Full text of "Problems Of Sugar Industry In India"

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UMVERSITY LIBRARY 

No . 




PROBLEMS OF SUGAR 
INDUSTRY IN INDIA- 

SCOPE AND PROSPECTS OF' RE-ORGANISATION 
IN POST WAR PERIOD 

BY 

M. P. GANDHI, 

Editor: Indian Sugar Industry Annual ai\d Imhan C.ntyon Textile Industry 
Annual, since 1935 ; part- time Honorary Profc&por, Sydenhain College of Commerce, 
and Economics, Bombay ; Proprietor, Bombay Commercial Corporation, etrr. 
\Formerly, Ashburner Prizeman, Bombay University, (1924) ; Secretary , lyrfiian 
Chamber of Commerce, Calcutta (1^26-^6) ; Secrcta-ry, Federation of Indian Cfham- 
"oerv of 'Commerce' n\\d Industry (VJ28-29) ; Indian National Committee, International 
Chti,,)bcr ol Commerce (W2S-'JO) ; Indian Sugar Millx Association '(1932-36) ; Direc- 
for, lii(im,> tiiictar Syndicate Ltd. (W37-40) : Member, U. P. & Bihar Joint Power 
Alcohol Committee (1 937 -38) : Member, Bihar Government Labour Enquiry 
Committee (1938-40) ; Member, U. P. <fr fttlwr Sugar Control Board (1939-40) ; 
Cliiej Commercial Manager, Dalmia Group oj Industrie!*! comprising .sugar, paper, 
eemcut t coal, etc., (1937-40) : Member, f'ural Industries Sub-Committee of the 
National Planning Cowurittee, (1,040) ; Controller oj Supplies, Bengal Circle, 
(lowrnnient oj India. (1941), etc. 



WITH A FOREWORD BY 

SIR PURSHOTAMDAS THAKURDAS, K.B.E., C.I.E. 



EXTRACT FROM THE FOREWORD 

Viewed from (his general aspect, I am sure the public in India 
will more than -welcome this publication at this juncture. The author 
has been issuing Annuals reganljtiy- Jjhpv .Cotton Textile, and 
Sugar industries in India, which Jiavr^c^h regarded as standard works 
of reference and the usefulness of which has been steadily kept up by 
the untiring zeal with which the author brings out revised and amplified 
editions every year. 1 congratulate .Mr. MrP| 'panel hi on the great- 
industry and care which he has put Ififo .the preparation of this work, 
and I believe that the Indian public will endorse my hope that similar 
careful studies of other ' -ies serving India's needs will be under- 
taken by students of eco in years to come. 



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HANDLOOM WEAVING INDUSTRY IN INDIA 

(ITS PAST AND PRESENT POSITION AND 
POTENTIALITIES IN POST-WAR PERIOD) 



BY 

Mr. M. P. GANDHI, 

Proprietor, Bombay Commercial Corporation; Bombay Agent, Gujarat Paper 
Mills Ltd. ; Editor, Indian Cotton Textile Industry Annual and Indian 
Sugar Industry Annual ; Honorary Lecturer in Cotton Economics, Syden- 
ham College of Commerce & Economics, Government oj Bombay ; 
I Formerly, Controller of Supplies, Bengal Circle, Supply Department, 
Government of India : Secretary, Indian Chamber of Commerce, 
Calcutta ; Secretary, Indian Colliery Owners' Association ; 
Secretary, Indian Sugar Mills Association ; Secretary, Federation 
of Indian Chambers of Commerce & Industry ; Secretary, 
Indian National Committee, International Chamber of 
Commerce ; Chief Commercia/ Manager, Dalmia Cement 
Ltd. & Rohtas Industries Ltd, ; Head of Credit Depart- 
ment, National City Bank of New York, Calcutta ; 
Director, Indian Sugar Syndicate Ltd. ; Member, 
Bihar Government Labour Enquiry Committee ; 
Member, U. P. & Bihar Joint Power Alcohol 
Committee ; Member, U. P. & Bihar Sugar 
Control Board; Member, Cottage & Rural 
Industries Sub-Committee of the National 
Planning Committee ; Member, Advisory 
Committee, East Indian Railway; 
Member, Executive Committee, Ben- 
gal Textile Institute ; Ashburner 
Prizeman, Bombay University ; 
Examiner in B.Com. Examin- 
ation of the University of 
Allahabad, Lucknow, and 
Bombay.] 



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FOREWORD 

BY 

SIR PURSHOTAMDAS THAKURDAS, K.B.E., CXE. 

Of the various questions relating to the sugar industry in India dis- 
cussed by the author in this publication, the one which has an imme- 
diate interest for the Indian economic system as a whole at this juncture 
is the extent to which protection afforded by the Government of India 
during the period from 1930 onwards has vindicated itself. The pro- 
duction of sugar in India during this period, that is from 1930 to 1944, 
has gone up, as indicated in Table 3 in Chapter V in the following 
pages. Cane factory production went up from 158,000 tons to 1,216,000 
tons between 1931-32 and 1943-44, and the nett import of sugar into 
British India went down from 438,000 tons in 1931-32 to 18,000 tons 
in 1940-41. That in spite of this increase in production, there was 
scarcity of sugar tluring the last five years of the war period, and efforts 
had to be made by the Government of India to control sugar distribu- 
tion and ration it, has its own lesson to teach. How the masses took 
to sugar increasingly is evident to anybody conversant with the rural 
and urban areas in India and the steadily increasing hunger for sugar 
during this period. 

In Chapter III, the author discusses the economics of discriminating 
protection and tries to meet the arguments advanced by parties interested 
in imports of sugar from abroad into India, particularly the Bengal 
Chamber of Commerce, and some economists in India who supported 
that view. If Sir George Schuster, as Finance Member of the Govern- 
ment of India, had not, as appeared then, taken his courage in both 
hands and decided to give protection to the sugar industry, the economic 
history of India during the war period as far as sugar consumers are 
concerned, and indeed even as far as the requirement of the Army in 
India is concerned, would have been substantially different. Those 
who wished to rely upon what they fondly called cheap sugar from 
Java, would have had the mortification of seeing the Indian public 
falling back only on local Gur production, and large quantities of 
sugar would have had to be imported for the British and American 
troops in India who would otherwise have had to go without sugar. 



IV PORJEWOR* 

Thanks to the policy of protection, however, they had a considerably 
greater ration of sugar than what fell to the lot of the civil consumer 
in India. It is hoped that the experience of India during the last five 
years would put an end to controversies regarding the advisability 
of protection for Indian industry and prevent vested non-Indian interests 
from misguiding the Indian consumer into opposing a sane protectionist 
policy for any industry. 

It has to be borne in mind that the comparative chaos in organising 
a proper distribution policy through reasonably honest channels during 
this period has and justifiably so more than irritated the Indian con- 
sumer. Those who are of the nationalist school feel that if Indian 
Ministries responsible to the Legislature were in power in various pro- 
vinces and the Centre, the story might have been appreciably different. 
But this may be open to the charge of being mere wishful thinking 
and need not be pursued at this stage. The distributors and manu- 
facturers must take this lesson to heart. That the consuming public 
in India, not merely of sugar but also of other articles of local manu- 
facture, ^have passed through experiences which will rankle in their 
minds, is but too evident. But, that, instead of being a reason for not 
building up indigenous industries for local requirements, would indicate 
that there should be enough manufacturing concerns in the country under 
Indian ownership and management to fully meet local require- 
ments under any contingency. This is particularly necessary where an 
Indian industry proves to have been of substantial benefit to the grower 
of the raw produce required for such industry. And in the case of the 
sugar industry in India, there should be little doubt left that the protection 
given to that industry has, to a large extent, been reflected in increased 
cane production and comparatively better return to the cane producer. 
As against this, the return to the producers of, say, cotton or oil-seeds 
in India, which have to find their market abroad in the absence of 
manufacturing industries in India of sufficient size to consume the major 
portion of the supplies, is comparatively small. The facts and figures 
given by the author in this publication go t strengthen the case of 
reasonable protection to the sugar industry in the event of any attack 
on it by uneconomic competition from abroad. 

Chapter XVI in the following pages deals with the important ques- 
tion of scope for further production and consumption of sugar in India. 



1QU.WO1B V 

The author has brought out, without any vestige of doubt, that there 
is waste of resources at every point in the sugar industry as carried on 
at present. The most culpable waste has admittedly been regarding 
the criminal manner in which molasses have been allowed to be wasted 
till now. During the war period, a few laudable efforts were made 
by certain factory owners to get "on, in spite of this apparent antagonism 
of the Government, to the fullest use of molasses, and it is very much 
to be hoped that what has taken place till now in connection with 
molasses will not be tolerated any longer. With full economic use of 
molasses and greater yield of cane per acre of land which, I am convinced, 
is possible if suitable effort, is made in this behalf by the provision 
of irrigation, manuring, better seeds, etc., there is every chance 
of increasing the production of sugar without putting additional acreage 
of land under cane and of sugar being made available to the con- 
sumer in India in larger quantities for meeting the nutritional require- 
ments of the people, and at reasonable prices, under normal peace 
conditions. 

A significant feature of the protection granted to the sugar industry 
is that it benefits not merely the manufacturer of sugar but also the 
cultivator of sugarcane. In several provinces in India, such as the United 
Provinces and Bihar, sugarcane forms a most important cash crop, 
on the proceeds of which the agriculturist depends for meeting his 
obligations in respect of land revenue, payments to creditors and house- 
hold requirements involving cash expenditure. The increase in the 
production of sugar since protection was granted has meant a corres- 
ponding increase in the amount of sugarcane which the agriculturist 
has been able to produce and sell. The sugar industry in this respect 
is typical of a large class of industries in India and it illustrates the 
clpse connection which exists between industry and agriculture and the 
importance to the agriculturist of a properly conceived policy of indus- 
trial development. The idea current in certain quarters that industry 
can be developed only at the expense of agriculture is one which will 
hardly bear examination. The development of the sugar industry in 
recent years has given the lie direct to this contention and the story of 
its growth, as set out by Mr. Gandhi, is therefore valuable, particularly 
now when plans for large-scale industrial development are under active 
consideration in the country. 



VI FOREWORD 

There is one more aspect of the policy of protection, as exempli* 
fied in the case of the sugar industry, which needs to be noticed. The 
cry of protection for the sugar industry in India was first raised nearly 
50 years ago, when bounty-fed sugar in European countries began to 
menace the older sugar-producing countries in the world. But the 
Government of India showed no signs of moving in the direction of 
protecting the Indian industry until as late as 1930. What the country 
might have saved if suitable action had been taken in time is too obvious 
to need elaboration. In this respect, again, the sugar industry is typical 
of Indian industries generally, many of which, with timely assistance, 
would have established themselves long ago and provided much needed 
avenues of occupation and sources of income. If Mr. Gandhi's book 
leads to an awakening of public opinion to the importance of providing 
prompt assistance to our industries, it will have served d very useful 
purpose. 

Viewed from this general aspect, I am sure the public in India 
will more than welcome this publication at this juncture. The author 
has been issuing Annuals regarding the Cotton Textile, and 
Sugar industries in India, which have been regarded as standard works 
of reference and the usefulness of which has been steadily kept up by 
the untiring zeal with which the author brings out revised and amplified 
editions every year. I congratulate Mr. M. P. Gandhi on the great 
industry and care which he has put into the preparation of this work, 
and I believe that the Indian public will endorse my hope that similar 
careful studies of other industries serving India's needs will be under- 
taken by students of economics in years to come. 

"Sunceta", 

Ridge Road, 

Bombay. FURSHOTAMDAS THAKURDAS 

30-10-1945 



AUTHOR'S PREFACE 

The present volume on the " Problems of Sugar Industry in India " is the 
esult of studies and business activities spread over well-nigh two decades. 

Firstly, as a research scholar pursuing my studies in the Benares Hindu 
Jniversity for the M. A. Degree in Political Economy and Political Philosophy, 
vhich I took in 1925 after graduating from the Bombay University in 1923, 
md immediately thereafter, for a period of nearly 10 years, as Secretary of 
leading commercial bodies like the Indian Chamber of Commerce, Calcutta, 
Federation of Indian Chambers of Commerce and Industry, Indian National 
Committee of the international Chamber of Commerce, Indian Colliery 
Owners' Association, I had ample opportunities of indulging in my love of 
study of Indian economic problems ; and I have all along endeavoured to 
embody from time to time the results of such studies in brochures and mono- 
graphs on various industries, large and small. 1 But the Indian Sugar 
fndustry lately came to absorb all my attention, partly because it is unique 
imong protected industries for the multiplicity of its special problems, and 
uartly because of my appointment in 1932 (in addition to being Secretary of 
die Indian Chamber of Commerce) as Secretary of the Indian Sugar Mills 
Association, Calcutta 8 as well, up to 1936, and then, even more, due to my 
appointment as the Chief Commercial Manager a position of greater direct 
responsibility in the Dalmia Combine owning three large sugar mills in 
Bihar, (in addition to plants for cement, paper etc), for a period of nearly three 



1 Vide, for example : 

The History of Cotton Textile Industry in India from the earliest time to the present day, 
being an essay for which the Ashburner Prize 'was awarded in 1934 by the Bombay 
University, to the present author. 
M, P. Gandhi's Indian Cotton Textile IndustryIts Past, Present and Future, 1937 with 

a foreword by Sir Purshotamdas Thakurdas. 
M, P. Gandhi's Indian Cotton Textile Industry Annual, 1938, with a foreword by Mr. Subhas 

Chandra Bose, 
Indian Cotton Textile Industry Annual 1939, with a foreword by the Hon'ble 

Dr. Kailas Nath Katju, Minister for Development, United Provinces. 
Indian Cotton Textile Industry Annual, 1940, with a foreword by Mr. Nalini 

Ranjan Sarker. 
Indian Cotton Textile Industry Annual, 1941, with a foreword by Dr. John 

Matthai. 

Indian Cotton Textile Industry Annual, 1942, with a foreword by Sir Chuni- 

lal B. Mehta, Ex-President, Federation of Indian Chambers of Commerce 
and Industry. 
Indian Cotton Textile Industry Annual, 1943, with a foreword by Sir Homi 

Mody, Ex -Supply Member, Government of India. 
Indian Cotton Textile Industry Annual, 1944. 

" How to Compete with Foreign Cloth "a study in the economics of handspinning. and 
hand weaving, and cotton mills, in the cloth production of the country, with a foreword by 
Sir P. C. Ray, for the English Edition, 1931, and by Mahatma Gandhi, for the Gujerati, 
Hindi, Bengali and Tamil editions, 1932. 

Handloom Weaving Industry in India Its Past and Present Position, and Potentialities 
in the Post-War Period, 1945. 

*The Indian Sugar Mills Association, of which I was the first Secretary* was established at 
Calcutta, on 30th June, 1932. 



viii AUTHOR'S PREFACE 

years. As a Director of the Indian Sugar Syndicate, Ltd. representing tteit 
Dalmia Group for a period of three years from 1937 to 1940, it was incumbeflf 
on me to study directly and in greater detail the structure, efficiency 
technique and organisation of the sugar industry in India, in its technological; 
general and statistical aspects. 

I have no desire to conceal the origin of my work 3 on the Indian Suga 1 ? 
Industry in circumstances which are not quite favourable to a strictlr 
academic detachment. Professionally, I have been for a long time (about 2f 
years) an avowed partisan in current economic controversy, and not unoftei* 
in the past, my study of a particular problem has been motivated by the 
desire to strengthen the brief I held, I venture to hope, however, that I haw 
not only shed the dust of controversy, but I have regained the mental detach* 
ment of my undergraduate and post-graduate days at the Bombay University 
and the Benares Hindu University, to which latter I was also attached as 
research scholar for some time in 1925. The change, I might, perhaps, say, 
is not abrupt, as I have had the honour of serving as a member on various 
Public Committees of Enquiry, like the U. P. & Bihar Joint Power Alcohol 
Committee (1938-39) the Bihar Government Labour Enquiry Committee (1939- 
4P), the U. P. & Bihar Joint Sugar Control Board (194041), the East Indian 
Railway Advisory Committee (193941), the Rural Industries Sub-Committee 
of the National Planning Committee (194041) etc., and since 1943, I -have 
again had the opportunity of cultivating an academic outlook since I accepted 
the position of Honorary Part-time Professor at the Sydenham College of 
Commerce & Economics, in Bombay. 

Broadly, my connections with the industry in the earlier stage were 
largely as a spokesman of the manufacturing interests, but I have also had 
the opportunity of understanding the view-point of other'interests in the in- 
dustry ie., the cultivators, consumers, and labour, during the period of my 
membership of the Bihar Government Labour Enquiry Committee, the U. P. 
& Bihar Joint Sugar Control Board, the Rural Industries Sub-Committee of 
the National Planning Committee, etc. I have also acquainted myself 
personally with the researches-on sugarcane and by-products of sugar being 
conducted in various places, and have visited several important centres of 
research, like Pusa (Bihar), Cawnpore, and various factory farms and 
laboratories in order to gain first-hand knowledge. I have endeavoured all 
through to evince a non-partisan attitude and all my publications have been 
the result of my research work year after year, into the various problems 
of the industry, and the fruits of such research have been presented, 
statistically supported and in an unbiassed manner, in these- various Annuals 
from 1935 till date. 

Having thus had occasion to go into the numerous aspects of the sugar 
industry ^from various angles, I felt an impulse, as soon as my direct 
commercial association with the industry came to an end in 1940, to put 

Vide M. P. Gandhi's Indian Sugar Industry Its Past, Present and Future with a foreword 
by Sheth Walchantf JJirachand, 1934. 



Airmen's PREFACE ix 

gether the results of my studies into a more enduring form than the Sugar 
adustry Annual* which I have been bringing out every year during the last 
iecade commencing from the year 1935, and I have devoted myself to a much 
letailed and detached study of the problems of this industry during the last 
' years in order to reduce to writing some of the conclusions which I have 
T>rmed in regard to the scope and problems of reorganisation of this second 
Kgest national industry of India, with which I have been fortunate to be 
issociated for a period of nearly 14 years since 1932, when the industry was 
granted tariff protection. 

This, then, is the raison d'etre and genesis of this thesis which may be 
;aid to be the result of years of unbiassed and practical research in and study 
rf the sugar industry in its various aspects from different angles and positions 
if special vantage. 

The statistics appertaining to various aspects of the industry have been 
:empiled and built up by me with the greatest care and industry, over a series 
of years, and I venture to claim, are as authoritative and reliable as they can 
be, bearing in mind the woeful lack of general statistical information in this 
country, and the defective basis of agricultural statistics, which cannot be too 
greatly deplored, and which needs to be improved immediately, if proper 
planning for the country is to be undertaken. 

In preparing the present thesis, I have subjected to a critical review the 
various problems before the industry, including the policy of control initiated 
in various provinces by the various Provincial Governments, as also the 
Central Government, since 1937, when the industry has been controlled in a 
very large measure. I am aware that this thesis leans more on the practical 
side than on the theoretical side, but my excuse for it is my desire to pass 
under review the various problems of the industry as they appear to an 
academic person, with a business man's outlook derived from close and 
practical contact with the industry for nearly 14 years. 

My task, in the first instance, is of detecting the relations between a 
number of disparate studies on various aspects of the sugar industry which 
1 had undertaken in the past and, secondly, bringing the light of established 
economic theory to illumine them all. But economic thought, if not economic 

M.P.Gandhi's 

Indian Sugar Industry Annual, 1935 
1936 with a foreword by Lala Karam Chand Thapar. 

1937 with a foreword by Sardar Kripal Singh, President 

Indian Sugar Mills Association. 
M 1938 with a foreword by Dr. Ra jendra Prasad, Ex -President, 

Indian National Congress. 
1939 

n M , 1940 with a foreword by Dr. Syed Mahmud, Ex-Minister, 

Education and Development, Bihar. 

> M 1941 with a foreword by Mr. D. R. Sethi, Director of Agri- 
culture, Bihar. 
,* 1942 with a foreword by Sheth Lalchand Hirachand 

1943 

t t> it 1944 



x AUTHOR'S PKEFACE 

science as such, is of late so far from being established that it is no longer a 
matter of applying a particular body of economic laws and doctrines to parti- 
cular problems. It is even less a matter of wishing for different trends and 
developments in national or world economy other than what have actually 
taken place, wishes in which some of the foremost economists are known to 
have indulged in by way of suggesting a cure for the ills of modern economic 
life. 

1 have endeavoured, for my part, to see the development of the sugar 
industry more in the setting of established trends in world economy than ir 
the setting of economic doctrines, the universality of which seems by no 
means indubitable. In this approach one detects at least what I may call the 
rationality of inevitability and can feel oneself led on to the purposeful task , 
of examining the economics as well as the economies of the sugar industry * 
in a realistic spirit instead of an attitude of wishful thinking. \ 

Two facts emerge as a result of this approach. First, that the develop , 
ment of the sugar industry is part of a redistribution of productive activity 
among the various countries of the world, achieved, superficially and in the 
initial stages, by protectionist policies and later, and more deeply, by 
changes in productive technique tending to widen the range of eligible raw 
material 6 and secondly, that during the last decade, new industries are 
rightly deemed to be so clearly in the national interest that for all practical 
purposes they are emancipated from obedience or conformity to the laws of 
laissez faire economics. In other words, the Stale agrees to take upon itself 
the responsibility of correcting any social injustce that may result from the 
encouragement of such new industries instead of leaving the task blindly 
to the natural forces of the free market. In other words, it is not protect- 
ionism but regulationism, if I may coin the term, that isthe dominant note of 
economic policy. 

I have shown that the sugar industry is the first of the great industries 
to be subject to the redistribution of productive activity through the interven- 
tion of a substitute raw material, viz., beet, and that in regard to the industry 
in India, public policy has, as a matter of fact, exceeded the limits of 
protection as we have understood it till now, and aims at regulation, whidi is 
Of far wider import. Indeed, as I have shown in Chapters II and III, the 
development of Indian economy, as indeed of the economy of many other 
countries, serves only to emphasise the unreality of fiscal controversies along 
the customary lines of free trade versus protectioa 

Nevertheless, on a critical review of the facts of the case it will be seen 
clearly that the Indian sugar industry is, from the national point of view, 
a strictly economic proposition, in the sense that the nation would have been 
obliged, in the absence of an indigenous industry, to pay higher prices for its 
requirements of sugar, not to speak of having to do without it altogether in 
an emergency like the second World War which has just ended 



*VW Chapter I. 



AUTHOR'S PREFACE xx 

But the problem of making the most of the sugar industry, now that it is 
established, is a problem, on the one hand, of improving the quality aftd 
method of cultivation, and maximising the quantity of average yield per 
acre, and on the other, of establishing new industries for the efficient 
utilisation of byproducts of sugar manufacture. These problems have been 
examined in the appropriate places in detail, while the internal economies of 
the sugar industry, which are deemed to be of comparatively less importance, 
have been discussed in brief. 

Since popular welfare is the measure of all matters of public policy, 
a few pages have been devoted to the relation between the sugar industry 
and the adequacy of so important a dietetic article for the people of the 
country. Here I have taken the view that the maximisation of sugar 
consumption in India should be attempted mainly through the full realisation 
of economies in cultivation and manufacture rather than through abrupt and 
grandiose schemes of expansion of acreage. It is indeed heartening to find 
that with such economies and proper planning, production of sugar, inclusive 
of gur, can be easily doubled, if not trebled, without increase of acreage of 
sugarcane, in a few years, and with the improvement in the standard of 
living of the people, which is essential and which appears to show signs of 
accomplishment as a result of the recent acceptance of economic planning 
by the Government and the people, it is possible to envisage a satisfactory 
increase in the per capita consumption of sugar in India, in keeping with our 
basic resources and the requirements of adequate nutrition. The means by 
which our total sugar production, inclusive of gur, can be doubled, if not 
trebled, within the next few years, are examined in Chapter XVI, together 
with the technological basis of such expansion and an estimate of the capital 
cost involved therein. t 

The sugar industry is in many ways different from our other protected 
industries. The grant of protection to sugar brought in its wake a series of 
measures for the control of the price of sugarcane in the major sugar "produc- 
ing provinces of Bihar and UP. And these entailed a number of administra- 
tive devices for enforcing price control. The sugar industry is again unique 
in its link with agriculture, & link for which there is no exact parallel in the 
case of other protected industries. Besides, broadly considered, it comprises 
not only the modern vacuum pan sugar factories, but also the production by 
villagers of Gur and Khandsari Sugar . In the production of raw material as 
well as the utilisation of by-products like molasses and bagasse, there 
are a number of technical problems which the public will need to appraise, 
both by themselves and in their relation to the fortunes and progress of the 
sugar industry. In this, the reader will find this volume a valuable, if not 
wholly self-contained, help. 

It is, however, the problem of protection that is likely to have the widest 
appeal. Reference may be made here to the special approach to this 
problem, which is attempted in this work. It is maintained in the first place, 
that the place of beet sugar in the world sugar industry shows that, given 



i AUTHOR'S PREFACE 

certain aids and favourable conditions, a substitute like beet sugar can gain 
as much importance as the natural product and that beet sugar furnishes the 
first instance of ersatz* of which the world must liear more and more 
in course of time. 

Secondly, it has been shown that, in the conditions of world economy 
and international trade which have obtained since the Depression, the 
question of the price at which the consumer of sugar in India could have got 
the imported product, is more than usually hypothetical and that, all the 
world over, fiscal controversies have an element of unreality which it is 
unwise to overlook or underrate. 

Thirdly, it has been argued that, since comparison with probable import 
prices is impossible in the altered conditions of world trade, the only test of 
the success of protection is whether the sugar industry has satisfied the 
expectations of the Tariff Board and whether the consumer has had to pay 
a higher price for sugar. That the consumer has paid less than during the 
pre-protection period is well-known. What is not as well-known is that the 
industry achieved, even before the commencement of the World War, more 
than was expected of it by the Tariff Board, and that further progress did not 
rest with the industry but with the development of our agriculture and the 
establishment of industries for the utilisation of by-products. 

And the history of the sugar industry must be deemed to have provided a 
welcome corrective to the most serious of economic misconceptions in India that 
economic progress can be achieved by attending to industry or agriculture 
without regard to the links between the two. 

And fourthly, it ought also to be remembered that the reason which 
weighed-most with the Tariff Board in recommending for this industry tariff 
protection of an unique nature, viz., protection for a period of 15 years the 
longest period for which protection has been recommended for any industry 
so far without making any attempt at the same time to foresee the period 
when the need for protection would be obviated was the link between this 
industry and agriculture. The Tariff Board definitely ignored the theory of 
protection in its classical form, and in doing so, far from being guilty of 
lowering the tests of a sound protectionist policy, they only showed a keener 
grasp of the special requirements of the industry. 

We thus come to the most important point, viz., that in the conditions of 
India today, nothing can be a graver blunder than to look at the problems of 
each industry separately from those of others and to consider industrial 
development apart from the development of our agriculture. With such 
a compartmentalised view, the national economy would be imprisoned in a 
vicious circle, agricultural development waiting for industry to provide 
artificial fertilisers at sufficiently low prices, and industries unable to compete 
because agriculture cannot furnish the raw material at economic prices. 



Vfcte Chapter!. 



