  Rs.  6484.77  crore  were disbursed to sugar mills under this Scheme during sugar season 2013-14.
- (c)  Financial  assistance  was  provided  through  raw  sugar  export  incentive  scheme. Rs.413 crore was disbursed under the scheme during sugar season 2013-14 and 2014-15.
- (d)  Financial assistance of Rs.4212 crore was extended under soft loan Scheme during sugar season 2014-15. Funds were directly credited to farmers account on behalf of sugar mills through banks. About 32 lakh farmers in the country benefited from this Scheme.
- (e)  Supply of ethanol was facilitated under Ethanol Blended Petrol Programme (EBP) by fixing  remunerative  price  and  waiving  off  excise  duty  on  supply  of  ethanol  during sugar  season  2015-16  (up  to  10th  August,  2016).  Notwithstanding  ethanol  for blending being exempt from excise duty, credit of excise duty paid on inputs used in its manufacture was also allowed.
- (f)  A  comprehensive  performance  based  production  subsidy  has  been  extended  @ Rs.4.50  per  quintal  of  cane  crushed  payable  to  farmers  against  their  cane  dues contingent on mills undertaking export and supplying of ethanol during sugar season 2015-16.

These  measures  have  improved  liquidity  position  of  the  sugar  industry,  enabling them to clear sugarcane price dues. The sugarcane price arrears of farmers reduced from its peak  level  of  Rs.  21837  crore  to  Rs.  481  crore  in  sugar  season  2014-15  and  for  sugar season 2015-16, about 98% of sugarcane dues have been cleared. Further, domestic sugar price has improved above their operational viability level strengthening the financial position of sugar mills.

In  view  of  the  above,  there  is  no  proposal  presently  under  consideration  of  the Government to provide any tax incentive to the sugar industry.

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