The government in the biggest sugarcane producing state, Uttar Pradesh, is working on a new Sugar Investment Policy. The aim is to provide incentives for investments in the eastern part of the state, in sugar, ethanol and bagasse-based power.
UP is the country’s second biggest sugar-producing state, after Maharashtra, while being first in cane. Top industry players such as Bajaj Hindusthan, Balrampur Chini and Triveni Engineering have operations in UP.
As the industry in UP is concentrated in the western and central regions, the new policy is to offer incentives for investments in the eastern region, said an official. “New investment in the eastern region with distillery and co-generation facilities will be eligible for various fiscal incentives under this policy,” he added.
An industry official said the new policy could attract investment if the sector saw reforms such as removal of the levy sugar obligation and other controls as recently suggested by the Rangarajan committee.
The 2004 Sugar Investment Policy announced by the then state government under Mulayam Singh Yadav had attracted investments of close to Rs 10,000 crore, in both expansion and new capacity.
The 2004 Policy had provided incentives such as exemption from entry tax, trade tax on molasses, stamp duty and registration charges on purchase of land, purchase tax on cane, society commission on cane and administrative charges on molasses. It also offered subsidy on transport of sugar and cane and a capital subsidy of 10 per cent on investment. All these were to be given for five years if a company/group invested a minimum of Rs 350 crore and for 10 years if the investments were at least Rs 500 crore. However, the policy was scrapped by the Mayawati government immediately after it came to power in May 2007, and some companies could not avail of the benefits on the investments made.
The state official said the government was evaluating options to give the earlier-promised incentives due to various companies under the 2004 Policy.