AUTHOR'S IPREFACE xiii 

The main conclusion, therefore, is that, protection to sugar is an unquali- 
fied success in the sense that the country has been recompensed for the aid 
given to the industry, particularly in the war period, and there is wide scope 
for future progress of the industry, which can be secured only by co-ordinated 
development in both industry and agriculture. k 

I cherish the hope that the Government and the Legislatures will evince 
the greatest care in safeguarding this industry which has stood by them 
during the war-period and has supplied sugar at reasonable rates without 
any attempt at profiteering or improving its own financial condition, in 
appreciation of the effects of such a policy on the welfare and well-being of 
the general consumer who has enabled the establishment of this industry. 
The importance of this great industry in the national economy of the country 
need hardly be stressed, if it is remembered that it has stopped the drain of 
about Rs. 16 crores per annum with the complete cessation of sugar imports, 
is supporting no less than 20 million agriculturists whose interests are 
indissolubly linked up with the future of this industry, has led to the 
development of the village industry of gur manufacture, has provided a 
channel for investment of indigenous capital estimated at Rs. 33 crores, has 
been responsible for finding employment to no less than 3,000 University men, 
1,00,000 labour, skilled and unskilled, and has made the country completely 
self-sufficient in respect of supplies of sugar, a valuable article on the dietary 
of millions in the country, and promises to develop further, with the general 
improvement in the economic conditions of the people. 7 

I earnestly hope that this volume written in an unbiassed manner will 
be found useful by the readers and I trust that it will be of use to the Members 
of the Central Legislatures and the Government of India, when the question of 
devising measures for the further development and stabilisation of this great 
national industry which has thoroughly justified the grant of protection given 
to it during the last 15 years, comes up for consideration in March 1946, when 
the present tariff protection to the industry is due to expire. 

I suggest that it would be appropriate if the present tariff protection is 
continued for a period of three years and in the interval as soon as conditions 
within the industry return to normal, a Tariff Board should be appointed to 
conduct the necessary enquiry and to recommend the kind of -aid and the 
period for which it would be necessary in the years to come. 

Needless to say, in a work, so complicated and so wide in scope, the need 
for consultation with scholars and men of affairs was often felt. It is as no 
matter of form that I acknowledge here my grateful thanks to all those, 



1 Vtde: the following observations of the Famine Inquiry Committee in their Final Report, 1945, 

pp. 122 and 123, (to hand when this preface was under print). 

" While sugar is a carbohydrate food, containing no protein or vitamins, it supplies calories, 
and since there is much undet nutrition, calories are needed." 

''The present per capita intake of sugar in all forms in India is much lower than peacetime 
intake in most western countries arid we believe that its production and consumption 
can with advantage be considerably increased." 

Also vide pages 255 and 259 of this volume. 



xiv AUTHOR'S PREFACE 

literally too many to be mentioned here individually, who have freely given 
the help and guidance I sought of them. But I may mention particularly 
Prof. C. N. Vakil and Prof. J. J. Anjaria of the Bombay School of Economics 
and Sociology who gave me every assistance that their position and equipment 
enabled them to do. Not less helpful than these academicians have been the 
editors of the four leading Financial Weeklies of Calcutta, Bombay and 
Delhi, as the discussions I have often been privileged to have with them have 
enabled me to give point and sharpness of outline to my views on many 
questions. 

My thanks are also due to Mr. R. C Srivastava, Director, Imperial 
Institute of Sugar Technology, Cawnpore, for having gone through a few of 
the chapters of this thesis in which he was specially interested, and for giving 
me his reactions thereto. 

I must also express my gratefulness to Dr. John Matthai, a distinguished 
economist, who was for several years a member and President of the Indian 
Tariff Board and is one of the authors of the Bombay Plan, for the trouble he 
has taken in reading patiently through this volume, and for his advice and 
criticism which have been of great value to me in improving my arguments 
at several places. 

I must also refer here to the benefit I derived from the detailed 
discussions on various subjects pertaining to the industry which I had the 
privilege to have in the past with Sir T. Vijayaraghavachariar, Ex- 
Vice-Chairman of the Imperial Council of Agricultural Research, who was 
engaged in 1936-37 by the Indian Sugar Mills Association to prepare the 
Industry's case for submission to the Tariff Board, with the Hon'ble 
Dr. Kailas Nath Katju, and the Hon'ble Dr. Syed Mahmud in J 937-1940 when 
they were Ministers in charge of Development in the U. P. and Bihar 
respectively, with Dr. Rajendra Prasad and Mr. R. R. Bakhle, Chairman and 
Vice-Chairman of the Bihar Labour Enquiry Committee in 1939-40, as also 
with various other officials, particularly Sir P. M. Kharegat, I.C.S., former 
Vice-Chairman of the Imperial Council of Agricultural Research and now 
Secretary, Department of Agriculture, Government of India, Mr. N. C. Mehta, 
I.C.S., former Sugar Controller for India, Mr. S, Lai, C. I. E., I.C.S., former 
Secretary of the Development Department, Bihar, and at present Additional 
Secretary, Labour Department, Government of India, Mr. N. Baksi, O.B.E., 
I. C.S., Registrar of Co-operative Societies, Bihar, Mr. Vishnu Sahai, I.C.S., 
Cane Commissioner of U. P. and at present Sugar Controller for India, 
Mr. V. K. B. Pillai, I.C.S., Cane Commissioner of Bihar, Sir T. S. Venkataraman, 
late Sugarcane Research Expert to the Government of India and Dr. Shanti 
Swarup Bhatnagar, who was my colleague on the U. P. & Bihar Joint Power 
Alcohol Committee in 1937-38 and who is at present Director of the Board 
of Scientific & Industrial Research, Government of India. 

I would be failing in my duty if I did not acknowledge my deep gratitude 
to Sir Purshotamdas Thakurdas for his very great kindness in going through 



AUTHOR'S PREFACE XV 

this entire volume and for having written a foreword thereto in spite of his 
present state of health which prevents him from undertaking strenuous 
work. I am also very thankful to him tor the appreciative references he has 
made in respect of this work as also my Annuals on the Indian Cotton 
Textile Industry, and the Indian Sugar Industry. 

For the sake of ready reference, I have given the text of current impor- 
tant Legislative measures relating to this industry, and not less than 35 up-to- 
date statistical tables in the earlier portion of this book styled as "The Sugar 
Industry at a Glance ". As far as possible statistical tables have been put in 
this portion, but I must invite the attention of the reader to the fact that as 
many as 20 interesting tables have been put in Chapter XV entitled " Methods 
of utilisation of sugar and gur in India." 

Chapter XVI on the "Scope of optimum production and consumption of 
sugar in India " will be found of interest to a large number of readers in view 
of the attempt made therein to picture the potential development of the 
industry in India. 

There are five appendices, including a brief bibliography. The last 
appendix contains a complete and up-to-date list of sugar factories in India, 
showing the location, district, nearest railway and steamer station, the daily 
cane-crushing capacity, and names and addresses of the Managing Agents or 
Proprietors of sugar factories, in the various Provinces and States. 

A work with so wide a scope, it is hoped, will have as wide an appeal. 



"Gmi KUNJ", M. P. GANDHI 

11, Hughes Road, Bombay. 

5th November, 1945. 



For ERRATA, 

please see Page xviii. 



The only Indispensable & Authoritative Annual Reference 
Book for the Indian Sugar Industry 

THE INDIAN SUGAR INDUSTRY- 

(1944 ANNUAL) 



VoL X 



Editor : Mr. M. P. GANDHI 



306 Pages: September, 1945. Price Rs. 6/8; V.P.P. Rs^6/14. Sh. 12. 
CHIEF FEATURES - 

<> Retrospects and Prospects of the Sugar Industry in India in 
1943-44 and 1944-45, and position in world economy. 

<s- Modus Operandi of the Indian Sugar Syndicate Ltd., Cawnpore. 

*> "The Sugar Industry at a Glance' 1 , containing 46 Statistical 
Tables pertaining to production and consumption of Sugar, 
imports and exports of Sugar, Production of Gur, Cane- 
crop, Duty and Revenue from Sugar, etc. 

<?> The Sugar Industry (Protection) Act, 1939, Protective Duties 
Continuation Act, 1944, and Sugar (Temporary Excise 
Duty) Order, 1943. (Texts). 

**> The Sugar and Sugar Products Control Order, 1943, of the 
Government of India, with the latest amendments, the 
Gur Control Order, 1943, and other important Notifications. 

& Personnel of U. P. and Bihar Sugar Control Board, 1944-45. 

* Details re. U. P. & Bihar Sugar Commission, Cawnpore. 

* Necessity of Regulation of Industry on an All-India basis. 

<a* Discussion on Export Prospects, Sugar Control Policy, and 

Rationing. 

<s* Personnel and functions of Central Sugarcane Committee, 1944. 
<s Capital and Dividend Statement of Sugar Mills. (Latest.) 
* Complete and up-to-date list of Sugar Mills, working and 

projected, with addresses of Managing Agents, information 

regarding crushing capacity etc. 



Extract from Reviews of 1944 Annual 

The Times of India, Editorial, 24th October, 1945: 

The Annual is as usual an excellent compendium of information regarding 
the industry. 

The "Commerce", dated 13thQctffor, 1945: 

The publication gives, as usA, a graphic account of the affairs of the 
industry. It has maintained all its familiar features. The standard of 
performance has been as high as it was in previous years. 



Another Recent and Authoritative Publication t 



THE INDIAN COTTON TEXTILE INDUSTRY-1944 ANNUAL 



300 Pages: July, 1945. 



Editor : M. P. GANDHI 
Price Rs. 5/-; V.P.P. Rs.5/6; Foreign Edition Sh. 9/~ 



PROBLEMS OF SUGAR INDUSTRY IN INDIA 



SCOPE AND PROSPECTS OF REORGANISATION 
IN POST-WAR PERIOD 



By M. P. GANDHI 



CONTENTS 

PAGES 

Foreword by Sir Purshotamdas Thakurdas, K,B,B.,C.I.E. ... iii-vi 

Preface by the Author ... ... ... vii-xv 

Contents ... ... ... xvii-xviii 

Errata ... ... ... xviii 

Index ... ... ... ... xix-xxi 

" Sugar Industry at a Glance " containing 35 Statistical 
Tables and Important Acts and Legislative Measures 

appertaining to Sugar Industry ... ... i-xxxvi 

CHAPTER 

I. The Indian Sugar Industry in World Perspective ... 1-16 

II. Unreality of Fiscal Controversies ... ... 17-22 

III. Economics of Discriminating Protection Some Criticisms 

Answered ... ... ... ... 23-37 

IV. History of Sugar Industry in Pre-protection Period 

A Comparative Study ... ,., ... 38-48 
V. History of Sugar Industry -in Post-protection -Period (1932 

onwards.) ... ... ... 49-55 

VI, The Costs of Protection to Sugar Industry ... ... 56-63 

VII. Benefits of Sugar Protection to Cane Cultivafipn ... 64-77 

VIII. Fixation of Cane Prices ... ... ... 78-99 

IX. Economies in Production by Utilisation of By-products 

( Molasses, Bagasse, etc. ) ... ... ... 100-126 

X. Economies in Manufacture of Gur and Sugar by Various 

Processes ... ... ... ... 127-152 

XL Problems of Marketing ... ... ... 153-178 

XII. Localisation of the Indian Sugar Industry ... ... 179-202 

XIII. Sugar Control in the U. P, and Bihar ... ... 203-216 

XIV. Central Government Control Over Sugar Industry in the 

War-period ... ... ... ... 217-221 

XV. Methods of Utilisation of Sugar and Gur in India (Contain- 
ing 20 Statistical tables, ) ... ... ... 223-244 

XVI. Scope of Optimum Production and Consumption of Sugar 

in India ... ... ... .,. 245-260 

XVII. Conclusion ... ... ... ... 261-266 



xviii CONTENTS 

APPENDICES PAGES 

T, Glossary and Explanation of Some Indian Terms Appertaining 
to Sugar ... ... ... ... i 

II. Comments on Levy of Import Duty and Excise Duty on 

Sugar from 1932 to 1946 ... ... ... ii-x 

III. Substitution of Gurby Sugar, and Possibilities of Develop- 

ment of Palm Gur Industry ... - ... ... xi-xii 

IV. Important Problems Facing the Sugar Industry and Awaiting 

Solution ... ... ... ... ... xiii-xv 

V. Bibliography ... ... ... ... xvi-xviii 

LAST List of Sugar Mills in India, with Names & Addresses of 
Managing Agents, information regarding Cane-crushing 
capacities, Method of Manufacture, and Location in 
Various Provinces and States ... ... ... i-xxx 



ERRATA 

KINDLY MAKE THE FOLLOWING CORRECTIONS. 



Page Line For Substitute 

39 5 Part Past 

46 1st Para Indian Sugar Committee Indian Sugar Commi- 

in 1929 ttee in 1919 

69 8 from bottom cultivation cultivator 

78 1 Chapter IX Chapter- VIII 

113 23 (4) Drop the words "of manufacturing," after 

possibilities of, and drop " the " after molasses in 

132 19 problems problem 

196 18 factory factor 

196 26 factory factor 

214 17 from bottom contributors contributions. 

252 18 Drop " is " after mills. 



INDEX 



Page 

Adarkar, B. P. 24, 63, 149 

Adarkar, B.N. 62 

Alcohol, Power * 105 

All-India Village Industries Association 133 

Anstey Vera 266 

Acquisition Of Land Near Factories 65 

Bagasse: 120, 124 

Utilisation in manufacture of 

packing paper. 122 

Beet: 

Cost of production, higher than cane 14 
Development 8 

First Ersatz Industry 2, 3 

Bengal : 
Condition of industry in 188, 189, 190 

Bengal Chamber . 24 

Bihar: 
Govt. Labour Enquiry Committee 151 

Bihar: 
Sugar Control Act. "At a Glance" 203 

Bombay : 

Advance in Production 199 
Highest Consumption of Sugar 

in India 198, 238 

"Deficit" Province 199 

Brussells Conference of 1902 2 

By-products 100, 126 

Cane: 

Cess Also "At a Glance*' 92 

Fixation of Prices of 79 

India, Java, Queensland, 

Hawaii, Mauritius 83, 84, 85 

Methods of payment in 
Minimum Prices of cane 86, 87 to 92 
Quantity crushed in 

factories, Gur manufacture, 

and utilised in other ways 128 

Cane Crop : 

Age 143 

Acreage of 66, 67, 62 

Cost of cultivation 67 

Cultivators dependent on 263 

Crushed in factories 227 

Crushing capacities 76, 142, 147 

Payment- Deferred 209 

Percentage crushed in Provinces 253, 288 
Pests and Diseases 69 

In various Provinces 183, 187 

Research for different kinds of cane 71 
Statistics of 66 

Total Production of sugarcane 180 

Utilisation 227 

Vital importance 69 

Cane Prices: 
Formulae 79 

Cane Sugar: 
Production and Consumption 226,233, 199 

Central Sugar Selling Organisation 150, 178 



Page 

Chadbourne Restriction Scheme 9 

Confectioneries 104, 260 

Congress Govt. of U. P. and Bihar 265 
Co-operative Societies 212 

Cost of Production of Sugar 231 

Cotton Industry Indigenous 38, 202 

Crushing Capacity 76, 142, 146, 147 

Cuba, Sugar Industry 14, 15, 140, 144 

Dey. H. L. 24, 25, 29, 32, 33, 

34, 36, 37, 63, 264 

Dividends 221, 222 

Excise Duty : 

Changes in 50 

Appendix II, page i 

on Indian Factory Sugar 50, 52 

Appendix II page v 

on Khandsari Sugar 50 

Appendix II page v 
Revenue from 

Appendix II page vi 

Export Of Sugar: 41, 175, 176, 251 

Freight on Sugar 83, 195 

Famine Commission Final Report, 
1945 Preface, 266 

Fiscal Commission 23, 26 

Fiscal Controversies 17, 24, 25, 26, 27, 265 

Gandhi M. P. 17, 38, 192, 196, 198, 202 

Ahmedabad Rotary Club Speech 201 

Bombay Rotary Club Speech 196, 198 

Gandhi, Mahatma: 
on value of Gur 134 

Gur: 

What it is 129 

Cost of Manufacture 131 

Consumption in Various Provinces 238 
Future of Industry 132 

Method of manufacture 129 

Nutritive Value, Importance in 

Diet 134. 234 

Palm Cur-Possibility Development of 133 
Also Appendix III, 135 
Production in India 131 

Size of Industry 130, 132 

Utilisation of 232, 235, 236, 237 

Gur Control Order 3 

Gur Refineries ' 40 

Hawaii Islands 141, 144 

Imperial Council Of Agricultural 

Research, 1929 : 

Establishment 47, 263 

Sugar Committee of 47, 48, 62, 139 

Import Duty On Sugar : 41, 42 

Changes in 50 

In various Countries 44 

Revenue from 43 

Appendix II page ii 



Value of 



43 



INDEX 



Page 

India: 

Birth place of Sugar Industry 17, 39 
Largest producer of Sugar and Gur 

in the World 55 

Price-Market for Sugar 151 

Indian Central Sugarcane Committee : 
Constitution 
Establishment in 1944 Funds of 

"At a Glance" 

Indian Sugar Committee of 1919 17, 128 

Indian Sugar Industry : 
Beginning of Modern factories 

in 1903 in Bihar 41 

Meaning of " term " Foot-note 1 

Its Past, Present and Future by 

M. P. Gandhi 11, 38 

Growth 185 

M. P. Gandhi's Annual for 1937, 

1938, 1939, 1940, 1941, 1942, 

1943, and 44, 55, 155 etc. 

Indian Sugar Mills Association: 

" At a Glance " page xxxiii 
Indian Sugar Syndicate 160, 178 

Indian Tariff Board, 1931 & 1937 

1, 24, 25, 49, 51, 263, 265 

International Sugar Agreement: 
India signatory to xxii, 176 

Java : 

Scorched earth policy 201 

Sugar Industry in 8, 16, 140, 144 

Khandsari;: 138, 230 

Licensing of Sugar Factories : 
National Planning Committee on 220, 74 

Localisation : 

of sugar industry 180, 196, 202 

of Gur industry 199 

Lokanathan, Dr. P. S., 202 

Machinery : 

Imports in India from 1932-1940, 
value of 54 

Manufacture of Sugar : 

Carbonatation process 140 

Open Pan Process 137 

Suiphitation Process 140 
Carbonatation factories 140, pp. xxxv 
Suiphitation factories 140, pp. xxxv 

Khandsari 138 

Marketing : 153 

Black Marketing 200 

Molasses : 

Important By-product 101 

Other uses 102, 103 

Price of 100, 103 

Production of 102, 226 

Use in Power Alcohol 104 

What it is 100 

National Planning Committee : 220 

Nivas (of Java) : 

Function 156 to 160 

Whit it is 155 to 160 



Page 

Overall Efficiency : 147, 148 

Pests & Diseases (See under cane) 

Power Alcohol Committee, 104, 105, 108, 

109, 117, 138, 120 

U. P. & Bihar Govt. Resolution 114 

Prices of Cane (See under cane) 

Protection to Sugar : 

Benefits to cane cultivation 64 

Continuance of 41 

Costs of 19, 56, 57 

Criticism answered 23, 37 

Discriminating 23, 27 

Effects of, on development 64 

Effect on consumer 58, 264 

Employment caused by 24 

Liberal, not an accident 22 
When granted Appendix II 41, 42 

Petrol: 

Admixture with Power Alcohol 109, 110 
Consumption of 109, 110 

Power Alcohol : 

Cost of 111 

Manufacturing of 110, 115 

Problems before Industry : Appendix iv 

Philippines 145, 257 

Quality of Sugar 177, 229, 230 
Refineries 

Research in Sugar Problems : 256, 257, 

258, 259 

allotment of money for 62 

urgent necessity of 254, 256 

Greater Expenditure Recommended 256 
Saccharine 243 

in United States 258 

Simla Sugar Conference of 1933 80-84 
Statistics of Consumption ; Production, 

Export, Import, Duties etc. 35 Tables in 

"At a Glance" 

Sugar Industry Protection Act. (1932) and 
1944 (Text) Beginning of "At a Glance" 

Sugar : 

All India Consumption 199 

Consumer has been benefited 58 
Cultivators depending on Cane 

Cultivation, 20 millions 263 

Cost of production 231 

Etymologically, of Indian origin 39 

Export of 255 

Fixation of basic prices 162 

Freight 195 
Import of 41, 42 

Import Duty, value of, on 42 

India Birth place of 39 
Indigenous method of manufacture 137 

Largest Producer India 249 
Maximisation of Production pp. xxxiv 

Open pan process 137 

Output in various countries 146 

Past history 39 

Manufacture from beet 39 

Manufacture from cane 39 



INDEX 



XXI 



Page 
Sugar contd. 

Nutritional Survey, and Diet 

Reform 255, 260 

Per Capita consumption 

and Production 199, 239, 248, also 
Price fixed by Sugar 

Controller " At a Glance " 

Price in India compared with 

other countries 58, 59 

Prices of Sugar in India 240 

Prices of Gur in India 240, 162 

Recovery of, f roiri cane, in 

India and Java, 129, 149, 229 

Target for production and 

consumption 250, 253 

Tons of cane required per ton 148 

Total production, value 

of, Estimated 54, 263 

Transport 194 

Typical Post-Depression Industry 21 
Yield per acre in different countries 145 

Sugarcane : 

Acreage 66 

Average production per acre 66 

Cess on cane in U. P. & Bihar 1937 

88, 90 

Cost of . 67 

Cultivation 

Fluctuation in area 67 

Improved varieties 66 

Minimum price U. P. & Bihar 87, 88, 

89,90 

Methods of payment 83 

Production of 66 

Ratooning 73 

Sliding Scale 84, 87 

Use of Manuring 72 

Value due to quality 62 

Yield, improvement possible 70 

Zoning of areas 73 

Sugar Control : 203, 204 

Board, U. P. & Bihar " At a Glance " 
Central 217, 220 

Sugar Commission U. P. & Bihar 

" At a Glance ", 169 

Sugar Factories : 

Average number of working days 228 
Capacity of cane crushing 76 

Capital, needed for expansion and 

capital employed 254 

Duration of cane crushing season 62 
Expansion recommended 253 

Extent of development upto 1932 54 
List of Last Appendix 

Names of Managing Agents 

Province-wise distribution 86, also 

Sugar Industry: 

Benefits to Agriculture 64, 263 

Investment of capital Preface 

Nutritional Survey 255 

Possibility of Further Development 252 



Page 
Sugar Industry omft*. 

in Madras, Bombay, Bengal 197 

Post-war organisation 250 

Problems Appendix iv 

Protection justified, preface 262 265 
Provincial Development 186 

Progress from year to year 
Rapid Development " At a Glance " 
Restriction on further Development 
in U. P. & Bihar 197 

Scope and Prospects 1 

Sugar Selling Organisation in Java : 155 

Nutritional Survey 255 

Rationing 143 

Quota for Provinces 219 

Also "At a Glance" 

Utilisation in different ways 233, 235, 236, 

238 239 
Value of 248, 62, 263 

Sugar & Sugar Products Control Order 

in "At a Glance" xxv 

Tariff Board : 

Benefits to cane cultivation 64, 263 

First Enquiry (1930) , 1, 49, 58, 61, 64 
Government criticism of Report 

in 1939 52 

On fixation of cane prices 61, 64 

Period of Protection 49, 51, 61, 265 

Recommendation 49, 5.1, 61 

Research grant of 3 annas 

per cwt. 62, 256 

Second Enquiry (1937) 51, 58, 61, 64, 148 
Utilisation of Sugar and Gur for 
various purposes in Urban areas etc. 

232, 233 to 240, 264, 265 

Thakurdas, Sir Pur shotamdas Foreword 

Beginning 

Transport : 

Economy 75 

Problems of 195 

Sugar 195 

Sugarcane 195 

United States intensive Research in 257,260 

U. K. Sugar Industry Enquiry 
Committee Report 3, 4, 6 

U. P. Sugar Control Act, 

"At a Glance" 203 
U. P. Sugar Industry (Protection) 

Rules 1933 86 

Venkataraman, Sir T. S. & his research 71 
World Sugar Picture " At a Glance " xxxv 

World's Sugar Production And 
Consumption 7, 11, 12, 12A, 13 

Percentage of cane and Beet 11, 12 and 

12A 

Zoning : 
Areas of cane 73 



Published in July, 1945 

The only Authoritative & Indispensable Annual Reference 
Book for the Indian Cotton Textile Industry 

The Indian Cotton Textile Industry- 
(1944 Annual) 



Vol. VIII 



Editor: Mn M. R GANDHI 



300 Pages: Rs. 5: V.P.P. Rs. 5/6. July, 1945 

CHIEF FEATURES : 

> Retrospects and Prospects of the Indian Cotton Textile Industry, 
during the War period and Post-War period. 

* Organization of the Cotton Textile Directorate of the Industries 

and Civil Supplies Department of Government of India, 1945 
and personnel of Cotton Textile Board, its various Sub-Com- 
mittees, and the All-India Handloom Board. 

> "The Cotton Industry at a Glance" giving over 16 authoritative 

and up-to-date Statistical Tables relating to the Industry. 

> Latest Tariff on Piecegoods and Yarn, and Text of Cotton Yarn and 

Cloth (Control) Order, 1943 with latest amendments thereto, 
and Cotton Cloth Movements Control Order, 1943 inclusive of 
General Permit No. I, and references to other allied Control 
Orders. 

* Per capita consumption of piecegoods in India. 

* Review of Govt. measures for Control of Prices of Cloth and Yarn 
for distribution, production, availability of Standard Cloth, etc. 
" Present financial and economic position of the industry. 
Scope of Export and Import of Piecegoods in post-war period. 

* Target of further development of industry in post-war period. 

TWO APPENDICES: 

* An elaborate and up-to-date Appendix regarding cultivation of * 

superior variety of Cotton, Exports of Cotton, Imports of Cotton, 
Prices of Cotton, Consumption of Cotton in Indian Mills, etc. 

* A detailed Appendix regarding present position and post-war 

prospects of Handloom Industry. 



LIST OF COTTON MILLS IN INDIA, 1945 

Complete and up-to-date list of Cotton Mills working in India, with names 
and addresses of Managing Agents, number of Spindles, Looms, etc. 
( Published separately as a companion volume, Re 1.) 



Extracts from Reviews of 1944 Annual (Vol. VIII ) : 

"Times of India", Bombay, 1O July, 1945 : 

"An informed and interesting analysis of the future of the Indian Cotton Textile 
Industry is contained in the 1944 Annual." 

"Commerce", Bombay, 7 July, 1945: 

, "Mr. Gandhi's survey of the working of the Clotfc Control is comprehensive, and no 
aspect of it is left out. His conclusions in many cases are sound and realistic." 

