Lucknow/New Delhi: Ending a week-long impasse over cane prices, private sugar mill owners in Uttar Pradesh have agreed to start crushing at the rate of Rs 280 per quintal, but said that the present pricing is "unviable".

"Sugar industry of Uttar Pradesh at the initiative of the Chief Minister and in the larger interest of lakhs of farmers announced commencement of crushing operation for session 2013-14, despite operations being unviable at the present cane pricing," UP Sugar Mills Association Secretary Deepak Guptara said in a statement. Announcing tax breaks to end the impasse in the sugar industry, Uttar Pradesh government on November 28 warned sugar mills of legal action if they did not start operations by next week.

Earlier in the day, state Chief Secretary Javed Usmani told reporters that setting aside their demand of not paying more than at the rate of Rs 225 per quintal, sugar mills have agreed on the State Advisory Price of Rs 280 per quintal and have promised to start crushing from today. Millers have agreed to make payment for sugarcane in two tranches - Rs 260 in the scheduled minimum time and Rs 20 at the end of the session. Most of the 99 private mills out of state's 122 units had earlier refused to start sugarcane crushing from October as they found the Rs 280 per quintal price set by state government as unviable, prompting even Centre to consider a financial bailout package for the industry. Usmani said mills have requested the government that they were ready to pay Rs 260 per quintal in the scheduled minimum time, but in the wake of drop in sugar price, remaining Rs 20 would be paid at the end of the season.

The state government has accepted the demands. The Chief Secretary said that on the request of the sugar mills, the government has decided to bear the commission to be paid to the sugarcane committees which would amount to Rs 500 crore. In addition to this, he said the government has exempted from Rs 2 per quintal purchase tax benefitting the sugar mills by Rs 160 crore. Usmani said the sugar mills would be given rebate in the entry tax which would save them Rs 219 crore. He said that all the district magistrates have been directed to hold meetings with the authorities of the sugar mills in their area. He said that action would be taken against those adopting dilly dallying tactics.

The CS said that recovery certificates issued against the nine sugar mills have been suspended under the current scenario. "The state government has assured that a long-term viable cane price fixation formula would be worked out so as to ensure long-term viability and growth of industry," Guptara said.

PTI