News Release Details
Centre plans to introduce 4% uniform tax on ethanol
New Delhi 25-Sep-2007
In a bid to give a push to ethanol blending by oil companies, the Centre plans to bring ethanol under "product of importance" category and impose 4% sales tax across the country to re-strain states from imposing own levies. Minister for agriculture and food Sharad Pawar is expected to meet state finance ministers in the first week of October to arrive at a consensus in this regard. According to sources, "The Centre is contemplating introduction of a uniform 4% tax on ethanol across the country whereby states will be barred from imposing their own taxes and levies. The Centre has come across cases where several states even where ethanol is not produced are charging local taxes. The uniform tax will give a much-needed boost for the 5% ethanol blending programme from October thisyearandlO%fromOctober2008." Besides, the Centre would also amend the Sugarcane Control Order (SCO) to promote ethanol production by using secondary juice. At present, production of sugar, khandsari and jaggery is allowed under the SCO. "The group of ministers has already made its recommendation in this regard whereby sugar units will be allowed to use secondary juice for the production of ethanol. This is on the lines of Brazil," sources said. Meanwhile, the committee on the revival of sugar sector headed by former finance secretary Vijay Kelkar would give its recommendations only after a detailed study of the regional balances of the sugar industry. The committee members would visit Various sugar producing states, starting with western India. The committee met in the capital on Friday to discuss a revival package for the sugar sector. 'A discussion was held on how to buffer the industry from its cyclical nature. Among other things, the possible benefits of producing ethanol directly from sugarcane during seasons of bumper production to help the industry was discussed," a source said. The committee was set up by the government early this month to chalk out a long-term revival strategy for the ailing sugar industry, burdened by a surge in production and a drastic fall in prices. The panel has been given six months to suggest ways and means to revive the industry. The government has so far set up a sugar buffer stock of 50 lakh tonne and has instituted an export subsidy of Rs 1,350 per tonnein states with ports and Rs 1,450 per tonne in land-locked states. This has been to provide relief to the industry. The country is likely to produce a record 29 million tonne of sugar in the season that ends on September 30, 2007. It is also estimated that India would produce 33.5 million tonne of the sweetener in 2007-08. Demand for sugar in India, the world's second-biggest consumer on the sweetener, is 19-20 million tonne annually. Meanwhile, sugar prices have fallen steadily since June 2006. The average price has fallen to Rs l,250, about Rs 400 below the average cost of production. This has resulted in sugar companies failing to pay farmers from whom they have been buying sugarcane.
New Delhi 25-Sep-2007
In a bid to give a push to ethanol blending by oil companies, the Centre plans to bring ethanol under "product of importance" category and impose 4% sales tax across the country to re-strain states from imposing own levies. Minister for agriculture and food Sharad Pawar is expected to meet state finance ministers in the first week of October to arrive at a consensus in this regard. According to sources, "The Centre is contemplating introduction of a uniform 4% tax on ethanol across the country whereby states will be barred from imposing their own taxes and levies. The Centre has come across cases where several states even where ethanol is not produced are charging local taxes. The uniform tax will give a much-needed boost for the 5% ethanol blending programme from October thisyearandlO%fromOctober2008." Besides, the Centre would also amend the Sugarcane Control Order (SCO) to promote ethanol production by using secondary juice. At present, production of sugar, khandsari and jaggery is allowed under the SCO. "The group of ministers has already made its recommendation in this regard whereby sugar units will be allowed to use secondary juice for the production of ethanol. This is on the lines of Brazil," sources said. Meanwhile, the committee on the revival of sugar sector headed by former finance secretary Vijay Kelkar would give its recommendations only after a detailed study of the regional balances of the sugar industry. The committee members would visit Various sugar producing states, starting with western India. The committee met in the capital on Friday to discuss a revival package for the sugar sector. 'A discussion was held on how to buffer the industry from its cyclical nature. Among other things, the possible benefits of producing ethanol directly from sugarcane during seasons of bumper production to help the industry was discussed," a source said. The committee was set up by the government early this month to chalk out a long-term revival strategy for the ailing sugar industry, burdened by a surge in production and a drastic fall in prices. The panel has been given six months to suggest ways and means to revive the industry. The government has so far set up a sugar buffer stock of 50 lakh tonne and has instituted an export subsidy of Rs 1,350 per tonnein states with ports and Rs 1,450 per tonne in land-locked states. This has been to provide relief to the industry. The country is likely to produce a record 29 million tonne of sugar in the season that ends on September 30, 2007. It is also estimated that India would produce 33.5 million tonne of the sweetener in 2007-08. Demand for sugar in India, the world's second-biggest consumer on the sweetener, is 19-20 million tonne annually. Meanwhile, sugar prices have fallen steadily since June 2006. The average price has fallen to Rs l,250, about Rs 400 below the average cost of production. This has resulted in sugar companies failing to pay farmers from whom they have been buying sugarcane.