"Capital", Calcutta, 9 August, 1945; 

"This is a valuable reference book containing a great deal of statistical data and 
information about an industry of importance to India.'- 



STATISTICAL TABLES 

IN 

"THE SUGAR INDUSTRY AT A GLANCE" 

(1944) 

( Revised up to 30th June, 1945 ) 

TABLE No. i 

Number of Cane Factories working in India, including States, and Production of 
Sugar from Cane Factories, Gur Refineries, Khandsari, Net Import of Sugar in British 
India and Import in Kathiawar Ports during the last 13 years, and estimates for 

1944*45 and 1945-46 











c/> 


G J 


*"* cti 




i~ 

k*.O d> 

!f 


_ 

4)tJ RJ 

3*1 

u tfl>-* 
8-8.9 


fjlf 


a 


2_ 

ys 
iii 


2 'S 

1-s? 

g.so 

U V 


fill? 
till? 


|g -, 

en| t5 
R'S " 
1^1 > 


I* 


IP 

fa 


sgS 


jf" Q 


j|i 


*-* C/3 *"' 
O .. 

Ho 


<U "* 


I M Z 

ac >^ 

8 "^ 




- 


Tons 


Tons 


Tons 


Tons 


Tons 


Tons 


1931-32 


32 


158,781 


69,539 


250,000 


478,120 


438,797 


95,678 


1932-33 


57 


290,177 


80,106 


275,000 


645,383 


321,081 


68,649 


1933-34 


112 


453,965 


61,094 


200,000 


715,059 


233,366 


87,094 


1934-35. 


130 


578,115 


39,103 


150,000 


767,218 


197,775 


113,364 


1935-36 


137 


932,100 


50,067 


125,000 


1,107,167 


86,962 


45,218 


1936-37 


137 


1,111,400 


19,500 


100,000 


1,230,900 


11,160 


12,870 


1937-38 


136 


930,700 


16,600 


125,000 


1,072,300 


9,410 


12,284 


1938-39 


139 


650,800 


14,200 


100,000 


765,000 


254,400 


76,819 


1939-40 


145 


1,241,700 


31,700 


125,000 


1,398,400 


252,000 


85,580 


1940-41 


148 


1,095,400 


48,500 


125,000 


1,268,900 


18,778 




1941-42 


150 


778.100 


13,400 


150,400 


941,900 


48,637 




1942-43 


150 


1,070,700 


6,370 


117,630 


1,294,700 


563 




1943-44 


151 


1,216,400 


7,706 


80,000 


1,304,106 


... 




1944-45 


144 


985,100 


7,980 


80,000 


1,073,080 











(Estimated.) * 


(Estimated.) 




(Estimated) 






1945-46 


150 


1,200,000 I 


... 


... 


... 


... 






(OurEst.) 











* Vide Indian Trade Journal, p. 289, dated March 15, 1945. 

TABLE NO. 2 

Comparative growth of the Sugar Industry in the various Provinces 
since 1931-32, the pre-protection year 

(No. of Cane-jactories Working) 



Province 


1931-32 


1932-331 


<cf 
CO 
I 


in 

CO 

i 
^ 

8 


? 
to 

8 


$ 

to 

8 


1937-38 1 


1938-39 1 


i 


1940-41 1 


9 

A 
2 


1942-43 1 


1943-44J 


1944-45] 


United Provinces 
Bihar 
Punjab, Sind & N.-W. F. P. .. 
Madras 
Bombay 
Bengal 
Orissa 


14 
12 
1 
2 
2 


33 
19 
1 
2 
1 


59 
33 
5 
4 
4 
2 


65 
34 
6 
8 
5 
5 


67 
35 
4 
8 
6 
6 


68 
33 
5 
11 
6 
6 


68 
33 
3 
8 
7 
6 
?, 


69 
32 
3 
7 
7 
8 
?, 


70 
32 
3 
10 
7 
9 
?, 


70 
32 
4 
11 
8 
9 
fl 


70 
31 
4 
11 
10 
9 
?, 


71 
31 
4 
10 
9 
8 
?, 


70 
31 
2 
12 
10 
6 
?. 


68 
29 
2 
12 
10 
4 
1 


Indian States 


... 


... 


4 


5 


9 


8 


9 


11 


11 


12 


13 


15 


18 


18 


Total for India ... 
Burma* 


32 
1 


57 
1 


112 
1 


130 
2 


137 
2 


137 
3 


136 
2 


139 
2 


145 
3 


148 
3 


150 
15" 


150 
() 


151 

"w" 


144 
() 



* Burma excluded from 1936-37 onwards from the total for India. 
(a) No information available after occupation of Burma by Japan. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. 3 

Number of Sugar Factories in various Provinces, working in 1943-44, 

Estimated quantity of cane crushed, sugar produced and Recovery 

percentage obtained, etc. 

(Official Estimates oj the Director, Imperial Institute of Sugar Technology, 

Cawnpore, published in the Indian Trade Journal, dated 5tJv 

October 1944, and 15th March 1945.) 



Province 


No. of 
Mills 
Working 


Cane 
Crushed 

Tons 


Sugar 
Tons 


Sugar-cane 
Recovery 
per cent 
1943-44 


United Provinces 
Bihar 
Punjab, Sind & N.-W. F. P. 


70 
31 
2 


7,332,400 
2,018,400 
174,200 


727,100 
212,400 
17,400 


9.92 
10.53 
9.99 


Madras 
Bombay 
Bengal 
Orissa 
Indian States 


12 
10 
6 
2 
18 


420,400 
739,700 
175,900 
17,600 . 
1,259,200 


39,200 
81,200 
13,600 
1,700 
123,800 


9.32 
10.98 
7.73 
9.66 
9.83 


Total ... 


151 


12,137,800 


1.216.400 


10.02 



TABLE No. 4 
Total, and per capita consumption of Sugar and Gur in India* 



Year 
(November- 
October) 


Consumption 
of Sugar in 
tons 


Official 
Estimate 


Consumption 
of Gur in 
tons 


Per Capita Consumption Ibs. 


Sugar 


Gur 


Total of 
Sugar and 














Gur 










Ibs. per 


Ibs. per 


Ibs. per 










head 


head 


head 


1931-32 


982,000 




2,758,000 


6.2 


17.2 


23.4 


1932-33 


1,006,000 




3,240,000 


6.3 


20.2 


26.5 


1933-34 


996,000 




3,486,000 


6.1 


21.5 


27.6 


1934-35 


1,059,000 




3,701,000 


6,5 


22.6 


29.1 


1935-36 


1,074,000 




4,101,000 


6.5 


24.8 


31.3 


1936-37 


1,167,000 




4,268,000 


7.3 


26.7 


34.0 


1937-38 


1,159,000 




3,364,000 


7.2 


20.9 


28.1 


1938-39 


1,073,000 




2,131,000 


6.6 


13.1 


19.7 


1939-40 


1,019,100 




2,441,000 


6.4 


18.0 


24.4 


1940-41 


1,100,000 


( Our Est. ) 


3,410,000 


6.7 


20.6 


27.3 


1941-42 


1,050,000 




2,829,000 


6.0 


18.5 


24.5 


1942-43f 


966,000 




3,567,000 


5.9 


20.1 


26.0 


1943-44t 


1,086,300 




3,989,500 


65 


23.8 


30.3 



* Total value of sugar, including gur, produced in the year 1943-44 may be 
estimated at about Rs. 118.33 crores. 

Price calculated at the rate of Rs. 15-4-0 per maund of sugar and Rs. 9-6-0 
per maund of gur as the standard of average for the whole season. 
Maund 82 . 2/7 Ibs. Sugar 15J Gur 9 . 1/6 

Tons Rs. Price 

10,86,300 49,09,65,375 

39,89,500 69,23,44,479 



1943-44 



Gur 



Total Value Rs. 1,18,33,09,854 Rs. 118.33 Crores. 

t Our estimates. 

TABLE No. 5 
Per capita consumption of Sugar in various countries 



United Kingdom 

U. S. A. 

Brazil 

France 

Australia 

Germany 



106 
97 
34 
52 

116 
52 



Ibs. per head 



Cuba ... 88 

Java ... 11 

Japan ... 33 

Union of South Africa 47 
Netherland ... 64 



Ibs. per head 



India 



27 (including 20 lbe.Gi*f) 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. 6 

Yearly world production, consumption and the carry-over of stocks of Sugar for the 
last 10 years in thousand tons \(Raw Sugar Value)* 

(In Thousands of Long Tons) 



Crop year 
(Sept. 1st 
to Aug. 31st) 


Opening 
Stocks 
(Sept, 1st) 


Production 


Consump- 
tion 


Closing 
Stocks 
(Aug. 31st) 


Percentage 
relation of 
stocks to 
Consumption 


1931-32 


12,362 


26,431 


26,724 


12,069 


" 45.2 


1932-33 


12,069 


24,692 


26,193 


10,568 


40.3 


19133-34 


10,568 


25,709 


26,287 


9,990 


38.0 


1934-35 


9,990 


2\19i 


27,188 


8,993 


33.1 


1935-36 


8,993 


28,846 


29,231 


8,608 


29.5 


1936-37 


8,608 


30,818 


30,549 


8,877 


29.1 


1937-38 


8,877 


30,967 


29,647 


10,197 1 34.4 


1938-39 


10,197 


29,478 


29,406 


10.269 


34.9 


1939-40 


10,269 


30,753 


26,551 


11,471 


38.8 


1940-41 





30,498 





1 ... 




1941-42 


*.. 


19,211 




... 


... 


1942-43 


... 


17,908 


* 


... 


... 



* Figures are in long tons (Long ton = 2,240 Ibs.), (Metric ton = 2,205 Ibs.), 
and (Short ton = 2,000 Ibs.). 

A glance at the last Table in the 1940 Indian Sugar Industry Annual will show 
that India leads as the largest sugar producing country in the world, since 1931. 

TABLE No. 7 
* 

Average and maximum percentage of recovery of Sugar in factories in India and 

Java since 1931-32* 



Year 


India 
Average 


17. P. 
Average 


Bihar 
Average 


Bombay 
Average 


Java 
Average 


India 
Maximum 


1931-32 


8.89 


8.59 


9.06 




10.92 


10 


1932-33 


8.66 


8.55 


8.60 


10.00 i 11.56 


10 


1933-34 


8.80 


9.08 


8.32 


10.00 


12.84 


10 


1934-35 


8.66 


8.56 


8.79 


10.37 


12.55 


11.10 


1935-36 


9.29 


9.60 


8.93 


10.47 


13.23 


11.34 


1936-37 


9.50 


9.65 


9.20 


10.68 


12.77 


11.43 


1937-38 


9.38 


9.18 


9.58 


10.97 


11.87 


11.63 


1938-39 


9.29 


9.14 


9,00 


11.29 


11.77 


12.25 


1939-40 


9.45 


9.37 


9.29 


10.97 


12.23 


12.31 


1940-41 


9.70 


9.87 


9.86 


9.94 


.. . 


11.15 


1941-42 


9.69 


9.87 


10.35 


9.87 


... 


12.45 


1942-43 


10.28 


10.16 


10.93 


10.64 


... 


13.35 


1943-44 


10.02 


9.92 


10.53 


10.98 


... 


12.84 



Indian Trade Journal, Calcutta, 5th October 1944. 



IV 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. 8 
Capacity of factories and duration of crushing season in India* 

Tons 



Average Cane-crushing capacity of Factory 
(calculated on the basis of tons of cane 
crushed per day of actual working) 
in India 



Maximum Cane-crushing capacity of Facto- 
ries per day in India 



f 517 


1934-35 


568 


1935-36 


630 


1936-37 


660 


1937-38 


{ 630 


1938-39 


710 


1939-40 


690 


1940-41 


640 


1941-42 


690 


1942-43 


708 


1943-44 


2,012 


1934-35 


1,807 


1935-36 


1,960 


1936-37 


2,000 


1937-38 


1,850 


1938-39 


! 1,960 


1939-40 


1,980 


1940-41 


1 1,800 


1941-42 


1 1,920 


1942-43 


I 1,903 


1943-44 





en 1 m 


in 


in 


en 


C/) 


C/J 


en 






Duration of 


**" nTI e? 


VO 


^ e? 


00 0? ^ rt' 






QVJ >* 


m ^ 


^ > 


Cane-crushing 
Season 


So 


J- ^ 


s? 


s? 


55o 


CT; ^ 


So 


1? 


IS 


|| 


t^ 


(October-May) 


2 6 


26 


2 6 


2 6 


2 o 


2^6 


2 o 


f 4 O 


2 6 


2 6 


2d 







JZ5 





z 


^ 


^ 


J5 


85 


^ 





z; 


Mean duration of 






















Cane-crushing season 
























in All-India 


106 


104 


126 


138 


112 


83 


129 


113 


85 


101 


117 


Maximum duration of 
























Cane-crushing season 
























in All-India 


208 


172 


179 


203 


181 


184 


203 


264 


313 


278 


255 


Mean duration of 
























* Cane-crushing season 
























'.inZ7. P. 


112 


107 


134 


140 


124 


77 


133 


100 


78 


112 


131 


Mean duration of 
























fc/ Cane-crushing season 
























. in Bihar 


105 


109 


4 


150 


99 


79 


136 


100 


54 


96 


93 


Mean duration of 
























Cane-crushing season 
























in "All other Pro- 
























vinces" 


84 


90 


112 


138 


103 


97 


119 


144 


117 


89 


110 



* Vide Indian Trade Journal, 
Issues. 



Calcutta, dated 5th October 1044 and previous 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. 9 

Acreage under Sugar-cane, under improved varieties, production of cane per acre, gross 
production of Gur, and calculated production of Cane-crop* from 1931-32 

to 1944-45 





tP 


a C * 


8*1 


!?! 


IJjfJ 


Year 


** 01 TJ 


|| 


ila 

to OO 


||! 


sPI 




1JJ 


8 > g 
8 |l 


Hg 


a|l 

O p,*- 1 


J C^H 




H c 


^ S.S 


* a 49 






1930-31 . 


2,905 


817 


12.3 


3,359 


35,780 


193132 . 


3,076 


1,170 


14.1 


4,116 


43,316* 


193233 . 


3,425 


1,845 


14.9 


4,859 


51,129 


193334 


3,422 


2,295 


15.3 


5,055 


52,455 


193435 


3,602 ' 


2,433 


15.1 


5,292 


54,346 


193536 


4,154 


3,056 


15.3 


6,102 


61,202 


193637 


4,582 


3,452 


15.6 


6,932 


67,322 


193738 


3,869 


2,968 


15.5 


5,579 


55,637 


1938-39 . 


3,130 


2,673 


15.0 


3,572 


35,851 


193940 


3,640 


2,893 


15.0 


4,748 


47,632 


194041 . 


4,598 


3,480 


15.0 


5,794 


59,090 


194142 


3.515 





15.0 


4,371 


46,030 


194243 


3,600 


...... 


15.0 


5,076 





194344 . 


4,234- 


... 


...... 


5,848 




194445 


4,134f 


...... 


... 


5,422 












(Estimated) 





* Vide Indian Trade Journal. The yield of gur per acre has increased from 
.80 tons in 1901-02 to 1.47 tons per acre, due to improved varieties of cane. 

f Vide Indian Trade Journal, p. 116, 26th April, 1945. 

TABLE No. 10 

Percentage of Cane used under different heads during the years 1932-33 to 1943-44 

(November-October)** 






CO 

CO 




co 
o> 

rH 


1934-35 


in 

CO 
rH 


CO 

1 

CTi 
rH 


00 ->* 

00 cS 

SQ 


83 

rHQ 


o *: 

CO r- 

Cr> 3 


rH -J 

^ <n 

4< 1* 

r^O 


<M *J 
rf V4 

o> a 

rHQ 


3 i 

Oi 3 


11 


Cane used in Factories ... 


6.5 


9.8 


12.3 


16.0 


17.6 


17.8 


16.2 


27.7 


19.1 


21.2 


25.0 


25.0 


Cane equivalent to gur 


























used in refineries 


3.0 


2.0 


1.2 


1.4 


0.5 


0.5 


0.5 


0.9 


1.4 


1.4 


1,0 


1.0 


Cane used for gur manu- 
facture 


64.7 


65.5 


66.0 


63.8 


64.9 


62.0 


64.0 


51.4 


57.7 


53.4 


50.0 


50.0 


Cane used for other 


























purposes, including 


























Khandsari, Chewing, 


























setts for planting etc. ... 


25.8 


22.7 


20.5 


18.8 


16.9 


19.7 


19,3 


20.0 


21,8 


24.0 


24.0 


24.0 


Total percentage ... 


100 


100 


100 


100 


100 


100 


100 


100 


100 


100 


100 


100 



1941. 



** Vide Reply in the Council of State to Question No, 39, dated llth November 



VI 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. ir 
Percentage of Cane crashed in factories to the total Cane-crop in various Provinces* 



Season 


U. P.* 


Bihar* 


Bombay 


Bengal 


Madras 


India 


1934-35 






13.6 


30.9 


80 


2.7 


50 


12.3 


193536 






17.1 


40.4 


11 


7 


4 


8 


5 


4 


16.0 


193637 






17.1 


49.3 


13 





5 


2 


6 





17.6 


1937 38 (Ou 


Est.) 




18.6 


62.3 


14 













17.8 


193839 






14.5 


44.5 














19.5 


1939-40 






25.5 


48.4 














27.7 


1940-41 






13.9 


29.3 














19.1 


1941-42 






14.6 


...... 














21.2 


1942-43 






21.9 

















25.0 


1943-44 






22.3 











- 






25.0 



* Figures based on Cane Development Department (U. P.) statement showing 
disposal of cane crop in the U. P. during 1934 to 1942 and on letters from Cane 
Commissioner, Bihar to Chairman, Sugar Commission, U, P and Behar. 

TABLE No. 12 
Cost of production of Cane per maund 

(a) Definite figures are not available. Cost of production varies from Province 

to Province from annas 0-3-0 to annas 0-7-0 per maund. (Vide 1939 
Annual.) 

(b) Enquiry undertaken by the Imperial Council of Agricultural Research in 1934, 

is concluded. Reports of cost in various Provinces were published in 1938 
and 1939, and also referred to in Tariff Board's Report of 1937. 

(c) Cost considerably increased since 1942, due to inflation, and soaring up of 

prices. 

TABLE No. 13 

Estimate of total amount of money paid by Sugar factories to Cane-cultivators and 
workers, since 1931-32 to 1943-44 







Estimated 


Estimated 




Estimated 






average price 


amount 


No. of unskilled 


amount of 


C*Aae 




per maund 


paid for cane 


workers 


money paid 


OCaB 


on 


of cane in 


by factories to 


employed (2) 


to unskilled 






U. P. & Bihar 


Cultivators (1) 




workers (3) 






Rs. a. p. 


Rs. 


No. 


Rs. 


193132 




5 10 


1,77,51,000 


16,640 


998,000 


1932-33 




056 


3,14,39,000 


29,640 


1,778,000 


1933-34 




056 


4,83,98,000 


67,200 


4,032,000 


193435 




053 


5,97,66,000 


78,200 


4,680,000 


1935-36 




053 


8,81,03,000 


82,200 


4,932,000 


193637 




045 


8,92,19,504 


100,000 


6,000,000 


1937-38 




051 


8,57,53,775 


100,000 


6,000,000 


1938-39 




6 10 


8,13,00,988 


100,000 


6,000,000 


193940 




085 


18,81,09,460 


100,000 


7,000,000 


194041 




048 


8,96,40,583 


100,000 


5,650,000 


194142 




070 


6,15,00,000 


100,000 


4,000,000 


194243 




10 


13,00,00,000 


100,000 


5,000,000 


194344 


t 


12 


18,00,00,000 


100,000 


5,500,000 


1944-45 





014 


26,40,00,000 


90,000 


6,200,000 



THE SUGAR INDUST&Y Af A GLANCE, 1944 



va 



(1) Based on statistics received from a large number of factories in U. P. and Bihar. 

(2) Based on an assumption of an average factory employing about 600 workers. 

(3) Based on an estimate of payment of o-8-o per day, (upto I94M 2 ) an d on 

the average working period of the season. After 1941-42, the estimate is 
on a 25 per cent higher basis. 

(4) Dearness and allowances were increased by 50 per cent in 1942-43 and 1943-44. 

TABLE No. 14 

Import Duties on Sugar in India and Principal Countries in the World 
As there have been so many changes due to the war in regard to the 
duties on sugar in the various countries, we are not giving the full table 
here. A reference may be made to the 1939 Annual for the import duties 
on sugar then existing, 

The following table gives the duties in India: 
Import Duty on Sugar in India (1944) 

Total Import Duty including 20 per cent surcharge 
(with equivalent excise duty) 
equivalent to 
Excise Duty on factory sugar 

in British India equivalent to 

The. present import duty will continue till 3ist March 1946 



Rs. 
Rs. 
Rs. 
Rs. 



11-1-7 1 
7-1-96 
3-0-0 
2-3-3 



5 per cwt. 
7 per maund. 

per cwt. 

per maund. 



TABLE No. 15 
Excise Duty and Import Duty on Sugar, Sugar Candy* and Molasses in India 



On Sugar per cwt. 


Protective 
Import Duty 
per cwt. 


Additional Revenue 
Duty 


Total Import 
Duty per cwt. 
Rs, 


From 1st April, 1932 to 31st 


Rs. 7-4-0 


Revenue surcharge @ 25% 


9-1-0 


March, 1934 




of protective duty Rs. 1-13-0 




From 1st April. 1934 to 27th 


7-12-0 


Equivalent excise duty 


9-1-0 


February, 1937 


(0-8-0 being 


Rs. 1-5-0 






additional 








margin) 






(Rs. 1-5-0 Excise Duty on domestic 








production of factory sugar) 








From 28th February, 1937 


7-4-0 


Equivalent excise duty 


9-4-0 


(Rs. 2-0-0 Excise Duty on domestic 




Rs. 2-0-0 




production of factory sugar) 








From 1st April, 1939 


6-12-0 


Equivalent excise duty 


8-12-0 


(Rs. 2-0-0 Excise Duty on domestic 




Rs. 2-0-0 




production of factory sugar) 








From 1st March, 1940 


6-12-0 


Equivalent excise duty 


9-12-Of 


(Rs. 3-0-0 Excise Duty on domestic 




Rs. 3-0-0 




production of factory sugar) 








From 1st April, 1942 
(Rs. 3-0-0 Excise Duty on domestic 


6-12-0 


Revenue surcharge of 20% 
amounting to Rs. 1-5-7 1/5 


11-1-7 l/5{ 


production of factory sugar) 




and Equivalent excise duty v 








Rs. 3-0-0 





* From 20th February 1934, a revenue/ duty of Rs. 10-8-0 per cwt. was imposed 
on sugar candy in plaee of Rs. 9-1-0 per cwt. The rate of import duty on molasses 
is 31J per cent ad valorem since April 1932. 

fThe import duty of Rs. 11-1-7J per cwt. works out at Rs. 7-1-9 per md 
and Rs. 3-0-0 excise duty per cwt. works out at Rs. 2-3-3 per md. 

This import duty has been continued till 31st March 1946. 

$ Total import duty includes surcharge of 20 per cent as from 1st April 1942. 



Vni 



SVGAR INDUSTRY AT A GLANCE, 1944 

TABLE No. 16 



Yield of Revenue from Import Duty on Sugar in India from 1931-32 to 1944*45 
(Burma excluded from 1937-38) 



Year 


Yield of Revenue 


Year 


Yield of Revenue 


(April-March) 


Rs. 


(April-March) 


Rs. 


1931-32 ... 


7,97,63,000 


1938-39 ... ...{ 45,22,000 


1932-33 ... 


6,84,79,000 


1939-40 ... 


3,96,08,000 


1933-34 ... 


4,72,04,000 


1940-41 ... 


18,24,000 


1934-35 ... 


3,81,35,040 


1941-42 ... 


1,94,000 


1935-36 ... 


3,24,16,000 


1942-43 ... 


56,000 


1936-37 ... 


50,52,000 


1943-44 ... 


4,14,000 


1937-38 ... 


25,33,000 


1944-45 ... 


3,56,000 



TABLE No. 17 

Excise Duty on all Sugar produced in British India and Yield of Revenue 
therefrom from 1935-36 to 1945-46 Fiscal years (April-March) 



Amount of 
duty per 
cwt. 


Yield of Revenue from Excise Duty (in Thousand Rupees) 


1935- 
36 


1936- 
37 


1937- 
88 


1938- 
39 


1939- 
40 


1940- 
41 


1941- 
42 


1942- 
43 


1943- 
44 


1944- 
45 


1945- 
46 


Khaftdsari: 
Factory : 

Total 


Rs. 

60 

15,824 


Rs. 

47 

25,202 


Rs. 
51 

33,097 


Rs. 
59 

42,244 


Rs. 

146 

24,760 


Rs. 

286 

39,011 


Rs. 

443 

66,827 


Rs. 
157 

48,184 


Rs. 

327 

67,900 


Rs. 

65,000 
(Revised 
estimate) 


Rs. 

62,500 
(Est.) 


15,884 


25,249 


33,148 


42,303 


24,906 


39,297 


67,270 


48,341 


68,227 


65,000 


62,500 



TABLE No. 18 
Average price of Indian and Imported Sugar in India per maund of 82-2/7 ^ s - 



Indian 1st quality 


1934 


1935 


1936 


1937 


1938 


1939 


1940 


1941 


1942 


1943 


1944 


Special (Cawnpore 
market average 


Rs, 


Rs. 


Rs. 


Rs. 


R* 


Rs. 


Rs. 


Rs. 


Rs. 


Rs. 


Rs. 


quotation) (Factory 
























Delivery Basis) 
Imported Sugar 


9-6-0 


9-0-0 


8-4-0 


7-0-0 


8-8-0 


10-12-0 


10-8-0 


11-0-0 


13-0-0 


15-0-0 


16-4-0 


(Calcutta market 






















for 


average quotation) 


9-13-0 


9-13-0 


9-12-0 


9-10-0 


LQ-8-0 


11-0-0 


11-0-0 


... 


... 


*.. 


D24 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



IX 



TABLE No. 19 
Average price of Gur per maund in 1940-41, 1941-42, 1942-43 and 1943-44 



Gur Market 


1940-41 (Nov. to Oct.) 
Rs. a. p. 


1941-42 (Nov. to Sept.) 
Rs. a. p. 


1942-43 
Nov.-Oct. 
Rs. a. p. 


1943-44 
Nov. -Oct. 
Rs. a. p. 


Madras 


316 


426 


9 6 10 


9 10 


Ahmednagar ... 


369 


658 


14 14 6 


15 9 9 


Lyallpur 


292 


406 


10 7 7 


10 4 5 




( No quotation ) May, ,'41 


( No quotation ) Feb., June, 










July, August, Sept. '42 






Mimffarnagar ... 


307 ! 5 13 9 | 8 15 6 


6 12 11 


Meerut 


2 12 11 


5 12 10 


901 


760 




( No quotation ) August, '41 


( No quotation ) for March 










and Sept. '42 






Bhagalpur 


301 


5 10 3 


11 4 4 


856 




( No quotation ) for Mar.,'41 


( No quotation ) for May, 










June, July and Sept. '42 






Dacca 


554 


977 









TABLE No. 20 

Approximate Official Estimate of total Carry-over of Stocks of Sugar in India 

at the beginning of November, since 1931 

Year Tons 

1931 ... ... ... ... ... ... 32,000 

1932 1. ... ... ... ... ... 19,000 

1933 ... ... ... ... ... ... 9,000 

1934 ... ... ... ... ... ... 30,000 

1935 ... ... ... ... ... ... 23,000 

1936 ... ... ... ... ... ... 159,000 

1937 ... ... ... ... ... ... 211,000 

1938 ... ... ... ... ... ... 102,000 

1939 ... l ... ... ... ... ... 105,000 

1940 ... ... ... ... ... ... 390,000 

1941 ... ... ... ... ... ... 295,000 

1942 ... ... ... ... ... ... 105,000 

1943 ... ... ... ... ... ... 133,863 

1944 ... ... ... ... ... ... 265,802 

TABLE No. 21 
Approximate Railway Freight on Sugar-cane in 1943-44 



Railway 


Kind of Wagon 


Average Capacity 


Distance 


Rate per Wagon 


A. B. Railway 
E. B. Railway 
E. B. & A. B. Rly. 
combined 
0. & T. Railway 
E. I. Railway 


4 wheeler 
4 wheeler 

4 wheeler 
4 wheeler 
4 wheeler 


160 maunds 
160 maunds 

160 maunds 
270 maunds 
480 maunds 


35 miles 
177 miles 

54 miles 
55-60 miles 
39 miles 
up to 50 miles 
up to 100 miles 


' Rs. A. p. 
* 8 14 
27 

17 8 
900 
10 
14 
25 



THE SUGAR INDUSTRY AT A GLANCE, 1944 

TABLE No. 22 

Statement showing Expenditure on Sugar Research by the Imperial Council of 

Agricultural Research* 



Year 


Amount spent or proposed 
to be spent 


Directions in which generally Spent 




Rs. 




1935-36 


4,79,088 


) Production and testing of new varieties of 


1936-37 


3,88,627 


j sugar-cane. 


1937-38 


3,46,820 


) Devising and testing systems of cultivation and 


1938-39 


3,24,928 


J manuring. 


1939-40 
1940-41 


3,56,790 
3,19,304 


I Study and combating of insect and fungus pests. 


1941-42 


3,74,580 


\ Research in use of molasses as manure and cattle 


1942-43 


3,57,446 


J food. 


1943-44 


4,26,828 


Sugar Marketing Survey. 


1944-45 


4,11,700 


Utilisation of Bagasse for the paper, and board 




( Estimated to be spent. ) 


industry, Etc., Etc. 



* Figures collected from official sources and furnished by Secretary, Imperial 
Council of Agricultural Research, (Vide letter No. F. 66(14)|43D dated* 16th 
January 1945). 

TABLE No. 23 

Estimated Percentage of Gate-cane to the Total Quantity of Cane (i.e. Gate-cane 
and Rail-borne cane) crushed in Factories in the various Provinces* 





8 


CO 
CO 


CO 


00 
CO 


o> 

CO 


o 


r-1 


T 


CO 


5 


Province 


rt -5 


10^ 


<i^ 


^ 




<i c 


O-^O 




ci > 


co^ 




i 1 


0> 

r-4 


2 


i-H 








r-4 


o> 

r 1 


s 

r-l 


Oi 


Bihar 


48 


50 


58 


53 


53 


53 


65 


63 ^ 


70 


70 


United Provinces 


65 


66 


68 


72 


66 


62 


69 


80 ^ 


85^ 


85 ^ 


Bengal 


22 


26 


45 


55 


54 


33 


32 


52 o 


60 o 


60 o 


Punjab 


... 


51 


61 


69 


57 


47 


55 




80 g 


80 g 


Bombay 


100 


100 


100 


100 


100 


99 


100 


100 


100 


100 


Madras 


... 


35 


67 


71 


72 


75 


67 


60 ^ 


65 ~ 


65 ^ 



* Compiled by the Indian Sugar Syndicate Ltd. in September 1939. 
t Compiled by us from the returns made by factories in 1939-40, 1940-41, 
1941-42, 1942-43 and 1943-44. 



TABLE No. 24 

This Treble shows the production, consumption and per capita consumption of 
sugar in thfe different Provinces and Indian States in 1939-40, 1940-41 and 1941-42 (1st 
November to 31st October). In estimating these figures also, no account has been 
taken of the differences between opening and closing invisible stocks and imports 
and exports by road. But it is believed that initial and closing invisible stocks 
do not differ appreciably and that the volume of inter-provincial traffic in sugar 
by road is not great. A better estimate of consumption will, however, be possible 
if statistics of markets stocks improve. 



TfiE SUGAR INDUSTRY AT A GLANCE, 1944 



XI 



Production, Consumption and Per Capita Consumption of Sugar in the various 
Provinces and States, during the years 1939-40, 1940-41, and 1941*42 (Nov.-Oct.) 





193940 


194041 


194142 


. Name of Province 


1 


& 


5 & 





o, 


So, 





a 


o ^ 




1 


Is 


III 


o 

3 


9| 


|l 

*J en * 


| 


|| 


til 




^ 


c *** 


& o *"* 


"8 


* 


fc CJ ' M 


*s 


o ** 






V-i 

Q-, 


CJ 


ft(j 








a,cj 


& 


U 


00 














i 










Tons 






Tons 






Tons 






Tons 


in 


Lbs. 


.Tons 


in 


Lbs. 


Tons 


in 


Lbs. 






(1000) 






(1000) 




(1000) 














I 








Bengal 


45,800 


161 


6.7 


64,600 


178 


6.6 


29,400 


120- 


4.5 


Bombay 


97,200 


219 


15.2 


120.132 


260 


20.8 


113,354 


240 


192 


Madras 


50,400 


94 


3.6 


67,400 


106 


4.8 


47,448 


90 


4.1 


Bihar 


328,800 


57 


(a)3.1 


257,100 


69 


(fl)3 9 


122,300 


66 


(a)36 


United Provinces 


783,400 


153 


63 


708,592 


244 


9.8 


480,663 


159 


6.4 


Punjab 


32,100 


169 


12.0 


51,023 


231 


15.3 


38,120 


199 


13.1 


C. P. and Berar... 




38 


4.3 




47 


6.3 




37 


4.9 


Assam 




16 


3.5 




20 


4.4 




11 


24 


Sind and British Baluchistan. 




35 


14.3 




44 


19.5 




39 


17.3 


Orissa 




8 


... 




10 


... 




7 


... 


N.-W. F. P. ... 




8 


3.8 




18 


13.3 




15 


ll'.l 


Delhi 




20 


44.8 




22 


53.7 




14 


342 


Rajputana 




38 


6.8 




48 


7.9 




60 


9.8 


Central India ... 




25 


4.8 




35 


6.8 




33 


6.4 


Nizam's Territory 




20 


2.8 




27 


3.7 




23 


3.2 


Kashmir 




2 


1.1 




3 


17 




4 


2.3 


Mysore 




11 


3.5 




14 


4.3 




15 


4.6 


ALL-INDIA ... 




1,074 


6.5 




1,376 


8.5 




1,132 


7.0 



(a) Includes Orissa also. 

TABLE No. 25 
Total Production, Import and Export of Molasses in India* for the last 13 years 





Production of Molasses 


Imports of 


Export of Molasses 




in India in Thousand Tons 


Molasses 


from British India 


Year 







__ 


into British 


(including Palmyra 




From 
Cane 


From 
Gur 

Rpfinp- 


From 
Khand- 


Totalf 


India 
(Tons) 


and cane jaggery) 
(Tons) 


Nov.-Oct. 


Factory 


ries 


sarif 




Apr. -Mar. 


Apr.-Mar. 


1931-32 


69 


46 


250 


365 


40,191 


740 


1932-33 


130 


56 


275 


461 


31,991 


819 


1933-34 


190 


% 40 


209 


430 


2,401 


1,201 


1934-35 


234 


22 


150 


406 


415 


1,153 


1935-36 


337 


33 


125 


495 


Nil 


1,026 


1936-37 


406 10 


100 


516 


Nil 


24,195 


1937-38 


349 


8 


125 


482 


5 


79,167 


1938-39 


242 


g 


100 


348 


2160 


52,676 


1939-40 


485 


7 


125 


627 


2000 


16,000 


1940-41 


424 i 32 


100 


556 




,. 


1941-42 


293 


7 


100 


400 




.. 


1942-43 


369 


11 


100 


480 




t f 


1943-44 


438 


8 


100 


540 




,, 


1944-45 


341 














* After 1936-37, statistics regarding Burma are excluded, 
t Official estimates. 



XII 



THE SUGAR INDUSTRY AT A GLANCE, 19*4 



TABLE No. 26 

Total value of Sugar Machinery imported in| British India from 1932-33 to 1939-40* 

(In Thousands of Rupees) 



Source 


1932-33 


1933-34 


1934-35 


1935-36 


1936-37 1 1937-38 


1938-39 


1939-40 


U. K. 
Other Countries 


Rs. 
91,48 
61,63 


Rs. 
1,95,87 
1,40,51 


Rs. 
73,60 
31,84 


Rs. 

49,70 
16,00 


Rs. 

68,49 
26,66 


Rs. 

43,15 
26,21 


Rs. 

30,16 
31,20 


Rs. 


1,53,11 


3,36,38 


1,05.45 


65,70 


95,16 


69,37 


61,36 


50,84 



* Statistics discontinued after 1939-40. 

TABLE No. 27 

Calculated Net Production* of Gur in India for direct consumption, from 

1937-38 to 1942-43 

Year Calculated net Annual Production of Gur for 

( November October ) direct consumption ( in Tons ) 

1930-31 . - .. 2,241,000 



2,758,000 

3,240,000 

3,486,000 

3,701,000 

4,101.000 

4,268,000 

4,364,000 

2,131,000 

2,441,000 

3,414,000 

2,829,000 

3,015,000 (Revised) 

3,564,000 (Estimated) 



1931-32 

1932-33 

1933-34 

1934-35 

1935-36 

1936-37 

1937-38 

1938-39 

1939-40 

1940-41 

1941-42 

1942-43 

1943-44 

* The net production of gur is calculated by deducting from the total yield of 
cane expressed in terms of gur, and published in the " Final General Memorandum 
on the production of the Principal Crops in India ", by the Director-General, Com- 
mercial Intelligence and Statistics, the gur equivalent of the cane used for purposes 
other than gur manufacture. Vide letter No. 8002|stat, dated 2nd February 1944, 
from the Director, Imperial Institute of Sugar Technology, Cawnpore, to the 
Chairman, Sugar Commission, U.P. and Bihar, Cawnpore, for figures from 1940-41 
to 1942-43. 

TABLE No. 28 

Cane Factory Production of Sugar in U. P., Bihar and All-India 
(in Tons) from 1931-32 to 1943-44 

(Vide Indian Trade Journal, 6th. -April 1944) 











Total quantity of cane 


Season 


U.P. 


Bihar 


All-India 


crushed all factories 










in tons 


1931-32 


66,312 


75,091 


1,58,5S1 


17,83,000 


1932-33 


1,40,344 


1,28,610 


2,90,177 


33,50,000 


1933-34 


2,73,774 


1,39,957 


4,53,965 


51,57,000 


1934-35 


3,15.600 


1,84,038 


5,78.115 


66,72,000 


1935-36 


5,30,000 


2,50,200 


9,32,100 


98,01,000 


1936-37 


6,08,600 


3,29,300 


11,11,400 


1,10,87,000 


1937-38 


5,31,300 


2,25,300 


9,30,700 


99,16,400 


1938-39 


3,20,300 


61,600 


6,50,800 


70,04,800 


1939-40 


6,59,500 


3,22,100 


12.41,700 


1,31,31,700 


1940-41 


5,13,300 


2,46,100 


10,95,400 


1,12,90,900 


1941-42 


3,82,900 


1,17,300 


7,78,100 


80,26.300 


1942-43 


6,12,500 


2,37,400 


10,70,700 


1,04,18,500 


1943-44 


7,27100 


242,400 


12,16,400 


1,21,37,800 (Revised) 


1944-45 


5,33,500 


1.70,600 


9,85.100 


95.33.400 



THE SUGAR INDUSTRY AT A GLANCE, 1944 












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THE SUGAft INDUSTRY AT A GLANCE, 1944 

TABLE No. 30 
Recovery of Sugar from Cane during 1932-35 to 1944-45 



Provinces 


Recovery of Sugar per cent Cane 


8 

ri 

3 


to 

CO 
1 

in 
g 


t** 

CO 
1 
CD 
00 

o> 


CO 

<? 
t>. 

s 


1938-39 




T* 
1 

o> 

8 


1940-41 


7 


Tl 

&> 


1942-43 


3 

rf 
0> 


1944-45 


U. P. 


8.56 


9.60 


9.65 


9.18 


9.14 


9.37 


9.87 


9.87 


10.16 


9.92 


10.36 


Bihar ... | 8.79 


893 


9.20 


9.58 


9.00 


9.29 


9.86 


10.35 


10.93 


10.53 


10.70 


"All other 
Provinces" 


8.77 


9.00 


960 


9.77 


9.91 


9.88 


9.34 


9.22 


9.95 


9.94 


... 


All-India 


8.66 


929 


9.50 


9.38 


9.29 


9.45 


9.70 


969 


10.28 


10.02 


10.31 



* Vide Trade Journal. (Second Memorandum on production of cane sugar, in 
1944-45.) 

TABLE No. 31 

Production of Sugar directly from Cane in Modern Factories in India, 1929-30 
to 1943-44, and Recovery Percentage for Java 



Season 


Number of 
Factories 
producing 
Sugar direct 
from cane 


Cane 
crushed 


Sugar 
produced 


Percentage 
Recovery 
for India 


Percentage 
Recovery 
for Java* 






Tons 


Tons 






1929-30 


27 


989,776 


49,768 


9.07 


11.76 


1930-31 


29 


1,317,248 


119,859 


9.00 


10.92 


1931-32 


32 


1,783,499 


158,581 


8.89 


11.56 


1932-33 


57 


3,350,231 


290,177 


8.66 


12.84 


1933-34 


112 


5,157,373 


453,965 


8.80 


12.55 


1934-35 


130 


6,572,000 


578,115 


8.66 


13.23 


1935-36 


137 


9,801,748 


932,100 


9.29 


12.77 


1936-37 


137 


11,687,200 


1,111,400 


9.50 


11.87 


1937-38 


136 


9,916,400 


930,700 


9.38 


11.77 


1938-39 


139 


7,001,800 


650,800 


9.29 


12.23 


1939-40 


145 


13,131,700 


1,241,700 


9.45 




1940-41 
1941-42 
1942-43 (OurEst.) 


148 
150 
150 


11,290,900 
8,026,300 
10,418,000 


1,095,400 
778,100 
1,070,700 


9.70 
9.69 
10.28 


1 
1 


1943-44 (Revised) 
1944-45 


151 
144 


12,137,800 
9,533,400 


1,216,400 
985,100 


10.02 
10.31 






* Vide <the Indian Trade Journal, 23rd September 1943, 



XV 



THE SUGAR INDUSTRY AT A GLANCE, 1944 
TABLE No. 32 

Value of imports of Sugar,* Revenue from imports, and Rate of Import Duty 
on Sugar from 1920-21 to 1944*45 



Year 
April-March 


Value of foreign Sugar 
( net ) imported i n 
British India in Lakhs 
of Rupees* 


Revenue from 
Import Duty on 
Sugar in Lakhs 
of Rupees** 


Rate of Import Duty 


1920-21 
1921-22 
1922-23 
1923-24 
1924-25 


1,850 
2,750 
1,549 
1,545 
2,090 


185 
412 
487 
486 
578 


10 p c. ad valorem 
15 p.c. ad valorem 
25 p.c. ad valorem 
> * 
> 


1925-26 
1926-27 
1927-28 
1928-29 
1929-30 


1,520 
1,534 
1,450 
1,586 
1,836 


659 
744 
653 
782 
846 


Rs. 4-8-0 per cwt 
u 



it 


1930-31 
1931-32 


1 1,047 
590 


1,081 
798 


Rs. 6-0-0 per cwt. 
Rs. 9-1-0 



1932-33 
1933-34 
1934-35 



422 
270 
210 



685 
472 
381 



Re. 1-13-0 being revenue sur- 
charge from 1st April 1932.) 



Rs. 9-1-0 per cwt. 
(Rs. 7-12-0 being protective & 
Re. 1-5-0 being equivalent ex- 
cjse duty from 1st April 1934.) 



1935-36 
1936-37 
1937-38 

1938-39 


190 
23 
18 

45 


324 
51 
25 

45 


*> 

Rs 9-4-0 per cwt. 
(Rs. 7-4-0 being protective and 
Rs. 2-0-0 being equivalent 
excise duty from 28th February 
1937.) 


1939-40 


331 


396 


Rs. 8-12-0 per cwt. 
(Rs. 6-12-0 being protective & 
Rs. 2-0-0 being equivalent ex- 
cise duty. (With effect from 
1st April 1939.) 


1940-41 
1941-42 


36 
107 


18 
1*9 


Rs. 6- 12-0 being protective and 
Rs. 3-0-0 being equivalent 
excise duty. (With effect from 
1st March 1940.) Rs. 9-12-0 
per cwt. 


1942-43 

1943-44 
1944-45 


... 


5 

4-1** 
3'5** 


Rs. 11-1-7 1|5 per cwt. with 
effect from 1st April 1942 
(i.e. including 20% surcharge 
on ordinary import duty of 
Rs. 6-12-0) and Rs. 3-0-0 being 
equivalent excise duty. 



* Annual statement of sea-borne trade (Burma excluded from 1937-38) . 

** These figures appear to be too large, looking to imports reported to be 
negligible. On an enquiry, however, we were informed that they represent duty 
collected in those years on sugar released from Bond out of stock imported during 
1941 and 1942. 



XVI 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



TABLE No. 33 

Java Sugar Statistics from 1935-36 to 1940-41* 
(In Long Tons) 



Crop Year 


Initial Stock 
on 1st April 


Production 


Exports 


Local 
Consumption 


Final Stock 
on 31st Mar. 


1935-36 ... 


1,585,397 


505,528 


863,356 


285,013 


942,556 


1936-37 ... 


942,556 


583,029 


975,003 


309,449 


541,133 


1937-38 ... 


241,133 


1,392,151 


1,017,276 


306,522 


309,486 


1938-39 ... 


309,486 


1,376,824 


1,163,809 


315,922 


206,579 


1939-40 ... 


206,579 


1,550,462 


1,214,125 


304,740 


238,176 


1940-41 ... 


238,176 


1,579,697 


837,342 


"351,828 


628,703 


1941-42 ... 


( No reliable 


reports availa 


ble since occu 


pation of Java 


by Japanese) 



* Vide Lamborn Weekly Report, issue of June 24th, 1941. 

TABLE No. 34 

An interesting Table regarding Per Capita Consumption of Gur and Sugar in 
certain Rural and Urban Areas* in pre-war period (1937-38) 



Name of Province 


Gur 


Sugar 




Urban areas 
(lb.) 


Total for the 
Province 
(lb.) 


Urban areas 

db.) 


Total for the 
Province 
(lb.) 


United Provinces 


13*2 (1) 


53'9 


58'1 (2) 


8'3 


Punjab 


18'0 (3) 


23*3 


50'4 (4) 


12'8 


Bengal 


15'4 (5) 


22*8 


85'5 (5) 


6'3 


Madras 


8*9 (6) 


12*1 


51 '2 (6) 


4'4 


Bombay 


12*4 (7) 


14'4 


81'4 (7) 


16'3 


Sind 


6'0 (8) 


7*2 


82'1 (8) 


17'8 



(1) 22 markets, (2) 29 markets, (3) 6 markets, (4) Delhi, (5) Calcutta, (6) 
Madras, (7) Bombay, (8) Karachi. 

* Report on the Marketing of Sugar published by Central Agricultural Market- 
ing Department (Government of India), 1943, p. 130. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



xvu 



TABLE No. 35 

Statement showing Sugar Production and Quotas allotted for Civilian Consumption 

for the Quota Year 1943-44 





Production 


Quota 


i from 


Total quota 




Areas 


during 
1943-44 


Local 
Production 


U. P. & 

Bihar 


for civilian 
corlSump- 
tion for 


Total 
quota for 
1944-45 




(Tons) 


( Tons ) 


(Tons) 


1943-44 




Assam .. 






16,000 


16,000 




Baluchistan 






4,700 


4,700 




Bengal & States 


13,649 


13,649 


1,34,351 


1,48,000 




Bombay & States 


1,03,225 


80,181 


1,27,819 


2,08,000 




Central India 


12,172 


12,172 


12,828 


25,000 


</} 

Q 


C P & States 






33,000 


38,000 





Delhi 






19,000 


19,000 


o 


Hyderabad 


17,467 


17,467 




18,000 


o 

o 


Jammu & Kashmir ... 


15 


15 


5,985 


6,000 




U"> 


Madras & States 


66,858 


66,858 


43,042 


1,09,900 


o> 


N.-W. F. P. 


6,253 


6,253 


11,247 


17,500 


K 


Orissa 


1,695 


1,695 


6,305 


8,000 


o 

V4 


Punjab & States 


28,348 


28,348 


1,39,652 


1,68,000 


Ou 

a 


Rajputana 


2,179 


2,179 


38,821 


41,000 


3 


Sind & States 






31,200 


31,200 




U P & States 


7 59 436 


1 38 500 




1,38 500t 




Bihar 


2 12 809 


53,500 




53,500 




Khandsari Sugar . . 


80 OOOt 






















Total ... 


13,04,106 


4,20,817 


6,28,956 


10,86,300** 





* Estimated. 

** Includes 44,000 tons of khandsari sugar allotted outside the U. P. and 36,000 
tons estimated consumption of khandsari sugar in the U. P. 

fThe U. P. is allotted a further quota of 36,000 tons of khandsari sugar in 
1943-44 

N. B. The figures of allotment quota are collected from official sources. But as 
the cane-crushing season of 1944-45 has not yet been closed and returns of 
sugar production from Madras, Bengal and Bombay were not available so far, 
the allotment quotas are provisions^ and should be taken as such. The quotas 
have not been finalised at the time this volume has been sent to press and 
readers may kindly note that there might be some difference in final figures. 

NOTE. Where States, are not shown separately their quotas are included in 
the British Indian Provinces adjoining them. 

According to the Sugar Controller of India, Annual quotas for the Provinces 
and Indian States are fixed by him on the basis of consumption averages during 
the year 1934-35 to 1938-39. The sugar allowed for civilian consumption in 
1942-43 may perhaps be 25 per cent less than the consumption requirements of 
the country which have appreciably increased as compared with the average of 
the pre-war years. The population in many towns and cities has increased even 
as compared with 1941 census figures. There has been a large influx of refugees 
in the country. The Allied forces stationed in the country have also increased. 
Again, conditions now are more prosperous than before and this has naturally 
resulted in a change in the social habits of the people leading to a higher demand 
for luxury foodstuffs. 

3 



xviii THE SUGAR INDUSTRY AT A GLANCE, 1944 

Non-varying price for cane in U. P. and Bihar in 1943-44 
Punjab and Bengal Fix Higher Prices 

Early in November, 1943, the Government announced an increase 
in the minimum price of cane in U. P. and Bihar from As. 10 a maund 
which was the price in the 1942-43 season, to As. 12 a maund of cane. 
At the same time, the factories were directed not to pay the full price 
to the cane-grower all at once. One-sixth of the price, i.e. two annas 
a maund, was to* be paid in Defence Savings Bonds or Certificates which 
were to be cashed one year after the war was over. The Govern- 
ment expected that on the basis of production of 9 lakhs tons of sugar 
in U. P. and Bihar, nearly Rs. 3 crores would thus be withheld from 
circulation and be of assistance in their anti-inflationary tendencies. The 
Punjab Government, finding 'that factories were unable to get cane at 
Rs. 0-12-0, fixed Rs. 0-14-6 per maund, and the Bengal Government fixed 
Re. 1 per maund. 

Special Reduction in Cane Price towards the fag end of the Season, 1943-44 

With effect from 15th May, 1944, the U. P. Government announced a 
reduction of Rs. 0-2-0 in the price of cane, i.e. to Rs. 0-10-0 per maund, 
in order to induce factories to continue crushing and produce maximum 
quantities of sugar. The full amount was to be paid straight to cane-growers. 

Discontinuance of Additional Special Cess of Rs. 0-0-6 per maund of Cane in 
. U. P. and Bihar in 1943-44 

Additional Cess of 0-0-6 per maund of cane imposed in 1940-41 to 
repay the deferred excise duty, for which an amount of Rs. 1,50 crores was 
borrowed from the Government of India, with a view to enable the Govern- 
ments of U. P. and Bihar to give a temporary rebate of one rupee per 
maund of the excise duty, was discontinued from 1943-44 season, as the 
amount was fully collected and as the sum, along with the interest, was 
repaid to Government of India. 



Raising of Ordinary Cess on Cane from 0-0-3 to " I * P er maund in U. P. and 

Bihar in 1943-44 

The rate of ordinary Provincial cess on cane which was O r O-3 per 
maund was, however, Braised to 0-1-0 per maund with effect from 1943-44, 
in U. P. and Bihar, in spite of the protests of the industry. The proceeds 
of this cess will be credited to Provincial Revenues as usual. No portion 
of this cess is earmarked for any specific purposes. But in 1942-43, the 
U. P. Government spent a substantial amount from the General Revenues 
on (i) Cane Development Department, (ii) the staff for reservation and 
bonding of sugarcane, (Hi) the seasonal, staff maintained for the adminis- 
tration of the United Provinces Sugar Factories Control Act, 1938, and 
the rules made thereunder, (iv) the Sugar Commission, (v) the special 
staff maintained at the Imperial Institute of Sugar Technology in connection 
with the technical and statistical work entailed by the Sugar Factories 
Control Act and Rules, and (vi) the staff maintained in connection with 
the Sugar Control Scheme of the Government of India. 

The U. P. Government realized Rs. 61,07,755, as cess on sugarcane during 
the financial year 1942-43. This also includes the proceeds of the addi- 
tional cess of 0-0-6 per maund of cane levied in order to recover the loan 
advanced by the Government of India in the form of deferred sugar 
excise duty with a view to assist the sugar industry of the province. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xix 

The sum advanced by the Government of Bihar to the industry in 
Bihar a few years ago in connection with Excise Duty has not yet been 
recovered in full. There was a sum of Rs. 5,70,000 yet to be realized at 
the end of November 1943. But the special cess on cane was discontinued 
from 1943-44. 

The total amount collected from the Cane Cess in Bihar in 1942-43, 
was Rs, 22,74,000 of which Rs. 7,58,000 represented the ordinary cess and 
Rs. 15,16,000 represented the special cess for repayment of loan to the 
Government of Ind^i. 

In Bihar also, the income from the cane cess is merged in the Provincial 
Revenue and no separate account is maintained of the expenditure from 
cess. The annual expenditure incurred by Government on the Cane Deve- 
lopment and other schemes related to sugarcane generally covers a large 
portion of the proceeds from the ordinary cess. 

The Chairman, Sugar Commission of U. P. and Bihar assured the indus- 
try, however, (vide his letter to the Sugar Mills Association, No. 5784 1 Com. 
E-7, dated the 22nd September, 1943) that " the proceeds of the cess though 
credited to General Revenues will in due course be utilized for the benefit 
of the industry and the growers". 

Cane Prices and Cane-cess During 1944-45 Season in U. P. and Bihar 

In October, 1944, the Sugar Controller for India, after consulting his 
Advisory Committee, announced an increase of Rs. 1-7-0 in the sugar price, 
thereby fixing the price of sugar of the standard quality (D. 24) at Rs. 16-4-0 
per maund. The Governments of U. P. and Bihar on the basis of this 
increase fixed a cane price of As. 14 -. Thus the minimum price of cane 
for the season 1944-45 was fixed at annas fourteen per maund of cane 
exclusive of cess to be paid by all factories. An exception was made in 
the case of the Gokulnagar Sugar Factory at Kichha, the cane price in 
the case of which was fixed at 12 annas per maund. As in the previous 
year, the two Provincial Governments levied compulsory deductions from 
the cane price for investing in the National Savings Certificates. In U. P. 
compulsory deductions were as follows : 

Rs. a. p. 

1. Kichha Factory . . . . . . 0-1-0 

2. Factories in Gorakhpur Division . . . . 0-2-0 

3. Ratna and Aira Sugar Factories . . . . 0-2-0 

4. All other Factories .. .. .. 0-3-0 

In Bihar, the Government at the very commencement of the season 
fixed a cane price of 14 annas and ordered a uniform deduction of 0-2-0 
for National Savings Certificates from the cash price. As the season advanced, 
it was found that the cane price for ryots seemed low in view of the bad 
crop in Bihar. As the industry considered the price of Rs. 0-14-0 inadequate, 
a deputation of industrialists waited on His Excellency the Governor of 
Bihar towards the beginning of December,^ 1944. In response to the demand 
of the industry the Governor agreed to abolish the cess of one anna in the 
case of Bihar factories and permit this amount to be added on to the cane 
price. With effect from 16-12-1944 the cess of one anna was abolished and 
the cane price was raised to Rs. 0-15-0 per maund in the case of Bihar. The 
compulsory deduction in the case of Bihar was fixed at a uniform rate of 
two annas per maund. 



xx THE SUGAR INDUSTRY AT A GLANCE, 1944 

It may be noted that the Governments of U. P. and Bihar also abo- 
lished the compulsory deductions from cane prices paid to the cultivators 
with effect from 25th January, 1945, in response to the requests 
of the industry. This salutary measure came none too early as it 
was recognised to be long overdue, both in the interests of the cultivators 
and the future of the sugar industry. 

Cane Prices in Other Provinces 
Madras * 

The basic minimum prices of sugarcane were fixed by the Government 
of Madras for the season 1943-44 ranging from Rs. 17 to Rs. 20 per ton 
in accordance with the costs of transport of cane to the factory from the 
field. In view of the increase in price of sugar announced by the Sugar 
Controller, prices for sugarcane for the current season of 1944-45 were 
fixed at between Rs. 20|8|- to Rs. 24 - per ton. 

Mysore 

The minimum price fixed for sugarcane in Mysore for the factory at 
Mandya for the 1943-44 season was Rs. 18 per ton. In view of the increase 
in the ex-factory price of sugar by Rs. 1-7-0 per maund with effect from 
20th October, 1944, a proportionate increase in cane-price was under con- 
templation of the Mysore authorities before the season could start. 



, M. P. GANDHI. 

Bombay, 30th July 1945. 



iliiliiJiiiiiv 

"THE SUGAR INDUSTRY AT A GLANCE" 

(1944) 



SUGAR INDUSTRY (PROTECTION) ACT, 1939* 
(Present Duties to continue till 31st March 1946) 

ACT NO. XX of 1939 

An Act to provide for the continuance for a further period of the protection 
conferred on the sugar industry in British India. 

Whereas it is expedient to provide for the continuance for a further period 
of the protection conferred on the Sugar Industry in British India, and to extend 

VTTT t moo tne date before which the Central Government is required under 

A 1 11 or Lij6tt * . . 

Section 3 of the Sugar Industry (Protection) Act, 1932, to lay 

before the Indian Legislature the proposals referred to in the said Section ; 
It is hereby enacted as follows : 

1. This Act may be called the Sugar Industry (Protection) 
Act, 1939. 

Amendment of 2 - * n Section 3 of the Sugar Industry (Protection) Act, 

SecJ* of Act XIII 1932, for the figure "1939" the figure "1941" sball be 
substituted. 

3. In Item No. 17 of the First Schedule to the Indian 



Short Title 



of 1932 t 



Amendment of First 
Schedule to Act rr .~ A A 1ri _. 
XXXII of 1934 J fariff Act, 1934 : 



* Received the assent of the Governor-General on March 31, 1941. For the Sugar Industry 
(Protection) Act, 1932, and the Sugar Industry (Temporary Extension) Act, 1938, see 1939 
Sugar Industry Annual, pages 1 to 4. 

f As amended, Section 3 of Act XIII, 1932, viz. the Sugar Industry (Protection) Act, 1932, 
will read as under: 

3. The Governor-GeneraHn-Council shall cause to be made by such persons as he may 
appoint in this behalf, an inquiry to ascertain if the protection of the sugar industry during the 
period from the 31st day of March 1941 to the 31st day of March 1946, should be continued to 
the extent conferred by this Act, or to a greater or lesser extent, and shall, not later than 31st 
day of March 1941 lay his proposals in this behalf before the Indian Legislature. 

t As amended, Item No. 17 of the First Schedule to the Indian Tariff Act, 1934, will read as 
follows: 



17. Sugar, excluding 
confectionery 



Protective 



The rate at which excise duty 
is for the time being leviable on 
sugar, other than khandasari or 
palmyra sugar, produced in British 
India plus Rs. 6-12-0 per cwt. 



Upto 

31st March 
1946 



xxii THE SUGAR INDUSTRY AT A GLANCE, 1944 

(a} In the fourth column, for the words and figures " plus Rs. 7-4-0 per 
cwt." the words and figures "plus Rs, 6-12-0 per cwt." shall be substituted; 

(6) In the last column, for the figures " 1939" the figure " 1941 " shall be 
substituted. 

It is hereby declared that it is expedient in the public interest that Clause 3 of 
this Bill shall have immediate effect under the Provisional Collection of Taxes 
Act, 1931. 

By the Protective Duties Continuation Act 1942, the import duty on sugar 
was continued on the same level up to 31st, March, 1944. 

By the Protective Duties Continuation Act 1944, the existing protective 
duties on sugar [as also wood pulp, paper, silk manufactures, gold and silver 
thread and wire, (including the so-called gold thread and wire mainly made of 
silver), and iron and steel manufactures] were continued for a further period of 
two years, that is, t4pto 31st March, 1946. 

It was observed in the Statement of Objects and Reasons that " in the present 
unsettled conditions no suitable date on the basis of which enquiries by a Tariff 
Board can be instituted is available. In the absence of such enquiries it is not 
possible to ascertain the quantum of protection required during normal years and 
the object of this Bill is to maintain the status quo for a further period of two 
years, that is, upto 31st March, 1946. 

Note ; The total import duty on sugar (including the equivalent excise duty 
of Rs. 3 per cwt. and the surcharge of 20 per cent imposed with effect from the 1st 
April 1942) amounts to Rs. 11-1-7 1/5 per cwt. with effect from 1st April 1944. 
It will be continued upto 31st March, 1946. 

SUGAR EXCISE DUTY ACT, 1934 

(incorporating amendments made upto March 1940) 

An Act to provide for the imposition and collection of 
an Excise Duty on Sugar. 

(For Text of the Act, refer to earlier issues of the Annual.) 



INTERNATIONAL SUGAR AGREEMENT. 
India does not join after September 1942. 

" India was a party to the International Sugar Agreement which was 
concluded in 1937 with a view to establishing and maintaining an orderly 
relationship between supply and demand of sugar and to regulate the world 
prices of sugar. Under this agreement India undertook to prohibit exports of 
Indian sugar by sea elsewhere than to Burma. 

India was released from this obligation not to export sugar by sea, with 
effect from 1st September 1942, the Government of India having decided 
not to join, in, the prpposed extension of the International Sug^r Agreement 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xx iii 

U. P. AND BIHAR GOVERNMENTS' ACTS 



SUdAR CONTROL BOARD (1944-45) 

The following persons have been nominated members of the reconstituted 
Sugar Control Board of U. P. & Bihar by a Notification dated 26th June, 1944, 
for a period of one year from 1st July, 1944. 

The Adviser to H. E. the Governor of U. P., Revenue; The Adviser to H. E. 
the Governor of Bihar, Development; Mr. D. R. Narang, Basti Sugar Mills Ltd., 
Basti; Mr. C. O'Malley, Begg, Sutherland & Co. Ltd., Cawnpore; Mr, R. L. 
Nopany, Calcutta; Lala Gurusharan Lai, Gaya Sugar Mills Ltd., Bihar; Mr. N. 
A, Shervani, Etah; Lala Har Sahai Gupta, Shanker Agricultural Farm, Bilari 
(Moradabad); Raja Raghuvendra Pratap Narain Singh, M.L.A., Gonda; Mr. 
Nasiruliah Rafaman Kidwai, Bara Banki ; Mr.-Jamuna Karjee, M.L.A., Darbhanga, 
Bihar; Chaudhury Kalika Prasad Roy, Bihar ; Mr. Satyapal Varma, Cawnpore; 
Secretary to the Government of Bihar, Development Department and Employment 
Department; Secretary to the Government of U. P. in the Agricultural 
Department. 

U. P. AND BIHAR SUGAR COMMISSION 

In August 1940, the U. P. and Bihar Governments set up a joint " Sugar 
Commission, which would be the final authority, subject to Government control, 
on all matters connected with the production and sale of sugar, as well as other 
matters regarding cane prices, etc." It may be observed that since the institution 
of Central Control over the industry, the Sugar Controller for India exercises 
some of the powers relating to sale, cane price fixation, etc. in the interests of an 
all-India policy and to that extent directs the Sugar Commission and its Chairman 
in the discharge of their duties. 

The Chairman of the Commission is Mr. K. R. Malcolm, I.C.S., who succeeded 
Mr. J. E. Pedley in 1944. The Cane Commissioners of U. P. and Bihar are 
ex-officio members of the Commission. They are also ex-officio members of the 
Board of Directors of the Indian Sugar Syndicate Ltd. The office of the Sugar 
Commission is located at Cawnpore. 

The Chairman of the Commission also acts as Provincial Sugar Controller 
for U. P. 

U. P. AND BIHAR SUGAR FACTORIES CONTROL ACT 

During 1942 the Bihar and U. P. Governments proposed an amendment to 
the Control Acts with a view to maintain the continuity of work and to continue 
the operation of the Acts till the end of the crushing season 1946-47. A copy of 
the Statement of Objects and Reasons was given in the previous Annual. 

In November 1944, the United Provinces Government made certain 
amendments to the U. P. Sugar Factories Control Rules, 1938. Under the new 
amendment a Technical Committee consisting of six members was proposed to bo 



xxiv THE SUGAR INDUSTRY AT A GLANCE, 1944 

set up to plan and organise and direct the technical problems concerning the sugar 
industry in U. P. The Director of Imperial Institute of Sugar Technology and 
the Cane Commissioner of U. P. shall be appointed as exofficio members of the 
Committee and the remaining four shall be nominated by the Government after 
consulting the Indian Sugar Syndicate Ltd. 

The functions of the Technical Committee shall be to advise the Provincial 
Government with regard to (a) the establishment of new sugar factories in the 
Province or additions or alterations in the existing plants of the sugar mills (b) 
and to advise on any other technical and incidental matters connected with the 
sugar mills referred to it from time to time by the Sugar Commissioner or the 
Provincial Government. The office of the Technical Committee is to be located 
at Cawnpore. 

if, 

^GOVERNMENT OF INDIA : DEPARTMENT OF FOOD 
SUGAR AN^UGAR PRODUCTS CONTROL ORDER, 1943 
- (As amended upto 30th June, 1945) 

No. 1-Sc. (l)/43 : In exercise of the powers conferred by the Sub-rule (2) of 
Rule 81 of the Defence of India Rules and in supersession of the Sugar Control 
Order, 1942, published with the Notification of the Government of India in the 
Department of Commerce, No. l-SC(6)/42, dated the 29th June 1942, and 
modified by subsequent notifications the Central Government is pleased to make 
the following Order, namely: 

v/f. (1) This Order may be called the Sugar and Sugar Products Control 
Order, 1943. 

v/r (2) It extends to the whole of British India. 
v' (3) It shall come into force at once. 

^'2. In this Order unless, there is anything repugnant in the subject or context, 

^(a) "Controller" means the person appointed as the Sugar Controller for 
India by the Central Government, and includes any person authorised by the 
Controller to exercise all or any of the powers of the Controller under this Order; 

y (b) "dealer" means a person carrying on business in the purchase, sale or 
distribution of sugar or sugar products; 

/ (c) "^-factory price" means price of sugar inclusive of excise duty, packed in 
accordance with the usual market practice, and loaded at the buyer's option, on 
buyer's carts, lorries or other means of transport, or into railway wagons at the 
railway station or siding generally used by the producer, and all incidental charges 
including those for siding and forwarding, being on account of the ex-factory seller; 

V(d) "producer" means a person carrying on the business of manufacturing 
sugar or sugar products or both with the aid of electrical energy or any other form 
of energy which is mechanically transmitted, and is not generated by human or 
animal agency; 

(e) "recognised dealer" means a dealer who has been recognised $$ such by 
the CpBtrolier for purposes of this Order ; 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xxv 

\/ (f) "sugar" means any form of sugar containing more than 90 per cent of 
sucrose ; 

^(g) "sugar product" means any article manufactured from, and containing 
sugar not less than 50 per cent of its weight. 

3. No producer shall, dispose of, or agree to dispose of, make delivery of, 
any sugar, except 

(1) to or through a recognised dealer, or 

(ii) to a person specially authorised in this behalf by the Controller to acquire 
sugar on behalf of the Central Government or of a Provincial Government or of 
an Indian State. 

v ' 4. (1) If the Controller has reason to believe that the production of special 
types of sugar or sugar products is likely to affect adversely the production of 
adequate quantities of ordinary sugar, he may, by general _pr spec i a 1 Q rd^r^pr oh i b i t , 
or limit to such quantities as may be specified in the order, the manufacture by any 
producer or by producers generally of such types or grades of sugar or sugar pro- 
ducts as the order may specify, and no producer to whom such order applies shall 
manufacture any sugar or sugar products in contravention thereof. 

* (2) For the purposes of sub-clause (l), "producer" includes a person carrying 
on the business of manufacturing any form of sugar containing more than 90 per 
cent sucrose including Khandsari sugar, Desi sugar and Bura. 

^ r 5. Every producer and dealer shall comply with such directions regarding 
the sales, stocks or distribution of sugar or sugar products as may from time to 
time be given to him by the Controller. 

lt /6. (1) The Controller may, from time to time, fix by notification in the 
Gazette of India the price or maximum price_at which any sugar or sugar, grodjict 
may be sold or deliveredjjind different prices may be so fixed by him for different 
areas or different types of grades of sugar or sugar products. 

(2) Where the price or the maximum price has been so fixed : 

(a) the price at which such sugar or sugar product may be sold for delivery 
otherwise than ex-factory shall not exceed the price or the maximum price as the 
case may be fixed under sub-clause (}) for sale ex-factory plus such charges in 
respect of transport to or in specified areas and other incidental charges as are 
approved by the Controller ; 

(b) no person shall sell or purchase or agree to sell or purchase such sugar 
or sugar product at a price higher than that fixed under the provisions of sub- 
clause (1). 

(1) The Controller may, from time to time 

allot quotas of sugar or sugar products or of both for the requirements of 
any specified province, or area, or market, 

(ii) issue directions to any producer or dealer to supply sugar or sugar pro- 
ducts to such provinces, areas or markets or sych persons er organisations, in 



xxvi THE SUGAR INDUSTRY AT A GLANCE, 1944 

quantities, of such types or grades, at such times, at such prices and in such 
manner as may be specified by the Controller, and 

(iii) require any producer or dealer to keep in reserve stocks of sugar or sugar 
products in such quantities and of such types and grades as he may direct from 
time to time. 

Provided that where price or maximum price of any sugar or sugar product 
has been fixed in accordance with sub-clause (1) of clause 6 the Controller shall in 
respect of such sugar or sugar product specify the price or maximum price under 
para (ii) of this sub-clause accordingly. 

(2) Every producer shall, notwithstanding any existing agreement with any 
other person, give priority to, and comply with, any directions issued to him under 
sub-clause (1). 

v/S. (1) No sugar shall be transported, or offered or accepted for transport, 
whether by rail, road or water, and whether by a railway servant, common carrier 
or other person, except under and in accordance with the terms of : 

V(a) a general or special permit issued by the Controller in this behalf; or 
(b) A Military credit note. 

Provided that nothing in this sub-clause shall apply to the transport of 
sugar not exceeding 20 seers as part of the personal luggage of a bona-fide 
traveller. 

(2) A permit issued in pursuance of sub-clause (l) shall be returned by the 
consignor to the Controller on completion of despatch, or on expiry of the period 
of its validity, whichever is earlier, with the particulars of actual despatches in the 
prescribed form. 

(3) For the purposes of this clause "sugar" means sugar manufactured by any 
process, including sugar made in vacuum pan factories from cane or gur or 
palmyrah jaggery, as well as khandsari sugar, sugar candy (misri) and Bura. 

9. The Controller may, by notification in the official Gazette, make rules for 
carrying into effect the purposes and objects of this Order. 

v/10. Notwithstanding the supersession of the Sugar Control Order, 1942, all 
notifications, rules, orders, authorizations, quotas, requirements, and directions 
issued thereunder shall, so for as they are not inconsistent with this Order, be 
deemed to have been made hereunder, and they shall continue in force until 
rescinded or modified hereunder. 

11. If any person contravenes the provisions of this Order, then without 
prejudice to any other punishment to which he may be liable, any court trying the 
offence may order that any stocks of sugar or sugar products, together with the 
packages and coverings thereof, in respect of which the court is satisfied that the 
offence has been committed, shall be forfeited to His Majesty. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xxvii 

GOVERNMENT OF INDIA : DEPARTMENT OF FOOD 
GUR CONTROL ORDER, 1943 

(With amendments up to date) 

No. 1 l-S,C.(6)/43-I : In exercise of the powers conferred by sub-rule (2) of 
rule 81 of the Defence of India Rules, the Central Government is pleased to make 
the following Order: 

1. (1) This Order may be called the Gur Control Order, 1943. 

(2) It extends to the whole of British India. 

(3) It shall come into force at once. 

2. In this order, unless there is anything repugnant in the subject or context, 

(a) "Controller" means the person appointed as Gur Controller for India by 
the Central Government, and includes any person authorised by the said Controller 
to exercise all or any of the powers of the Controller under this Order; 

(b) "dealer" means a person dealing in the purchase, sale, or distribution of 
Gur; 

(c) "producer" means a person carrying on the business of producing Gur; 

(d) "Gur" means articles commonly known as Gur, Gul, jaggery, palmyra 
jaggery, shakkar and rab, and includes raw sugar as also uncrystallised sugar in 
any other form comprising of original and convertible molasses and other 

'impurities,- inherent or foreign, prepared by boiling cane or palmyra juice; 

(e) " Sugar " means any form of sugar contaiping more than 90 per cent of 
Sucrose. 

3. The Controller may, from time to time, fix by notification in the official 
Gazette for any specified area the maximum prices at which Gur may be sold or 
delivered, and different rates of prices may be so fixed by him for different areas 
or different types or grades of Gur. 

4. Every producer and dealer shall comply with such directions regarding 
the production, sales, -delivery, stocks, distribution or prices of Gur as may from 
time to time be given by the Controller. 

5. If in the opinion of the Controller the unregulated production of Gur in 
any area is likely to affect adversely the production of sugar in quantity which in 
his opinion is required for the needs of the community, he may, by order published 
in the official Gazette, provide for all or any of the following matters: 

(a) prohibit or restrict the export of sugarcane to any place outside that area; 

(b) direct that cane growers in that area shall deliver sugarcane to a specified 
-sugar factory or factories in accordance with such conditions in regard to quantity, 
price, and time of delivery as may be specified by the Controller; 

(c) prohibit, or restrict to such quantities or qualities or both as may be 
specified by the OrcTer, the manufacture of Gur by all or any class of producers in 
the said area. 

6. (1) The Controller may, from time to time 

(i) allot quotas of Gur for the requirements of any specified province or area, 
or of any specified market, and 



xxviii THE SUGAR INDUSTRY AT A GLANCE, 1944 

(ii) issue directions to any producer or dealer to supply Gur to such areas or 
markets or such persons or organisations, in such quantities, of such types, or 
grades, at such times, at such prices and in such manner as may be specified by 
the Controller. 

(2) Every producer or dealer shall, notwithstanding any existing agreement 
with any other person, give priority to, and comply with, any directions issued to 
him under sub-clause (1). 

7. No Gur, shall, after such date and from such area as the Controller may 
notify in this behalf, be offered for transport by railway or in any manner 
whatsoever by land or river by a consignor or accepted by a railway servant or by 
any person whatsoever for transport or trasported by rail, road or river except 
under a permit issued by the Controller in such form and subject to such conditions 
and in respect of such areas as he may from time to time prescribe : 

Provided that this clause shall not apply to the transport by railway or in 
any manner whatsoever by land or river of Gur (a) by a bona fide traveller as part 
of his personal luggage or (b) under and in accordance with military credit notes 
or (c) under and in accordance with a permit issued by a Provincial authority 
before the date of this Order. 

Explanation. For the purposes of this clause Gur not intended for the 
personal use of the traveller and members of his family shall not be deemed to be 
his personal luggage. 

8. The Controller may, by notification in the Official Gazette, make 
regulations for carrying into effect the purposes of this Order. 

9. If any person contravenes the provisions of this order, then without 
prejudice to any other punishment to which he may be liable, any court trying 
the offence may order that any stocks of gur, together with the packages and 
coverings thereof, in respect of which the court is satisfied that the offence has 
been committed, shall be forfeited to His Majesty. 

Control over Movement of Gur 

Under a Food -Department Notification No. II S.C. (9)/44 dated the 25th 
March 1944, Gur Controller for India announced that no gur shall be offered for 
transport by railway by a consignor or accepted by a railway or transported 
otherwise by land or water from any place outside the area specified by him to 
any other place except under a permit issued by the Gur Controller for India. 

The specified areas are Gur surplus areas from which no gur could be 
moved to other provinces except under a permit from the Government. The 
order placed a ban on all private movement of gur from one area or province 
to another. 



THE UNITED PROVINCES MOLASSES CONTROL ORDER, 1944 

With a view to regulate the prices and disposal of Molasses in U.P., the 
Government promulgated by a notification dated the 13th March 1944, the 
United Prpvinces Mplasses Control Order, Similarly the Bihar Government 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



also instituted control over molasses and directed disposal of them. A summary 
of the important provisions of the U. P. Molasses Control Order is given here: 

Clause 3 of the Order reads: 

(i) Every owner or occupier of a sugar factory shall furnish to the 
Excise Commissioner, U, P., in a specified manner returns relating to 
stocks of molasses in his possession as required. 

(ii) Any person, other than the owner or occupier of a sugar factory, 
holding stocks of molasses shall furnish to the Controller such returns relat- 
ing to the stocks of molasses in his possession as required. 

Clause 4 of the Order lays down that no persop shall export, or cause to 
be exported by rail, river or road, molasses outside the United Provinces 
except on such terms and conditions as may be prescribed by the Excise 
Commissioner or Controller as the case may be. 

Under clause 6 of the Order no person shall move by rail or river from 
any place in the United Provinces to any other place in the United Provinces 
except with the permission of the Excise Commissioner or Controller as the 
case may be. 

In pursuance of clause 8 of the United Provinces Molasses Control Order, 
1944, the Governor was pleased to direct that the molasses mentioned in the 
statement below shall not be sold or offered for sale in the area noted against each 
at prices higher than those mentioned against it. The prices are ex-factory 
prices and inclusive of the cost of loading a tank wagon where transport is by rail 
and of filling the containers where transport is (a) by rail but not in a tank wagon 
or (b) by any means other than by rail. 



Serial 

No. 


Kind of Molasses 


Area 


Maximum Price per maund 


Ordinary or 
liquid molasses 


Cheeta or 
concentrated 
molasses 


1 


Cane molasses the final residual by- 
product of sugar factories manu- 
facturing sugar. from sugar foctories. 


Meerut Division. 


Rs. a. p. 
, 6 


Rs. a. p. 
100 


2 


Cane molasses the final residual by- 
product of sugar factories manu- 
facturing sugar from sugar-cane 
served by railway stations on the 
Broad Gauge or by stations both 
on the Broad Gauge & the Metre 
Gauge. 


Any place in U.P. 
except the Mee- 
rut Division. 


040 


12 


3 


Cane molasses the final residual by* 
product of sugar factories manu- 
facturing sugar from sugar-cane 
served by railway stations on the 
metre gauge only. 


Do. 


020 


080 


4 


Gur molasses the final residual by- 
product of sugar refineries operating 
on vacuum pan system. 


Any place in U.P, 


060 


1 



xxx THE SUGAR INDUSTRY AT A GLANCE, 1944 

INDIAN CENTRAL SUGAR-CANE COMMITTEE FORMED IN 1944 

The Government of India announced their decision to set up a Central Sugar- 
cane Committee by a resolution No. F 41-24/43A dated 6th June 1944, of the 
Education, Health and Lands Department. 

The following is the text of the Government resolution, dated 6 June 1944, 
published in the Gazette of India. 

Taking into account the expansion of sugar-cane research work and envisaging 
considerable further developments in the near future and the need for post-war 
re-adjustments, the Sugar Committee of the Imperial Council of Agricultural 
Research in October 1941, recommended that a Central Sugar Committee should 
be constituted on the lines of the Indian Central Cotton Committee and with 
somewhat similar powers and functions. This resolution was endorsed by the 
Governing Body of the Imperial Council of Agricultural Research in July, 
1942. The Government of India agreeing with the Sugar Committee and the 
Imperial Council of Agricultural Research, have accepted this recommendation in 
principle and decided to set up a Central Sugar-cane Committee, which will be a 
body corporate registered as a society under the Registration of Societies Act 
(XXI of 1860) with Head Quarters at Delhi or such other place as the Committee 
may decide. 

Functions ; The functions of the Indian Central Sugar-cane Committee will 
be to undertake the improvement and development of the growing, marketing and 
manufacture of sugar-cane and its products in India and of all matters 
incidental thereto. This includes items such as agricultural, technological and 
economic research on sugar-cane, gur, sugar and their by-products, the improve- 
ment of crop forecasting and statistics, the production, distribution and testing of 
improved varieties, the adoption of improved cultural practices, enquiries and 
recommendations relating to banking and transport facilities and transport routes, 
the maintenance of an Institute of Sugar Technology and other similar matters. 
The control over the Institute of Sugar Technology will vest in the Committee 
along the lines indicated later. The Committee will also advise the Central and 
Provincial Governments concerned on any points which may be referred to it by 
them, provided the subject matter of the reference falls within the prescribed 
functions of the Committee. 

Constitution: It is desirable that the growers, the manufacturers and the 
traders should be fairly represented on the Committee. Subject to a reserve power 
of nomination by the Governor-General -in-Council so as to permit of appointments 
to the Committee to meet requirements that may vary from time to time, the 
Committee will be constituted as follows : 

(1) The Vice-Chairman, Imperial Council of Agricultural Research, who 
shall be ex-officio President of the Committee. 

(2) The Agricultural Commissioner with the Government of India. 

(3) The Director, Imperial Agricultural Research Institute, 

(4) The Director, Imperial Institute of Sugar Technology. 

(5) The Agricultural Marketing Adviser to the Government of India. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xxxi 

(6) The Imperial Sugar-cane Expert. 

(7)-(l4) The Directors of Agriculture, Madras, Bombay, Bengal, United 
Provinces, Punjab, Bihar, Mysore and Hyderabad or their nominees. 

(15)-(16) The Cane Commissioners, United Provinces and Bihar. 

(17)-(25) Nine representatives nominated by the Indian Sugar Mills 
Association, of whom at least two shall be representatives of the Indian 
Sugar Producers' Association, one representative of the Deccan Sugar 
Factories Association, one of the Indian Southern Provinces Sugar 
Marketing Board and one of the Bengal Sugar Mills Association. 

(26) One representative of Sugar Factory Owners nominated by the 
Governor-General-in-Council. 

(27)-(30) Four representatives of the Gur and Khandsari Industry 
nominated by the Governor-General-in Council. 

(3l)-(38) Eight non-officials representing agricultural interests, one 
nominated by the Government of Madras, ofte by the Government of 
Ben|al, two by the Government of United Provinces, one by the 
Government of Punjab, one by the Government of Bihar and two by 
the Governor-General-in-Council to represent other areas. 

(39)-(41) Three representatives of Sugar Trade one nominated by the 
Bombay Sugar Merchants' Association, one by the Cawnpore Sugar 
Merchants' Association and one by the Indian Sugar Syndicate. 

(42)-(44) Three representatives nominated by the Governor-General-in- 
Council to represent the consumers. 

(45) One representative of Sugar Technologists nominated by the Governor- 
General-in-Council. 

The tenure of the appointment of the members of the Committee other than 
those who are appointed by reason of the office or appointment they hold, will 
be three years with effect from the 1st April of the year in which they are 
appointed or such lesser period as may be specified in the notification. 

The Secretary of the Committee, who will not be a member of it, will 
be appointed by the Governor-General-in-Council, but he will be paid 
from the funds of the Committee. The Director of the Institute of Sugar 
Technology will continue to be a servant of the Government of India. His 
salary and allowances will also be paid from the funds of the Committee, but the 
Government of India have agreed to meet his leave and pension contribution. 
The Committee will continue to employ at the Institute of Sugar Technology 
from its own funds such staff as has been tent to the Institute by the Government 
of the United Provinces on the same basis on which they are at present employed 
by the Government of India, as also such other staff as are at present on contract 
till such time as contracts expire. 

The Committee will continue to maintain the Imperial Institute of Sugar 
Technology both as a teaching and as a research institution and will be responsible 
for the maintenance of sugar standards. Returns under the Sugar Production 
Rules, the maintenance of sugar trade information services and any special work 



xxxii THE SUGAR INDUSTRY AT A GLANCE, 1944 

that may be required by the Central or by any Provincial Government will be 
directly under the'control of the Director of Institute of Sugar Technology. 

Funds of the Committee; The Government of India will finance * the 
Committee by placing at its disposal the entire proceeds of the Sugar Excise 
Fund ; the amount so credited shall continue to be one anna per cwt. of white 
sugar produced in British India out of the excise duty levied on it. The question 
of increasing this amount will be considered after the war. If the amount placed 
in the Fund in any year falls short of the needs of the Committee, the Government 
of India will automatically grant a loan free of interest to cover the deficit and 
enable the Committee to incur expenditure upto a limit of Rs. 11.75 lakhs in the 
year subject to the condition that the first charge on .any surplus occurring 
thereafter will be the repayment of this loan. The Committee will meet all the 
present liabilities of the Fund and take over all its assets. 

COMPOSITION OF THE INDIAN CENTRAL SUGARCANE 

COMMITTEE f 

Under Department of Education, Health and Lands Notification No. F. 
41-1/44A, dated the llth October 1944, it was announced that the following 
persons had been nominated as Members of the Indian Central Sugarcane 
Committee. 

The first sixteen seats of the Indian Central Sugar-Cane Committee are given 
to the Officials of the Government of India and the Provinces. The non-official 
members representing various interests are: 

Lala Gurusharanlal, Mr. R. L. Nopany, Mr. K. K. Birla, Lala Shanker Lai, 
Mr. D. R. Narang, Mr. C. W. Tosh, Mr. Lalchand Hirachand, Mr. A. A. Khan, 
Mr. B. P. Dalmia, Dr. Chr. H. Nielsen, Mr. Nasirullah Rahman Kidwai, Mr. 
Banchhanidhi Kar, Sardar Iqbal Singh of Iqbalnagar, Mr. Jagdish Saran Agarwal, 
Mr. V. T. Ramaswami Ayyar, Mr. Hamidul Haq Chowdhury, Raja Raghvendra 
Pratap Narain Singh, Lala Har Sahai Gupta, Sardar Santokh Singh of Shakot, 
Jullunder, Mr. S. Bose of Hasanli concern, Rao Bahadur Shembhedkar, Mian 
Abidul Huq, Seth Maneklal Ujamshi, Lala Daya Ram, Mr. Karamchand Thapar, 
Mr. G. V. Deshmukh, M.L.A., Sir Muhammad Yamin Khan, M.L.A., Hon. 
Mr. Hossain Imam, Sir T. S. Venkataraman. 

Lala Shanker Lai was elected V ice-President. 

RESOLUTIONS OF INDIAN SUGAR MILLS ASSOCIATION, 1944 

Some Important Resolutions passed at the 12th Annual 

General Meeting of the Indian Sugar Mills Association 

held on 16th September 1944. 

Shrinkage in Cane Acreage 

This Association views with grave concern reports of shrinkage in cane 
acreage for the season, 1944-45 particularly in Bihar and Eastern U. P. as a 
result of low sugar and cane prices fixed last year by the Central and Provincial 
Governments as compared to the general rise in prices of other competitive food 
crops. The Association regrets that while Government did not agree to increase 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xxx iii 

the cane prices inspite of Association's several warnings about the possibilities of 
shrinkage in cane acreage, hardly any steps were taken to ensure that there was no 
such fall in the 'area devoted to cane plantation. As a result, this Association 
apprehends a considerable curtailment in the sugar production of the country in 
general and in Bihar in particular, and, therefore, urges the Government of India 
to take immediate steps to maximise sugar production during the season 1944-45, 
and to ensure that there is an adequate increase in the cane plantation for the season 
1945-46. 

. Distribution of Sugar 

This Association regrets that inspite of three years' Government control over 
the distribution of sugar, its shortage continues and that, at many places people 
have to pay more than the controlled rates for their requirements. This 
Association is of considered opinion that besides the necessity of increased 
production the existing machinery of distribution, which works through official 
channels and seeks little co-operation from the industry and public, needs a thorough 
renovation. This Association, therefore, strongly urges the Government to take 
immediate steps in this direction. 

Molasses Control Order in U. P. Bihar 

This Association regrets that the Governments of U. P. and Bihar have 
promulgated Molasses Control Orders to control the movement of molasses 
although even the elementary conditions necessary for the control of a commodity, 
such as shortage in supply or an abnormal rise in prices etc., are completely absent. 
This Association has all along been opposed to the institution of any control on 
molasses, because 

(1) the supply of molasses in the U. P. and Bihar is far in excess of even 
the increased demand for molasses. 

(2) the average price of molasses obtained by the factories in these two 
provinces was below the level of the prices of other commodities. 

(3) the restriction on the movement of molasses has resulted in the accumu- 
lation of huge stocks thereby putting the factories to serious difficulties as regards 
its shortage, particularly, when new tanks cannot be constructed due to scarcity of * 
materials. 

This Association, therefore, urges the two Governments to withdraw the 
Molasses Control Orders forthwith, 

/ 
Levy of an Export Duty on Molasses in U. P. & Bihar 

This Association protests against the action of the U, P. and Bihar Govern- 
ments in levying an export duty of Rs. 2/- per maund which has befin lately reduced 
to Re. I/- per maund. This Association is of the considered opinion that even the 
reduced duty is disproportionately high as compared to the low prices of molasses 
which vary between -/2/- to -/8/- per maund. * 



XXXIV 



THE SUGAR INDUSTRY AT A GLANCE, 1944 



Restrictions on the Transport of Cane 

This Association regrets that the Railways and the Provincial Governments 
propose to impose restrictions on the transport of cane during' the next crushing 
season which are likely to curtail the cane supplies to the factories very considerably. 

This Association invites Government's attention to the peculiar conditions 
prevailing in the Sug^r Industry such as the perishable nature of the raw material, 
the seasonal nature of its working and the continuous process of manufacture 
which render it essential that the crushing operations must be carried out within 
certain time-limits and without any interruptions. .This, in the opinion of the 
Association, is possible only if the Government extend to the sugar factories the 
necessary transport facilities. 

This Association, therefore, urges the Government not to enforce restrictions 
on transport of cane. 



RESOLUTION ON THE MAXIMISATION OF 
SUGAR PRODUCTION (1945) 

The Government of India, Food Department, convened at New Delhi, a 
Conference of all the representatives of sugar interests and Provincial and State 
Governments on the 5th February 1945, to consider measures for the maximisa- 
tion of sugar production in the country. The Indian Sugar Mills Association 
was represented at the Conference by Lala Shankerlal, Mr. K. K. Birla, Mr. 
C. W, Tosh and Mr. Gulabchand Hirachand, The Conference adopted a number 
of resolutions detailing the steps to be taken for the maximisation of sugar 
production in India in the irrvnediate post-war years. It is understood that the 
Government of India have promised to take necessary action to implement the 
decisions arrived at the Conference. 

A summary of the main decisions arrived at the Conference is given below: 

1. That it is the intention of the Government to maximise sugar production 
in India during the current season and the coming season. Steps shall be taken to 
step up production during the next season of 1945-46. 

2. That efforts would be made to arrange adequate supplies of the following 
manures for the cane growers : (a) ammonium sulphate, (b) caustic cake, (c) ground- 
nut cake, (d) superphosphate, and (e) neem cake. 

3. That Government would also undertake distribution of subsidised manures 
to cane growers through the factories. 

4. That efforts would be made to provide adequate irrigation facilities to the 
cane growers, In this connection, it was urged that the Government of U. P. be 
urged to withdraw the increase in the irrigation charges, as enforced by them for 
the cane growers only. 

5. That agricultural machinery such as tractors, etc. would be made available 
to the factories running their own farms. 



THE SUGAR INDUSTRY AT A GLANCE, 1944 xxxv 

6. That the Co-operative Societies undertaking the supply of cane to the 
sugar factories should resort to Selective -harvesting, that is, selecting cane 
cording to maturity so that factories receive fully mature cane giving maximum 
recovery. This would enable factories to obtain higher recoveries. 

7. That the minimum cane price would be declared in early September every 
year.* 

8. That facilities would be arranged for the factories which were shifting from 
deficit cane areas to surplus cane areas to enable them to catch the next season. 

9. That the Provincial Governments would not take any action without 
previous reference to the Government of India, which might adversely affect the 
sugar production. In this connection, it was also agreed that the Government of 
Bombay be urged to exclude the cane growers, whether companies or individuals, 
from the operation of the Bombay Growth of Food Crops Act, 1944, as that was 
likely to curtail sugar output of the province during the 1945-46 season.^ 

10. That the lack of tranport constituted a serious bottleneck in obtaining 
cane from outstations and, therefore, efforts should be made to arrange for 
adequate supplies of trucks, petrol, tubes and tyres and to increase wagon supply 
on the respective railways with a view to enabling the factories to draw as much 
cane as possible. 

It was also agreed, in this connection, that only a free supply of wagons could 
improve production during the current season of 1944-45. 

11. That steps would be taken to control both the price and movement of 
Gur effectively. 

12. That the sugar prices would be revised, if necessary, in the light of the 
recommendations of the Joint Sugar Control Board of the U. P. and Bihar at 
tlie end of this crushing season but with retrospective effect. 



A WORLD SUGAR PICTURE AND INDIA'S 
POSITION THEREIN 

DO YOU KNOW (it would be interesting to know) that: 

1. Sugar is one of the cheapest, most universally used and palatable seeten- 
ing agent of proved high calorific value, unique for quick conversion into energy, 
contains 100 per cent carbohydrate and its value as a prime and vital food is 
enhanced due to the shortage of carbohydrate in general all over the world. 

2. The world production of sugar 1944-45 was only of the order of 19 
million tons as compared with 30 million tons in the pre-war year. 



* The Editor of this Annual Mr. M. P. Gandhi, when he was a Member of the U. P. & Bihar 
Sugar Control Board moved such a Resolution in 1938 emphasizing the necessity of an announce- 
ment of cane prices, early in September, every year. 

t We hope the Bombay Government will do this in the interest of the sugar industry in the 
Province. 



.txxvi THE SUGAR INDUSTRY AT A GLANCE, 1944 

3. It is essential for India to produce larger quantities of sugar both for 
meeting the increased internal requirements and also for exporting to neighbouring 
countries which are starved of su^nr. 

4. The drive for an all out production of sugar can easily result in produc- 
tion of about 15 lacs tons of sugar with the existing capacity of factories in India. 
When nee4 for further increase in capacity is felt, it would be desirable to locate 
further factories outside U. P. and P3ihar in order to anange for a proper dispersal 
of the industry all over the country. 

5. If the industry continues to be encouraged, India may eventually become 
a world sugar market, being one of the greatest sugarcane producers. 

6. Approximately two-thirds of the sugar produced in the world is from 
sugarcane and balance from beet. (90 per cent of the beet sugar comes from the 
European countries.) 

7. Production of sugar (including Gur) in India approximates to 26 per cent 
of the total cane sugar production of the world and to 16 per cent of the total sugar 
production in the world, both from cane and beet (This refers to pre-war period.) * 

8. The area under cane in India, i.e. 4 million acres, which is only 2 per cent 
of the cultivated area in India, is approximately 35 per cent of t!^ world's sugar 
cane area. 

9. Taking Gur and sugar together, India is the largest single sugar-producing 
country of the world. 

10. The total quantity of sugar transported by railways in India per year 
conies to about one-thousandth of the total quantity transported by railways, viz. 
90 crores tons. 

11. A Sugar Research Foundation has been established in New York in 
1943, comprising growers and processors of cane and beet sugar for research work 
in increasing the consumption of sugar through the development of new industrial 
uses, and establishment of a proper place of sugar in the diet.* 

12. It is worthwhile to explore the possibilities of production of sugar and 
gur through palm trees in India.! 

13. The number of factories, working by the sulphitation process, in India 
is 144 as compared with 17 working by the carbonatation process which latter can 
produce superior quality of sugar at a slightly higher cost. 

14. The Indian Sugar Industry the second largest national industry of the 
country represents investment of capital to the extent of about Rs. 33 crores. 

15. The total annual value of sugar and Gur produced is about 100 crores. 

16. The industry gives employment to 3,000 graduates, 1,00,000 skilled and 
unskilled workers, and interests not less than 20 million cultivators, and helps to 

retain in the~petrtry a sum of Rs. 16 crores which was being sent abroad. 

* 

M. P. GANDHI 



* Vide Chapter XIV. 
t Vide Appendix III. 



PROBLEMS OF SUGAR INDUSTRY IN INDIA 



SCOPE AND PROSPECTS OF REORGANIZATION 
IN POST-WAR PERIOD 



BY M. P. GANDHI 



CHAPTER I 
THE INDIAN SUGAR INDUSTRY IN WORLD PERSPECTIVE 

THE development of the modern sugarcane industry in India 1 during 
the last decade from very small beginnings to a commanding position 
both in the internal economy of the country and in the world's sugar 
industry is* popularly acclaimed as an outstanding achievement of the 
policy of " discriminating " protection which has literally revolution- 
ised the industry. India's progress during a short period from being 
a country mainly dependent on imports of sugar to becoming the 
largest sugar-producing country in the world with an output equal to, 
if not in excess of, its requirements 2 is, no doubt, a matter for great 
satisfaction, and of inestimable advantage as an insurance against con- 
ditions arising in times of war, like the present world war, and other 
emergencies such as the possibility of shortage of supplies leading to 
abnormally high prices. But behind this spectacular development lie 
a variety of economic phenomena which are important not only to 
the sugarcane industry in India and abroad, but to the Indian and 
world economy as well. It is hardly necessary to say that the solution 
of the problems of the sugarcane industry in India, whether they are 
of the technical kind connected with the improvement of the recovery 
percentage or the utilisation of molasses, or of the yield of sugarcane 
per acre, or whether they are of the quasi-political kind such as provi- 
sion of a fair price for the cane-grower, or competitive development 
of this industry in various Provinces, is of the utmost national import- 
ance. But it is not as well appreciated as it should be that the develop- 
ment of the world's sugar industry during the last fifty years is in 
itself an epitome of the problems and developments characteristic of 
the period of transition through which world economy is now passing. 
An understanding of the nature of these problems and developments 
is of vital importance for a proper comprehension of the present phase 
of the transition and also of the special problems which India will have 
to face in the future in connection with her sugarcane industry. 



1 The term " The Indian Sugarcane Industry," in this thesis should be taken 
to include all the three interests concerned in it, viz. the manufacturer of white 
sugar, the manufacturer of Gur and the grower of sugarcane, in India. 

Also vide Representation of the Imperial Council of Agricultural Resarch, 
dated 5th February 1930, to the Government of India, Commerce Department, in 
Vol. I of the Indian Tariff Board's Report on the Sugar Industry, 1932, page 18. 

a Vide Report of the Tariff Board, 1938, et seq. 



Variety of Economic Phenomena in the History of the 
World Sugar 

The changes that have occurred in the world's sugar industry have, 
in spite of their revolutionary character, attracted but little attention 
among economists, statesmen, and businessmen. The problems of the 
world's sugar industry have been dealt with by the governments con- 
cerned and by International Sugar Conferences as little different from 
the problems of overproduction, of which the post-war world had a 
surfeit. In reality, the problem of overproduction in sugar which the 
Brussels Conference of 1902 had to deal with was in a very essential 
respect vastly different from the problem of overproduction in tin or 
rubber or wheat. For overproduction was the result, not of an increase 
in the productive capacity of the original sources of supply, but of 
the success in the attempts of some of the consuming countries to find 
a substitute for cane-sugar. Thus, although from the practical point 
of view, the problem of overproduction in .sugar is not different from 
that in other commodities, the trends and features which have been 
characteristic of the development of the world's sugar industry will, 
I venture to think, be characteristic of an increasing number of indus- 
tries in the future. 

Special Features of Overproduction in Sugar 

Before proceeding to describe these trends and features, it is 
necessary to examine the distinctive characteristics of the growth of 
overproduction in the sugar industry. The development of commer- 
cial production of sugar from beet in the years of the 1st world war of 
1914-18, is, in all essential respects, different from the increase in the 
production of wheat or rubber or cotton goods in the same period. For, 
in the latter the increase occurred solely through the additions to the 
necessary capital equipment or the expansion in the productive capacity 
of the pre-existing centres of production or the establishment of new 
producing centres. The same thing could be said of sugar, only if the 
difference between cane and beet, which are the chief raw materials 
for production of sugar, is altogether overlooked. _As a matter of fact, 
beet as a raw material jfor commercial production of ~5tigar -industry 
Is n6F^v p efTdtt~t-peCr with^alniyra"Juice7 The beet root, as it was found 
in the beglnMng~gf~ifagjast cenlui'y, was hardly eligible for utilisation 
TrTtne commer ciai ^pTnduction ol! sugar, as compared with cane which is 
by far the older source of supply, its sucrose content then being only 
abouJLp-cent. It was only by careful nursing and Development of a 
virtually new species extending over half a century that the sucrose 
content of beet was raised to 16 percent, a level at which it could 
compete with cane as a* source of sugar production, though not without 
the aid of high subsidies or other forms of protection like direct pro- 
tective duties or preferential duties in its favour. 

Invention of a Substitute Beet, the First Ersatz Industry 

Beet, then, is the first instance of a substitute for an original 
gift of Nature. And the beet sugar industry in itself and in its relation 
to the industry manufacturing the natural product, viz. cane, is, if 
one may put it that way, the first ersatz industry. The rapidity with 



which beet sugar was perfected-~white^sugarfrom cane and beet, when 

r^ is ir^tigaLjnJfrf^ 

^ obscure itsessentTalry erSfttz chafacfer. 



And the wide distribution of production of beet sugar and the determi- 
nation of the nations concerned to foster beet sugar production at 
home have tended to create the impression that the beet sugar industry 
is an instance either of the infant industry which is considered to be 
the legitimate object of protection, or of the kind of perverse economic 
nationalism which is supposed to have brought about the great 
depression. 

But if one looks closely into the matter, one will find that the 
history of the world's sugar industry in the last fifty years and more 
is the history of the invention of a quasi-artificial substitute for cane 
sugar, its development through stages to a commercial basis, and its 
establishment, side by side with the natural product, in the national 
economy of the countries concerned, and in world economy. It is 
against this background of the development of a substitute that even 
the establishment and progress of the sugar industry in India must be 
viewed. For in essence, both are part of the same development by 
which the monopolistic position of a few favoured producers is broken 
down by the inevitable rise of substitutes and the exploitation of 
resources of each nation for the production of sugar. It might even 
be suggested that because far deeper evolutionary forces were behincT 
that diffusion of productive effort in the sugar industry, tEaFTiidia y s 

of 



would otheyyrige bp an incredibly short pprind. That IS, no doubt, to 
take an unduly teleological view of developments in the modern sugar 
industry. But the fact remains that earlier than any other industry, 
sugar saw the rise of what in essence is an artificial substitute and the 
consequent break-up of the old geographical division of labour and the 
creation of a wide diffusion of productive effort. More and more modern 
industries are today being subject to similar trends. It is no longer 
fanciful to suggest that the textile industries as we have known them 
till now will have to function in competition with fabrics made of 
artificial material of different kinds of origin. Rayon is a well estab- 
lished industry. But its best days still lie ahead of it. Glass bids fair 
to become a source of textile material, and perhaps soon after the 
present war, it may be a keen competitor of cotton in spinning mills. 
In the dye industry, artificial dyes developed so rapidly that the natural 
product has been driven out of the field. The possibilities of plastics 
hold out distinct threats to many an industry which today would other- 
wise have good reason for complacency. In the living present, the 
emergence of Buna a synthetic rubber produced by uniting two 
chemicals Butadiene (75%) and Styrene (25%) which has given 
encouraging performances in 1942 in the United States almost unques- 
tionably means that natural rubber will be a " deader " commodity at 
the end of World War II, than natural nitrates were at the end of the 
World War I of 1914-18. The cost of the Buna programme will " meet 
and lick natural rubber ". The reason why this synthetic rubber 
industry was not established till now, is due to cheapness of natural 



U.K. Sugar Industry Inquiry Committee Report, 1915, page 4, 



rubber. It was felt in the United States upto 1941, by those in Com- 
mand that unless U.S. was cut off from the Far East, synthetic rubber 
would be a waste of public money. 1 

Changes in Sugar are Symbolic of Changes 
in World Economy 

In the economics of the sugar industry, one should therefore expect 
to find an exemplification of the phenomena relating to the rise of 
artificial substitutes and their establishment in the face of competition 
from their natural rivals. Sugar brings out clearly the simple fact that 
the impulse to find a substitute comes from the prevalence of war or 
the anticipation of or preparation for it. The impact which the produc- 
tion of a substitute makes on world economy is capable of being viewed 
from the standpoint of economic theory, as similar to that of an infant 
industry, which the Government concerned decides to nurse to health 
and efficiency. 

Difference between Infant Industry and Substitute Industry 

It is true that, theoretically, the efforts made to develop a substitute 
industry, the repercussions of these efforts on national and world 
economy, the problems of costs and prices are all more or less wholly 
similar to those connected with the protection of an infant industry. 
But between the two, there is this difference, that a substitute industry 
is closely linked to the problem of national security, through the provi- 
sion of a requisite of warfare or a necessity of civilian consumption. 
The claims of an infant industry, as economic science understands it, 
rests on its potentiality for competition in the free market. But the 
substitute industry starts on its career with a full emancipation from 
the bonds of free competition. Though its capacity for free competition 
may be as considerable as in any known instance of an infant industry, 
State policy is on the whole indifferent to this aspect of the matter. 
The practical result of that, is, that nations cling more tenaciously to 
a substitute industry than to an industry ordinarily protected. 2 The 
subsidies which the beet sugar industry in Britain has obtained from 
the Exchequer are out of all proportion to what may be termed its 
objective value. And Continental nations would have more readily given 
in to the claims of free trade, so far as sugar is concerned, but for the 
fact that the beet sugar industry was the only safeguard they had against 
their being famished for sugar during a period of war. Even in India, 
where Government have been not known for their willingness to help 
indigenous industries, the sugar industry obtained a margin of protec- 
tion so wide that the acceleration of progress in respect of its expansion 
was phenomenal. 

The difference between a substitute industry and a protected 
industry is not only in the matter of the sentiment attaching to either. 
A more vital difference lies in the fact that the infant industry is part 



"Time", Weekly News Magazine from the U.S.A., July 20th, 1942. 

2 " The most striking general characteristic of the sugar industry is the exten- 
sive State encouragement of sugar production" U. K. Sugar Industry Inquiry 
Committee, Report, page 10. 

Also vide Encyclopaedia Britannica Volume XXVI, 1921 Edition, page 44. 



of and subject to the dictates of Nature in respect of the distribution of 
raw material and, through it, in respect of the distribution of productive 
activity. The substitute industry, on the other hand, signifies the 
attempt of industry to get over the limitations imposed by Nature. 
When a substitute is found, it is, in the nature of things, capable of 
being produced over wider areas of the world than the natural product. 
It is in contravention of the " natural " division of labour and the 
established distribution of productive activity. One can, therefore, look 
for a wider diffusion of productive activity as a result of the successful 
evolution of a substitute. 

Effects of International Trade 

When such a wide distribution of production is brought about by 
the addition of a substitute to the natural product, international trade 
in that commodity is naturally reduced to negligible proportions. The 
changes in the importance of the main articles of direct human con- 
sumption are a characteristic feature of the evolution of international 
trade in the last fifty years or more and particularly of the depression 
and the post-depression periods. It is interesting to reflect that a small 
volume of international trade relatively to total world population may 
be a characteristic as well of an advanced state of world economy as 
of a primitive state. Before sea_coinniunication was established on a 
considerable scale, every locality had to rely more or less wholly on 
what it grew or produced within its own limits. Exchanges, with the 
pre-requisite increase in the production of each locality, is possible only 
in an age of reliable international communication. International trade 
assumes proportions only when the value of geographical division of 
labour is consciously understood or instinctively felt by the producing 
nations. With the growth of settled political conditions, and the 
improvement of the technique of production and exchange, international 
trade blots out of perspective every other feature of world and national 
economy, till geographical division of labour with the consequent inter- 
dependence among the nations appears to be permanently ordained and 
free trade seems an instance of a lav/ of the Medes and the Persians in 
the realms of Nature. 

Trend towards Self-sufficiency 

But economic organisation, whether it is viewed nationally or inter- 
nationally, is indisputably conditioned by the objective conditions of 
economic life. If productive technique decrees at one stage of its evolu- 
tion an intricate international division of labour, it may also at a later 
stage force down the unwilling throats of Governments and of peoples a 
measure of self-sufficiency which more or less negates all the notions 
appropriate to an earlier period. How far the progress of scientific 
invention and productive technique may enable the nations to push 
farther on the path of self-sufficiency, no one can tell. The question is 
difficult enough, even apart from the need to peer into the misty future 
of world politics. But if the developments in world economy of the last 
two decades are not a flash in the pan, it seems safe to suggest that 
over vast areas of the earth's surface, self-sufficiency in main articles 
of direct consumption has been very nearly achieved. The wider distri- 
bution of wheat production since the last war, and the development of 



the modern Sugar industry, to mention only a few, are instances in 
point. 

In the case of sugar, the trend towards diffusion of production has 
been helped in the main by what I have ventured to call the develop- 
ment of a substitute. It is impossible in the nature of things that the 
production of sugar should become world- wide, when Nature limits the 
production of the main raw material, viz., sugarcane, to the tropical and 
sub-tropical regions of the earth's surface. The invention it has been 
pointed out already that it is no less of beet sugar has made it possible 
for almost every country in the world to aspire to being a producer of 
sugar. There is, however, the simple fact that, while the beet sugar 
producers were striving hard to foster the beet sugar industry, countries 
like India, which are fitted by nature for the production of cane sugar, 
were doing little to utilise their natural advantages. The dominant 
position which Cuba and Java enjoyed till the growth of the sugar 
industry in India only serves to show that till a recent time, sugarcane 
and sugar had to be classed, from the point of view of economic organisa- 
tion, with rubber and tin rather than rice or wheat or groundnuts. 
Agricultural staples, which lend themselves to the kind of organisa- 
tion indicated by the term " plantations ", afford scope for the growth 
and entrenchment of economic interests which are not easily weakened 
by adverse trends of deliberate economic policy or of natural economic 
evolution. 

It will be seen, therefore, that to the development of a large measure 
of self-sufficiency in regard to sugar, two distinct, but not altogether 
unrelated, tendencies had to make a large contribution. One is the 
development of the beet sugar industry in the countries which can grow 
beet root, and the other is the growth of the cane sugar industry on 
the strength of adequate protection in countries like India and the 
Philippines. 1 To both these forces, the World War of 1914-18 gave a 
strong impetus. The result of these tendencies on world production 
and consumption of sugar can be easily seen in Table No. 1 on next page, 
which gives statistics of the percentage of consumption and production 
of sugar in various important countries of the world during the years 
1935-36 to 1939-40, upto which such comparative figures are available. 

/ Indian Sugar and World Sugar A Possible Parallelism 

A glanccTat this table will show that in the case of almost all the 
countries mentioned therein, the difference between production and 
consumption (expressed as percentages of the world totals) is exceed- 
ingly small, which means that the sugar which enters into international 
trade and which is known as the " free market " is but a small fraction 
of the total production. For instance the " free market " for the year 
1936-37 was estimated by the International Sugar Conference of 1937, 
at 31,70,000 Metric tons. 

The assumption that the sugar industry has an innate tendency to 
resist localisation and to spread itself as far as natural conditions permit 

1 The United Kingdom Sugar Inquiry Committee (1935), observe in their 
report, page 10 : " There are accordingly very few important countries in the 
world which do not produce some sugar." It adds : " Sugar beet can be grown 
in most temperate countries, and sugarcane in most tropical and sub-tropical 
countries." 



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opens up a fruitful line of thought. For, what is true of the world as 
a whole cannot be mysteriously negated in the case of a vast sub- 
continent like India. If the history of the world industry has any 
lesson to offer, it inevitably suggests the possible emergence, sooner or 
later, of similar tendencies of diffusion within the frontiers of India. 

Development of Beet Sugar in Europe 

To see the Indian Sugar Industry in world perspective, it is neces- 
sary to understand two important changes, firstly, the growth of the 
beet sugar industry, and secondly the decline in the position of Java and 
Cuba. As regards the former, it is useful to remember that sugar 
from beet was first extracted in the middle of the 18th century, and 
although the industry originated in Germany, the first important develop- 
ment was witnessed in France, where as a result of the interruptions of 
supplies of cane sugar owing to the wars of the period, Napoleon 
initiated investigations and in 1811 instituted a definite scheme of State 
assistance for the production of beet sugar. The policy of subsequent 
French Governments varied from time to time, but some measure of 
tariff protection was maintained throughout, and for half a century 
France was the largest producer of beet sugar. Then followed Austria, 
Hungary, Netherlands, Belgium arid Germany, which developed various 
systems of open or disguised bounties for the export of beet sugar. 1 
And by the end of the 19th century, thanks to the system of export 
bounties, in several European beet sugar producing countries, produc- 
tion was found to be in excess over domestic requirements. It is no 
wonder, therefore, that after strenuous efforts the Brussels Convention 
of 1903 was concluded (as a result of protracted negotiations set about 
by the British Government, which saw in the bounty-fed exports a 
great danger to her Colonial canesugar producers, and her own refining 
industry). The abolition of all direct export bounties and the limita- 
tions of other methods of State assistance, which were the principle 
stipulations of the Brussels Convention failed, however, to arrest the 
growth of the beet sugar industry. During the period of the first World 
War of 1914-18, the Brussels Convention lapsed in practice, and the 
Treaty of Versailles officially brought it to an end. After the World 
War of 1914, beet sugar experienced a remarkable recovery. And the 
production of cane sugar, too, which was increased during the war as 
a result of the shortage of beet sugar, by bringing large areas of new 
land under cane, (especially in Cuba) continued to be maintained, and 
very soon amounted to three-fourths of the world's total output of 
sugar. 

Under the influence of the Brussels Convention of 1903, a stage of 
equilibrium was reached and the beet industry shared about equally 
the total world production of sugar. The first World War, however, 
reduced very considerably the production of beet sugar in Europe, owing 
partially to military operations in important areas of cultivation, and 
partially due to the general disorganisation of production and, as pointed 



Encyclopaedia Britannica, Volume XXVI, 1921, page 14 "Under the 
bounty system by which the protectionist countries in Europe stimulated 
the beet sugar industry by bounties on exports, the production of w sugar in bounty- 
paying countries was encouraged and pushed far beyond the limit it could have 
reached without State aid." 



out before, this reduction in the European output provided an incentive 
to increase sugar production elsewhere (mainly in cane sugar produc- 
ing countries) , and by the crop year 1920, nearly 4/5 of the world sugar 
production was of sugarcane origin, the European output being only 
about 1/3 of its pre-war average. After the first World War there was 
a rapid recovery in European production stimulated in many cases by 
renewed State assistance and by 1927 it had recovered to approximately 
its previous level. At the same time the development of cane sugar pro- 
duction continued, partly due to the new lands being placed under cane 
cultivation, especially in Cuba as observed before, and partly due to 
the phenomenal success which attended the sugarcane breeding experi- 
ments of which the most notable example is the success of the new 
variety of cane in Java, P.O.J. 2878, which helped very largely to raise 
the yield of sugar in that country. 1 The policy followed in important 
countries in the world, before the war, of promoting production of sugar 
on agricultural grounds as also for reasons of national safety in times 
of war, was vigorously continued. In addition to those countries which 
grew beet before the war, Great Britain at present accounts for the 
production of very nearly G lakhs tons, while Russia achieved a pro- 
gramme for the extension of beet cultivation from 56,000 tons of sugar in 
1921-22 to over 2,300,000 tons in 1938-39. For similar reasons, Japan 
also pursued this policy of sugarcane development in Formosa, where 
the production approximated to 15,23,000 tons in 1938-39. 

But as the position became alarming due to the relatively small 
free market comprising largely the deficit of the beet sugar producing 
countries by 1926, and in order to correct the balance between produc- 
tion, which had outstripped consumption, attempts were made to secure 
an agreed restriction of output. The initiative in the matter was taken 
by Cuba, which was then the largest single producer. In 1926 the 
Cuban crop was restricted by 10 % and restriction in that country alone 
was continued in 1927 and 1928. Endeavours were made to widen the 
scope of restriction by persuading other countries to take similar action, 
but agreement was not then possible and it became clear that restric- 
tion in Cuba alone would not be effective. By 1931 the surplus of export 
sugar approximated to one-third of the annual world production and 
the stocks reached alarming figures. 

The Chadbourne Restriction Scheme 

The depression in the sugar industry owing to the persistent increase 
of production and keen competition between cane sugar and beet sugar 
which was helped by tariff and other aids, was, as may be imagined, 
very acute and severe, 2 and the position called for immediate attention. 



1 Vide Tariff Board Report on Sugar, 1931, page 1. 

2 Vide Tariff Board's Report, 1931, page 7, where they observe: "Generally 
speaking, tariff and protective legislation is more intimately connected with the 
beet sugar industry than with the cane sugar industry. Most cane sugar is pro- 
duced where there is only a small home market and consequently has always to 
face a world competition. The manufacture of beet sugar has always been started 
primarily to meet a home demand and export of beet sugar is a development of 
subsequent growth. As a consequence the beet industry has always been heavily 
guarded and no beet sugar is now placed on the market except under some system 
of protection. All important cane sugar countries have also introduced protective 
duties but as most of them have but a small home market, the question that is of 
importance is what treatment their products receive in the expprt markets." 



10 

In May, 1923, the sugar position was referred to the Economic Com- 
mittee of the League of Nations for examination and a meeting of experts 
was held in 1929,, The deliberations of this Committee facilitated 
negotiations between representatives of producers for a more compre- 
hensive scheme of regulation, although at first these efforts failed owing 
to the continued refusal of Java to participate. Ultimately, however, 
Java producers came to terms with Cuban producers and in concert 
with the European countries and Peru, an agreement known generally 
as Chadbourne Agreement was concluded in 1931. This agreement had 
two objectives in view, both closely related, the first being to correct the 
statistical position of the sugar exporting countries, as a preliminary 
condition for obtaining the second objective, viz., stabilisation of a world 
price at a reasonably remunerative level. A joint restriction of exports 
and production with a view to liquidating existing stocks within 5 years 
was agreed upon. Cuba, Java, Czechoslovakia, Germany, Poland, Belgium, 
Peru, Jugoslavia and Hungary, 9 of the chief sugar producing countries 
participated in this agreement. Although the preliminary purpose was 
accomplished, as is proved by the fact that surplus stocks were eliminated, 
it did not have the expected beneficial effect on prices partly because 
consumption did not expand as anticipated, and partly because sacrifices 
made by the parties to the agreement, particularly Java and Cuba, were 
nullified by increase of production in countries outside the agreement, 
particularly the United States of America (and dependencies) , and the 
United Kingdom including its colonies and India. On the termination 
of the plan, the representatives of the " Chadbourne Group " countries 
suggested to the United Kingdom the convening of a world sugar con- 
ference, as the British Empire constituted the largest sugar producing 
area. At about this time the British Government made a statement in 
the Parliament of July 30, 1936, 1 to the effect that they believed " that 
the sugar producing countries can only hope to set the industry upon 
an economic basis by means of an international agreement for the 
adjustment of supplies to the requirements of the world market " and 
that " their own domestic policy is in full accordance with this view." 
This statement was very encouraging, coming as it did, from a country, 
which was both a large producer of sugar in its own territory and 
colonies as well as a large importer of sugar. 

International Sugar Conference 1937-42 

^The International Sugar Conference of 1937 concluded a compre- 
hensive agreement in November 1937 for the regulation of world price 
and production for a period of 5 years. 2 India was made a signatory to 
this agreement against the" wishes of the industryand she was prohi- 
bited from exporting sugar" by sea to any other country except Burma 
for a period of 5 years ending on 31st August 1942. Since 1st September 
1942 India has been released from this obligation as the Government 
of India decided not to join the proposed extension of the International 

[Contd. on page 13. 



1 Vide page 33 of the Proceedings of the International Sugar Conference, pub- 
lished by the League of Nations, Geneva, 1937 (Discussions on the second 
preliminary meeting). 

2 The text of this agreement will be found in the Sugar Industry Annual of 
1938, by Mr. M. P. Gandhi. 



11 

Cane vs. Beet 

It will be interesting to see the relative production of beet sugar 
and cane sugar during the years 1900-01 to 1938-39 from the following 
table, which has been compiled from " World Sugar Statistics " pub- 
lished by F. O. Licht of Magdeburg in 1939, the latest year for which 
statistics are at present available : 

TABLE NO. 2 
World Production of Sugar 1900/01 1938/39 



Campaign-year 


World produc- 
tion of Sugar 


Beet Sugar 


Cane Sugar 


Beet % 


Cane% 


1900 01 


11,258,855 


6,005,868 5,252,987 


53'3 


467 


1901-02 


12,643,448 


6,880,875 5,762,573 


54-4 


45'6 


1902-03 


11,543,974 


5,699,912 5,844,062 


49'4 


50-6 


1903-04 


12,101,316 


6,066,623 6,034,693 


501 


49'9 


1904-05 


11,184,759 


4,919,599 6,265,160 


44*0 


56-0 


3905-06 


14,003,288 


7,274,098 


6,729,190 


51-9 


48-1 


1906-07 


14,348,633 


7,224,550 


7,124,083 


50'4 


49*6 


1907-08 


13,705,575 


7,062,551 


6,643,024 


51-5 


48-5 


1908-09 


14,358,031 


6,985,539 


7,372,492 


48-7 


55'3 


1909-10 


14,690,241 


6,648,082 


8,042,159 


45-3 


54-7 


1910-11 


16,823,817 


8,667,980 


8,155,837 


51-5 


48-5 


1911-12 


15,517,728 6,947,131 


8,570,597 


44-8 


55-2 


1912-13 


18,008,380 i 9,039,006 


8,969,374 


50-2 


49'8 


1913-14 


18,714,726 


9,053,561 


9,661,165 


48-4 


51*6 


1914-15 


18,213,442 


8,311,701 


9,901,741 


45'6 


54-4 


1915-16 


16,721,086 


6,110,774 


10,610,312 


36-5 


63-5 


1916-17 


17,037,676 


5,864,508 


11,173,168 


34-4 


65-6 


1917-18 


16,863,065 


5,153,113 


11,709,952 


30-6 


69-4 


1918-19 


15,880,098 


4,428,150 


11,451.948 


27'9 


721 


1919-20 


15,212,872 


3,350,392 


11,862,480 


22-0 


78-0 


1920-21 


16,831,079 


4,906,266 


11,924,813 


29'2 


708 


1921-22 


17,869,580 


5,129,597 


12,739,983 


28'7 


71'3 


1922-23 


17,857,295 


5,356,950 


12,500,345 


30-6 


70*0 


1923-24 


19,579,214 


6,059,212 


13,520,002 


31'0 


69-0 


1924-25 


23,201,423 


8,295,493 


14,905,930 


35*8 


64-2 


1925-26 


23,758,502 


8,617,960 


15,140,542 


36-3 


637 


1926-27 ,., 


23,211,177 


7,896,189 


15,314,988 


34-0 


66*0 


1927-28 


25,117,767 


9,164,489 


15,953,278 


36-5 


63'5 


1928-29 


26,800,799 


9,612,881 


17,187,918 


35-9 


64-1 


1929-30 


26,730,327 


9,348,802 


17,381,525 


35-0 


65-0 


1930-31 


27,853,321 


11,910,883 


15,942,438 


428 


57'2 


1931-32 


24,997,311 


8,781,604 


16,215,707 


35'2 


64.9 


1932-33 


22,736,208 


7,994,375 


14,741,833 


35-2 


64*8 


1933-34 


24,272,206 


9,159,470 


15,112,736 


37*7 


62.3 


1934-35 


24,633,795 


9,791,624 


14,842,171 


39'7 


60-3 


1935-36 


27,079,057 


10,375,892 


16,703,165 


38-3 


617 


1936-37 


28,912,934 


10,231,429 


18,681,505 


35-4 


64*6 


1937-38 1 


29,409,387 


11,120,047 


18,289,340 


37'8 


62-2 


1938-39 2 


28,605,066 


10,553,393 


18,051,673 


36-9 


631 



iWhen comparing the above figures with those published in the table "World 
Sugar Statistics", one must bear in mind that in the above table some important 
cane and beet countries (Java, Italy, etc.) are represented by their national pro- 
duction figures, whilst in the other table all figures are based on the campaign-year 
September/ August. 

2 Preliminary figures. 



12 

The following table gives the estimate of the world sugar produc- 
tion from beet and cane during the years of 1931-32 to 1936-37 : 



TABLE NO. 3 

Estimate of the world sugar production by Dr. Gustav Mikusch 
Campaign year September to August 

(In 1,000 metric tons raw sugar value) 



| 1931-32 

i 


1932-33 


1933-34 


1934-35 


1935-36 


1936-37 


i 
A-BEET SUGAR ! 










I 


i 


i 






(a) EUROPE 








Germany ... ... 1,596 


1,091 


1,428 


1,673 1,676 


I 1,800 


Danzig ... ...' 22 


22 26 


i 33 




i 


Czechoslovakia ... ... 814 


634 i 517 


1 638 


571 


725 


Austria ... ... 163 165 170 


223 


206 


145 


Hungary ... ...| 125 103 136 


120 


117 


137 


France ... ... 874 ; 1,022 946 


i 1,223 


924 


910 


Belgium ... ... 205 265 247 


269 


241 


245 


Netherlands ... ... 172 240 290 


243 236 


i 245 


Poland ... ... 493 417 342 


447 444 


460 


Denmark ... ... 122 


192 254 


90 245 


| 220 


Sweden ... ... 144 


235 305 


272 295 


305 


Italy ... ... 363 


319 300 


! 345 321 


328 


Spain ... ...; 402 


260 242 


, 349 198 


250 


Jugoslavia ... ... 83 


85 74 


63 90 


98 


Rumania ... ... 48 


53 145 


; 107 135 


i 74 


Bulgaria ... ... 26 


29 45 


i 2 18 


10 


Switzerland ... ... 6 


7 9 


10 


8 


9 


United Kingdom ... ... 284 


373 523 


694 549 


548 


Irish Free State ... ... 6 27 35 


75 89 


97 


Finland ... ... 4 


6 i 7 


12 9 


! 11 


Latvia ... ... 10 27 33 


61 50 


40 


Lithuania ... ... 7 31 9 


17 24 


29 


Turkey (European & Asiatic) ... 16 | 18 78 


66 60 


72 


Azores ... ... 3 


3 , 3 


3 


3 


3 


Soviet Union ... ... 1,689 


796 1,460 


1,460 2,612 


2,000 


(b) AMERICA 












United States 


1,175 


1,363 1,648 


1,178 


1,188 


1,300 


Canada 


54 


67 


66 


57 


60 


62 


Argentina 


"... 


4 


4 


4 


5 


3 


Uruguay 


1 


1 


1 


1 3 


3 


(c) AUSTRALIA 














Victoria (Maffra) 


6 


6 


6 


6 5 


6 


(d) ASIA 












Japan (Hokkaido) 


27 


27 


26 


39 34 


62 


Manchuria 


2 


5 


4 


4 


5 


5 


Turkey (Anatollia) 


10 


12 


... 


... 


... 


... 


Iran 


... 


3 


1 


9 


17 


20 


China 


... 


... 


... 


... 


1 


1 


Total Beet Sugar Production ... 


8,952 


7,896 


9,124 


9,791 


10,439 


10,231 





1 Figures marked for the year 1936-37 have been taken from Dr. Gustav 
Mikusch's forecast of the world sugar production, Facts about Sugar. February 1937. 



120 



Estimate of the world sugar production by Dr. Gustav Mikusch 
Campaign year September to August (Contd.) 

(In 1,000 metric tons raw sugar value) 






1931-32 


1932-33 


1933-34 


1934-35 


1935-36 


1936-37* 


B CANE SUGAR 














(a) EUROPE 














Spain 


21 


19 


15 


18 


19 


15 


() AMERICA 














Louisiana and Florida ... 


166 


240 


232 


245 


345 


342 


Porto Rico ... 


900 


757 


1,010 


710f 


843f 


885 


Hawaii ... ... , 


933 


943 


866 


877 


852 


950 


Virgin Islands 


4 


4 


5 


... 


... 


... 


Cuba 


2,678 


2,053 


2,340 


2,611 


2,603 


2,900 


Trinidad ... 


99 


123 


107 


120 


157 


150 


Barbados 


85 


94 


81 


47 


107 


100 


Jamaica 


64 


56 


74 


78 


93 


96 


Antigua, St. Kitto, St. Lucia and 














St. Vincent. 


46 


58 


57 


56 


61 


61 


Martinique and Guadeloupe 


91 


96 


85 


92 


92 


92 


Dominion Republic and Haiti 
Mexico 


457 
262 


390 
190 


414 
209 


467 
285 


495 
331 


446 
330 


Guatemala, Costa Rica, Honduras, 














Nicaragua, San Salvador & Panama 


66 


48 


41 


44 


48 


58 


(c) SOUTH AMERICA 














British Guiana 


128 


151 


144 


134 


181 


185 


Dutch Guiana 


25 


18 


18 


17 


18 


18 


Argentina ... 


m 346 


348 


316 


342 


386 


431 


Brazil 


975 


950 


969 


994 


1,034 


916 


Peru 


409 


410 


420 


383 


389 


400 


Venezuela, Colombia, Equador, 














Bolivia and Paragua'y. 


92 


90 


93 


74 


73 


74 


(d) ASIA 














British India... 


3,521 


4,174 


3,106 


3,228 


3,696 


3.825 


Java 


3,004 


2,760 


1,504 


701 


564 


610 


Japanese Empire 


1,154 


797 


802 


1,156 


1,088 


1,190 


Philippine Islands 


999 


1,152 


1,434 


630 


902 


985 


China, Indo-China 


262 


270 


264 


423 


451 


455 


(e) AFRICA 














Egypt 


147 


170 


154 


152 


147 


160 


Mauritius ... 


167 


251 


265 


183 


285 


250 


Reunion 


43 


54 


77 


64 


91 


60 


South African Union ... 


296 


326 


355 


325 


379 


605 


Mozambique 


71 


93 


68 


84 


66 


72 


Angola, Madeira, Madagascar, 


56 


58 


77 


89 


102 


107 


Kenya, Uganda, Somali land, 














Belgian Congo and Cape Verde. 














(/) AUSTRALIA 














Queensland and New South Wales 


615 


541 


677 


653 


657 


715 


Fiji Islands 


73 


139 


118 


115 


134 


153 


Total Cane Sugar Production 


18,256 


17,823 


16,397 


15,397 


16,689 


17,517 


World Sugar Production 


27,208 


25,719 


25,521 


25,188 


27,128 


27,748 



* Figures for the year 1936-37 have been taken from Dr. Gustav Mikuseh 
forecast of the world sugar production (Facts about Sugar, February 1937). 
f Figures marked with t include figures for Virgin Islands also. 



Please see ERRATA 
after Contents on page xviii 

& 
INDEX 

after Contents on pages xix, xx and xxi, 

& * 

Substitute Chapter VIII on page 78 
for Chapter IX (wrongly printed) 



13 

Contd from page 10] 

Sugar Agreement, which is to be continued either for the duration of 
the war and for one quota year after the date of termination of hostili- 
lities or for a period of two years from August 31, 1942, whichever be 
less. India will be thus free to export her sugar to any country she 
likes by sea or by land, e.g. Ceylon, which was so far dependent upon 
Java for her supplies. The Burmese market to which Indian sugar was 
being sent is also now lost to India, but this loss would be made up 
if it is possible for her to export sugar to Ceylon, where the approximate 
consumption is annually about 85,000 tons. Exports of sugar to Ceylon 
were prohibited, however, in 1942, by a Notification by the Govern- 
ment of India, pending clarification of certain issues. 

A perusal of Table No. 2 will show (1) that the production of sugar 
spread throughout the world ; (2) that roughly 2/3 of it is from cane 
from tropical and sub-tropical countries ; (3) that 1/3 is from beet in 
countries situated in the temperate zone. It is also of interest to review 
here, in passing, the many methods of State assistance adopted either 
singly or in combination by the various countries of the world for 
developing their sugar industry. The following may be noted : l 

(a) The complete reservation of the internal market by the prohi- 
bition of imports (e.g. Australia) . 

(b) Protective Tariffs. This method is almost universal in 
European countries and is also employed in the United States 
of America and its dependencies, British India, Japan and other 
countries as well as the United Kingdom. 

(c) Tariff preference enjoyed in countries other than the country 
of production (e.g. the Colonial preferences already mentioned 
and the preference enjoyed by Cuba in the United States of 
America) . 

(d) Direct subsidy (e.g. in the United Kingdom, the Irish Free 
State and the Netherlands) . 

(e) Other differential advantages (e.g. the rebate of trade taxes as 
in Czechoslovakia) . 

A glance at Table No. 2 in this chapter will also show that there 
are very few important countries in the world, which do not produce 
some sugar. 

Three groups of countries may be distinguished, viz. : (a) 
Countries which have specialised in sugar production for export and 
in which sugar forms an important proportion (sometimes nearly the 
whole) of their exports. These include Cuba, Java, Peru, Santo 
Domingo, certain British Colonies (Mauritius, Fiji, British Guiana and 
some of the West Indian Islands) and the U.S. dependencies of Porto 
Rico and the Philippine and Hawaiian Islands. 

(b) Countries where sugar is grown primarily for internal con* 
sumption but which normally have an exportable surplus. These include 
several European countries (notably Czechoslovakia and Poland) 
Australia, and the Union of South Africa. 



1 Vide United Kingdom Sugar Industry Inquiry Committee Report, 1935 Page 11, 
also 1931 Tariff Board Report page 4. 



14 

(c) Countries which produce sugar but have no exportable surplus 
(e.g. the United Kingdom, the United States, and France). The total 
production of this group accounts for the greater part of the world's 
output. Some of them, such as France, normally import or export only 
small quantities. Others, like the United Kingdom and the United 
States, produce substantial quantities but also require large imports. 1 

Beet Sugar Costs Higher than Cane Sugar 

At this stage, a comparison of the cost of sugar produced from beet 
and from cane would be useful and interesting. The report of the 
United Kingdom Sugar Inquiry Committee, 1935, makes the following 
interesting observations in this connection : 

" At present, the lowest cost of producing beet sugar in any country 
is put at between 12 and 14 per ton. The lowest cost at which 
cane sugar can be produced, e.g. in Java, Santo Domingo, or Peru, 
appears to be between 5 and 7 per ton, that is, about half as much, 
while a number of other cane growing countries, for example, Cuba and 
our own Colonies, can produce very large quantities of sugar at prices 
much below the lowest cost of beet sugar. Both beet and cane costs 
have varied considerably in the past, but at all times there has been 
a margin in favour of cane. We understand that no beet sugar industry 
has ever been brought into existence without artificial support and a 
beet sugar industry, even when established, has only rarely carried on 
in free competition with cane. Today no beet sugar industry in any 
country in the world is able to stand without support. It has been 
suggested that biologically, sugarcane, growing in tropical countries, 
is a more effi.cienTinslrume'nt for the jtrodu^onjOjIpFihah the sugar 
beet growing in temperate climates ami it appears clear that, in default 
of some revolution in framing or manufacturing technique, or some 
major economic change, cane sugar will remain the cheaper. Even 
ignoring cane sugar, there seems no reason to suppose that this country 
(the United Kingdom) is likely ever to be a specially cheap producer 
of beet, having regard to the labour requirements of the crop. While, 
therefore, actual costs and prices may vary widely in future, it is to be 
anticipated that, taking a long view, assistance will always be needed 
to maintain a beet sugar industry in this country and that assistance 
will, on the average, have to be on a considerable scale." 



may 
Java. 



Before passing to the main problems of sugar industry in India, we 
p refer briefly to the position of the sugar industry in Cuba and 



The Sugar Industry in Cuba 



The sugar industry in Cuba was developed with special reference 
to the United States of America. Cuba was practically assured a market 
there by the reciprocity treaty as against all other foreign sugars, but 

1 United Kingdom Sugar Industry Inquiry Committee 1935 Report. The position 
of India is now changed, however, due to the great expansion in her industry 
since 1937, when her production largely exceeded her consumption and she acquired 
an exportable surplus of sugar. 



15 

since 1920, owing to the increase in home production, the United State? 
of America increased the import duties in 1920, 1921 and 1929, the 
result being that production in the United States, Porto Rico, Hawaii 
and the Philippine Islands increased rapidly. In 1930, the Philippine 
sugar was also made duty free and the limit of 3 lacs tons per year upon 
the imports of Philippine sugar was removed. This gave a great impetus 
to the sugar industry in the Philippines, and the production increased 
from 229,000 tons in 1913-14 to 11,64,000 tons. The increase of the 
Philippine sugar supplies in the United States markets necessarily meant 
the exclusion of Cuban sugar. The table below gives the statistics of 
sugar production in Cuba from 1930 to 1939 : 



TABLE NO. 4 
Sugar Production in Cuba 1 



Year 


Number of Centrals 
operating 


Sugar Production (Raw Sugar 
in thousand long tons) 


1930 


157 


4,671 


1931 


140 


3,122 


1932 


! 133 


2,603 


1933 


i 125 


1,995 


1934 


i 135 


2,274 


1935 


133 


2,537 


1936 


147 


2,588 


1937 


157 


2,971 


1938 


158 


2,950 


1939 


157 


2,697 



The production in Cuba has been reduced from 46,71,000 tons in 1930 
to only 26,97,000 tons in 1939. The number of sugar factories has 
remained about the same. The home consumption of sugar in Cuba is 
only about one lac tons per year. 

The United States of America is Cuba's best customer. In 1930, 
she supplied about 44 per cent of the sugar consumed in the United 
States of America. The total sugar consumption of the United States 
of America was 55,99,000 tons in 1930 and 56,49,000 tons in 1939. The 
per capita consumption in 1930 was 99 Ibs. and in 1939, 96 Ibs. The 
percentage of the United States' requirements of sugar supplied by 
Cuba was 44 in the year 1930 and only 25 in the year 1939. The pros- 
perity of the Cuban sugar industry is largely dependent on the condi- 
tion of sugar trade in the United States of America's market. 

Let us now review the position of the sugar industry in Java. The 
following table shows the number of factories operating, the areas under 
cane in acres, and cane and sugar production in Java from 1930 to 
1939: 



i Vide Indian Trade Journal, dated 7th May 1942. 



16 



TABLE NO. 5 

Number of Factories Working, Areas under Cane, and Production of 
Cane and Sugar in Java l 



Year 


No. of ! 
Factories 
operating 


Area 
under , 
Cane ; 
in acres 


Cane harvested 


Sugar produced 


Tons 


Tons 
per acre 


Tons 


Tons 
per acre 


Percent 
Cane 



1930 


; 179 


489,984 


25,253,775 


51*54 


2,969,269 


6-06 


11-76 


1931 


! 178 


493,721 


26,019,096 


5270 


2,842,642 


5-76 


10-92 


1932 


166 


423,924 


22,573,953 


53-25 


2,610,782 


6*16 


11-56 


1933 


99 


208,947 


10,909,122 


52-21 


1,401,327 


6-71 


12-84 


1934 


i 47 


93,613 


5,149,651 


55*01 


646,245 


6-90 


12-55 


1935 


39 


66,515 


3,881,374 


56-65 


513,554 


7-49 


13-23 


1936 


35 


85,076 


4,640,045 


54-54 


592,390 


6-96 


12-77 


1937 


81 


211,788 


11,910,957 


56-24 


1,414,500 


6-68 


11-87 


1938 


80 


210,799 


11,880,631 


55-36 


1,398,927 


6-64 


11-77 


1939 


84 


234,480 


12,875,296 


54-91 


1,575,353 


6-72 


12*23 



















Java Industry Ruined in 1942 ; Us Repercussions in the Future 

A glance at the above table will show that the number of mills 
working in Java has been reduced considerably from 179 in 1930 to 
only 84 in 1939. The production has also suffered a considerable fall 
from the peak of 1930 when it was 2,969,000 ions. The production was 
lowest in the year 1935 when it fell to 513,000 tons. It is understood 
that the production of sugar in Java in 1942 would have been about 17 
lacs tons, but as a result of the surrender of Java to Japan early in 
1942, a large number of factories, warehouses and transport facilities in 
Java were destroyed, the consequence being the almost complete 
annihilation of the century old and celebrated Java sugar industry, the 
absence of which will have a very serious repercussion on the future 
supplies and development of the sugar industry in the world. 2 

Principal Features of World's Sugar Industry 

To recapitulate : The principal features of the history of the 
world's sugar industry may be said to be the rise of a virtual substitute 
enabling the extension of sugar production from the most tropical and 
the sub- tropical countries (from cane) to all the most temperate regions 
of the world (from beet), the rise of a system of State aid to sugar 
both from beet (as for example, in Germany, France, Czechoslovakia, 
Soviet Russia), and from cane (e.g. India, Japan and Formosa), the 
continued undermining of the position of the big producers of cane 
sugar and last but not least, as the present World War drew nearer, 
anxiety to develop domestic sources of sugar as fully as possible as a 
result of the world wide policy of State assistance to this industry, both 
as a measure of insurance against shortage and development of an 
agricultural industry. 

One has only to state these features to see in the rise of the 
Indian sugar industry, under liberal protection, a natural denouement 
of these century old developments all over the world. 



1 These figures have been taken from the Supplement to the Indian Trade 
Journal, dated 7th May 1942. 

2 Also vide International Sugar Journal, London, Monthly issues of 1943. 



CHAPTER If 
UNREALITY OF FISCAL CONTROVERSIES 



A STRICTLY objective account of the origin and growth, together with 
the vicissitudes of the Sugar industry can by itself reveal little either 
of the forces which brought about the establishment of the industry or 
of the nature of the problems regarding its future. For one thing, a 
strictly objective account is not easily formulated or prepared. To the 
average Indian, the position of India as the largest producer of sugar 
seems so natural that any different state of affairs indicates the opera- 
tion of unnatural and, to that extent and, in that sense, uneconomic, 
factors and forces. It is true that India is the home of the sugarcane 
industry. 1 It is true, too, that at no time was this country an altogether 
insignificant producer of sugarcane. But the fact remains that it was 
only during the last decades that India attained a prominent position in 
the world's sugar industry, and that, too, by methods which are by no 
means unexceptionably economic. 

Protectionist Polemics 

The place of fiscal protection in the economic development of India, 
which is the principal obstacle in the way of formulating a strictly 
objective history of the sugar industry, has provided the most happy 
hunting ground of economic theoreticians. Just as at the present time 
it is a moot problem of economists whether protection to the Sugar 
industry has been adequately or even reasonably recompensed, in the 
period before the grant of protection, the claims of the industry to 
such State-aid were disputed by all but the most enthusiastic protec- 
tionists. Of those, as for example, the Indian Sugar Committee, which 
advocated the development of the Sugar industry in 1920, not a few 
were actuated by quasi-political motives like those of adequacy of 
internal supplies during times of war. This is hardly a matter for sur- 
prise ; for, in every case of claim for protection, plenitude of raw 
material and other natural advantages form an argument which really 
cuts both ways. For, while the protectionist may see in it a call to 
the Government to take on hand the exploitation of these advantages, 
the free trader is tempted to warn the authorities against ignoring the 
obvious inferences to be drawn from the fact that over centuries these 
advantages have been more or less wholly infructuous. 

The Rival Schools 

This applies in toto to the sugar industry and it is necessary to 
clarify the relation which the fiscal controversies in their century-old 
form bear to the problem of the sugar industry in India. It would serve 
little or no purpose to go over the beaten track of such controversies. 

i Vide Indian Sugar Industry, Its Past, Present & Future, by M. P. Gandhi, p. 2L 
Also Encyclopaedia Britannica Vol. XXVI. 



18 

What is important is the limits and limitations of theoretical reasoning, 
the validity of the assumptions made by each school both in their state- 
ments of pure theory and in its comparatively concrete applications to 
particular cases. On the side of the free trader, there is always the 
tendency to overlook the fact that the free trade theory is valid only 
in conditions of full employment and that even in conditions of full 
employment, fortuitous advantages like those derived from political 
power or from removable handicaps of possible rivals may serve to 
perpetuate an intrinsically uneconomic division of labour among the 
nations. Likewise, protectionists, at any rate in India, are not anxious 
to estimate costs of protection except for purposes of current controversy. 
Where estimated costs are out of proportion to the certain benefits of 
protection, they do not hesitate to press into service extra economic 
arguments like those covered by the term " political considerations ". 
There is, above all, the subjective value which nationalists of all shades 
attach to the possession of an industry within the borders of one's own 
country. 

The Free Trader in Modern Conditions 

Protectionists and free traders in India have not, therefore, come to 
grips. Changes in economic policy during the last one decade and, 
what are more, the economic exigencies created by the developments of 
international politics, have had the effect of keeping free traders at 
bay. It must be said to their credit, however, that they are only too 
eager to fight with their backs to the wall. But the trends of world 
and national policies will be such that free trade theories may not have 
for a long time to come a fair chance to vindicate themselves. The 
more State policies deviate from laissez jaire, the more impractical and 
visionary will seem the advocacy of free trade doctrines. The free 
trader will be hard put to it to prove his point to the hilt and the pro- 
tectionist will complacently assume the honours of the battle, 

State Interference A New Factor 

It is precisely in such conditions that the merits of the free trade 
should be given careful consideration. For, the value of the free trade 
theory lies not so much in its wholesale applicability to particular claims 
for protection or for other forms of State aid as in its emphasis on the 
importance of a wise distribution of scarce means among competitive 
ends. 1 With the increasing interference of the State in economic life, 
the conscientious free trader can do no more than make an increasingly 
forlorn plea for the resuscitation of laissez faire in each country and 
for the resumption of free trade in international commercial relations. 
His ability to demonstrate the wastefulness of protection in each instance 
must necessarily dwindle, when the major part of the economic life 
of all nations is State-regulated. Pari Passu with this decrease in the 
strength of the free trader, the protectionist feels, not quite reasonably 
though, the ground stronger under him. 

1 Lionel Robbin's definition of economics as the science which deals with the 
distribution of scarce means among competitive ends rescues economics from its 
dependence on " free " markets as an indispensable presupposition of economic 
thought. The relevancy of free trade theories to a communist economy can be 
seen only in the light of such a wide definition of The Scope and Nature of 
Economic Science. 



19 

The Problem of Costs A New Approach 

But this is no reason for the feeling that an economic regime of a 
totalitarian kind has no problem of costs to face, or that the problem of 
costs changes from one of calculation of costs in terms of given monetary 
standards to one of checking up the inventories of stocks in communal 
storehouses. For, the problem of costs arises not from the availability 
of the requisite materials during a given period, but from the possibility 
that these materials may have a more fruitful venue of productive 
activity than what the authorities may be having in mind. In the 
absence of revolutionary or astounding changes in productive technique, 
such a possibility is easily tested in the light of the structure of prices 
in conditions of economic freedom. The need for this guidance increases 
in direct proportion to the increase in State interference in economic 
life. It is thus the duty of even those who are protectionists in regard 
to particular economic problems, not to speak of unswerving free 
traders, to impress upon the public and on the governments alike the 
importance of deferring to the truths contained in the free trade 
theory. 

Assessing the " Cost of Protection " 

At the same time, it must not be overlooked that with the growing 
regulation of economic life in accordance with the requirements of 
economic security and progressive standards of life, the question of 
distributing scarce means among competing ends must be deemed to 
pass more and more into the hands of technicians and research workers. 
The control which the price system of free markets imposes on produc- 
tive activity and the economic fortunes of the human race as a whole 
and of particular communities appears to the free trader as an unexcep- 
tionable means of rationalising economic life. But few attempts are 
made to estimate the costs of this control even in terms of prices, not 
to speak of the intangible values indicated by the term, " Social costs ". 
The free trader is precluded by his own hypothesis from such an attempt. 
It is only the modern technocrats that have formulated for themselves 
an objective scale with which to measure the balance of regress and 
progress in the alternations of depression and boom or to gauge the 
difference between the actual achievements of the individualistic system 
in production and consumption on the one hand and on the other the 
capacity of the existing capital equipment of each nation. The protec- 
tionist is but an amateur technocrat who takes into account not the 
equipment of plant and machinery but the fertility of fallow land and 
the capacity of idle hands. The protectionist argues that when indus- 
tries are fostered by the State, costs should be reckoned not in terms 
of the price of imported products, but in relation to economic stability 
and the multifarious benefits which the nationals of a country can 
derive from a well established large scale industry. The benefits of 
such industries are not restricted to the goods which they directly pro- 
duce. They are, in fact, a long chain of economic activities which come 
into being and bear fruit only over a long period. Such benefits can- 
not be even envisaged fully by a Tariff Board in its initial enquiries. 

It is important to note that in the conditions of the last decade, even 
these calculations of restricted scope cannot be made with any approach 



20 

to accuracy. It is only when the major part of the world preserves the 
policies of laissez faire and free trade, that the costs of particular pro- 
posals of protection can be accurately appraised. When prices have 
ceased to be a reliable yardstick of objective economic values, the old 
controversy of free trade vs. protection loses all but an elemental 
academic value. 

Post-Depression Thought 

The period which followed the great depression is remarkable for 
the evangelical zeal with which free trade doctrines were preached by 
orthodox economists and not less for the tremendous pressure which 
the developments in world economic life were exerting on national 
policies in the direction of economic nationalism. It is no doubt true 
that this pressure was itself the result of the deviations from laissez faire 
which the nations had been guilty of in the pre-depression period. But 
nothing can be gained by denunciation of economic heresies, and the 
student of human history as a whole, as distinct from the purely economic 
part of it, may well wonder whether in economics, too, as in religion 
or politics, the heresy of one generation may not become the orthodoxy 
of the next. In this context, it is not without significance that an 
economist like Sir J. M. Keynes has begun to see a new wisdom in the 
discarded Mercantilism of the middle ages. Subjective estimates of the 
relative value or benefits of rival policies can by themselves do little, 
where the destinies of vast aggregations of men are concerned. It is no 
solution of the problem of war, to embark on refinements of pacifist 
doctrines. The fact must be recognised that free trade has come to bear 
the same relation to national and international economic life that paci- 
fism bears to the problems of international politics. The value of any 
theory to Governments and social leaders lies not in its internal con- 
sistency but to the closeness of its relation to the objective facts of 
life. For, it is only when the theory has such a close relation that it can 
be employed as an instrument of the desired change. In the case of free 
trade, it was at one time a description of conditions which obtained in one 
part of the world, at another it was indistinguishable from the croak- 
ings of a Cassandra. This is by no means a refutation of the theory of 
free trade ; for free trade can hardly be refuted, being in the main 
tautological expositions of premises in their inter-relation. In fact, the 
whole of equilibrium economics is a mental construction of which the 
practical economist has to make wise use without either denying its 
validity or exaggerating its application to real life. 

The Applicability of the Three Theories to Present conditions 

Like all products of man's logical mind, equilibrium economics has 
a degree of correspondence with the facts of life. But the free trade 
doctrine often suffers from a confusion between temporary states and 
permanent states and between the hypothetical and the laudably ideal. 
It is one thing to presuppose laissez faire as a hypothesis of equilibrium 
economics. It is quite another to regard it as the bedrock of sound 
economic policy. When the facts of economic life are quite opposed 
to the pre-suppositions of equilibrium economics and aspirations of 
human societies reach higher than the claims that can be theoretically 



21 

made for the policy of free trade, it is no wonder that the familiar 
controversy of free trade vs. protection has lost nearly all reality. Today 
it is not alone free trade that is at stake, it is the whole concept of 
governmental functions signified by the term laissez! faire that is thrown 
overboard by a race increasingly conscious of man's ability to control 
his economic destinies. Likewise, it is not protection that is the aim 
of those who clamour for the establishment of new industries. The 
demand is for the fullest development of economic resources and the 
regulation of economic life as a whole. 

The Rise of Dumping and the Shift in Protectionist Argument 

The chasm between the free trader and the " protectionist " has 
thus hopelessly widened. For, theoretically, the infant industry argu- 
ment is the uncontested common ground of both the free trader and 
the protectionist. It is in perfect accord with the whole body of equili- 
brium economics. The free trader concedes nothing when he concedes 
the claims of infant industries to State protection during the initial 
period. In the same way, the protectionist did not seek to storm the 
citadel of laissez faire when he advanced the claims of infant industries. 
But what distinguishes the post-depression ftfom the pre-depression 
period is that protectionist claims surpass the bounds of moderation set 
on them by the admitted claims of infant industries, because the dis- 
tinctive feature of international trade during this period is the rise 
of dumping on a large scale and in an acute form. So long as competi- 
tion is fair, and the rules of international commerce recognise the right 
of a government to afford protection to an infant industry, protective 
duties can be so fixed as to preserve competition between the protected 
industry and the importer. Such a handicap tournament has both an 
economic and aesthetic value. But, once dumping raises its head, the 
industry advances the claim to what is termed adequate protection, 
which, in concrete terms means, a level of duties which can completely 
shut the importer out of the home market. Public opinion, with its 
emphasis on security, is far from being unwilling to support the new 
claim. Once the claim is conceded, anti-capitalist sentiment seeks vent 
in laying new obligations on the protected industry. Thus is the inroad 
into free trade converted into a breach in the walls of laissez faire. 
The growth and development of the sugar industry and the problems 
connected with it can hardly be followed, unless it is remembered that 
the industry came in in the post-depression period. 

Sugar A Typical Post-depression Industry The 
Contrast with Cotton Textile, Steel, Etc. 

All the tendencies described above are fully reflected in the history 
of the sugarcane industry in India. For, the sugar industry is, in every 
respect, an offspring of the economic policies of the post-depression 
period. Though, the first official enquiry into its possibilities was made 
soon after the last war, i.e. in 1920, 1 it came on the list of protected 
industries only in 1932. Its birth and growth have little in common 
with those of the great protected industries of India like cotton textiles 
or iron and steel. In the case of the last two, protection was grudging 



*Vide the excellent and detailed Report of the Sugar Committee, 1920. 



22 

and halting. It took nearly twenty-five years for a second steel com- 
pany to be formed. In cotton textiles, the pre-eminence of Bombay 
and Ahmedabad was not shaken by an outburst of new mills in other 
parts of the country till the early * thirties of the century ' and that too 
to a small extent. And till the outbreak of the present World War II, 
neither the cotton textile nor the iron and steel industry was able to 
achieve the same degree of self-sufficiency for the country as the 
sugar industry in respect of its products. 

Liberal Protection to Sugar not an Accident 

For no Indian industry has the same pace of growth to show as 
sugar. If the high level of protective duties is a necessary and suffi- 
cient explanation of it, it must be remembered that the grant of such 
duties is by no means a historical accident. Not only would it be incon- 
ceivable in any earlier period, but it was made possible by that nexus 
of political, financial, economic and broadly social circumstances which 
characterised the post-depression period. While the Government soon 
came to depend on the sugar industry for a considerable amount of 
revenue in the shape of the sugar excise duties, the public, too, came 
to regard its link with agriculture as the starting point of the much 
needed rationalisation of Indian agriculture. In fact, the policies of 
"the U. P. and Bihar Governments in respect of the price of cane and 
the organisation of the industry in respect of sales are even more 
characteristic of a new industry of the post-depression period than even 
the high level of protective duties. The controversy regarding the right 
of the various provinces to encourage their own sugar mills regardless 
of the fate of the U. P. and Bihar Mills may be viewed as the repetition 
of the history of the world sugar industry within our frontiers. 1 



1 Vide Discussion at the Simla Conference of 1934, referred to in a later chapter. 



CHAPTER III 

ECONOMICS OF DISCRIMINATING PROTECTION SOME 
CRITICISMS ANSWERED 



THE most important and noteworthy fact about the development of the 
sugar industry during the first seven years of the period of protection 
is that the progress it has been able to make has not sufficed, though 
it has exceeded the sanguine expectations of the first Tariff Board, to 
reduce the extent of protection required to meet the competition of 
Java. As we have shown elsewhere, that is due to the further reduction 
in the price at which, according to the Tariff Board, Java sugar could 
be landed at the Indian ports. Here, then, is the issue of protection jgs. 
freejtr^d-jn a very illuminating facet. The orthodox free trader ancl 
tHepassionate opponent of protection in India would naturally argue 
from this that, the possibilities of improvement in Java's costs are un- 
limited, and that, therefore, the Indian industry can never catch up 
with Java and must be content for ever to walk on protectionist crutches. 
As we have pointed out in another chapter, the reduction in the price 
at which Java sugar can be landed at Indian ports in the present con- 
ditions is in itself an unreliable guide to the price which the Indian 
consumer would have to pay for imported sugar in the absence of a 
sugar industry at home. Nothing that Java can do with her costs of 
production can alter the basic facts of the economic situation in India, 
which, taken by themselves and in juxtaposition to the facts of the 
sugar industry in other countries, form a strong case for the attempt 
to develop an Indian sugar industry according to the principles and 
methods laid down by the Fiscal Commission. 

It would be apposite and relevant at this stage, generally to examine 
the policy of discriminating protection, and particularly in relation to 
the criticisms that have been made against it in recent years. The 
Fiscal Commission laid do wn^hr^ conditions which industries applying 
for protection have to satisfy : (1) that the~ industry possesses natural 
advantages, (2) that without the help of protection it is not likely to 
develop at all or not so rapidly as is desirable, (3) that it will eventually 
be able to face world competition without protection. These three con- 
ditions are only a translation into the practical terms necessary for 
administrative application of the principles underlying the well-known 
infant industry argument. But the Fiscal Commission claims that its 
policy of discriminating protection is an advance on the infant industry 
argument. It should be remembered that the infant industry argument, 
strictly speaking, cannot make a difference between a big industry and 
a small one. Wherever there are, demonstrably, potentialities of un- 
aided competition with imported goods, protective aid must, according 
to the infant industry argument, be deemed to be due. But the Fiscal 
Commission was concerned less with economic theory than with the 
question of ensuring the industrial development of India in consonance 
with the country's natural resources. The Commission, therefore, laid 
down that the volume of employment which the protected industry 



24 

would be capable of creating should be considerable. It is interesting 
that there have been instances of industries whose application for pro- 
tection was turned down on the ground that the extent of new employ- 
ment that would be created was too small to warrant the imposition of 
protective duties. 

The emphasis on the extent of employment, which the Fiscal Com- 
mission laid down and which the Tariff Board has scrupulously followed 
has, however, led to the idea that the employment which a protected 
industry is capable of creating constitutes the main defence of the policy 
of discriminating protection. 1 In this form, it becomes one of the fami- 
liar and fallacious arguments in favour of protection, one which the 
free trader finds it so easy to dispose of. In the context of Indian 
economic development during the last two decades, the argument 
becomes even more puerile. In a country in which the population is 
in the vicinity of 400 millions and industrial workers number only two 
millions, it is ludicrous to suggest that the additional employment which 
any one protected industry can immediately create or even all of them 
in any one specific period, can create, can be an adequate cure for the 
colossal unemployment and under-employment prevailing in the 
country. Foreigners, who cannot hide their interest in the import trade, 
but who claim to look at the whole question from the point of view 
of India, have always sought to discredit the protectionist policy by 
calculating the additional employment which might be created in the 
country if all the imports of cotton textiles, sugar, iron and steel and 
other products of industries which enjoy protection in India were to be 
produced at home. By making out that the addition to employment 
would be negligible, while the repercussions of a fall in imports on 
India's export trade and economic well-being would be incalculable, they 
try to establish that the whole policy of discriminating protection is a 
wasteful and dangerous folly. 2 

Indian economists like Dr. H. L. Dey and Mr. B. P. Adarkar have 
trailed the path of the Bengal Chamber with additions appropriate to 
their academic attainments. There can be no doubt that claims for 
protectionist policies are always apt to be pitched too high. On the one 
hand, applicants for protection not only exaggerate their case, but the 
public, too, is rarely able to follow the merits of each case. The argu- 
ments against protection are usually of the kind which make the edu- 
cated classes suspicious of the indigenous industrialist and the ordinary 
man uncritically enthusiastic in his opposition to import of manufac- 
tured goods. The argument that protection tends to increase employ- 
ment is one that appeals to the masses. Likewise, the free trader's reply 
that more is lost in other spheres of productive activity than what is 



iProf. B. P. Adarkar has calculated the extent of additional employment pro- 
vided by the sugar industry in his excellent volume on " The Indian Fiscal Policy," 
and has propounded the view that the total direct or primary employment comes 
to 130 lakhs of workmen, and that out of this at least 25 lakhs of persons may have 
been provided new employment by protection. He estimates further indirect 
employment at 25 lakhs of workmen, and concludes "Is this not a result worth 
achieving at the cost of the considerably smaller burden on the comparatively 
richer element in the population which consumes sugar in India ? " 

Vide B. P. Adarkar's "Indian Fiscal Policy", p. 202 et seq. 

2 Vide Pamphlet of the Bengal Chamber of Commerce, " Economic Milestones." 



25 

gained in one industry leaves the educated man who sympathises with 
indigenous industry in great confusion about the merits of the question. 

It is time, therefore, that the relation between the volume of 
employment and the claims of an industry to protective aid was pre- 
cisely understood. An examination of the various reports of the Tariff 
Board will show that the volume of employment was regarded rather 
as a criterion by which to judge the importance of an industry, than 
as a major item in the calculation of costs and returns of the policy 
of protection. At the time the Fiscal Commission was appointed, there 
was not only the eagerness to speed up industrial development, but 
also the fear that the adoption of a protective policy might lead to a 
repetition in India of the abuses of the tariff system in the United 
States of America. The Fiscal Commission was careful to emphasise 
the dangers of protection. It was specific and emphatic on the point 
that the contribution of the protectionist policy to the solution of employ- 
ment should not be exaggerated. Likewise, the Fiscal Commission did 
not make the mistake, which is attributed to it by Dr. H. L. Dey, of 
regarding the establishment of industries through protection as reducing 
the incidence of famine on the masses of this country. It is essential 
to stress these facts firstly because much of the criticism of the policy 
originating with the Fiscal Commission accepts without question the 
economic crudities commonly attributed to the supporters of protec- 
tionism. Such an assumption renders it easy to criticise the policy 
with an air of superior academic wisdom. It is interesting that Dr. Dey 
devotes a number of pages in dispelling the supposed misapprehension 
that industries can relieve the hardships of famine. 1 The Fiscal Com- 
mission observe on the other hand, " It is necessary, therefore, to recog- 
nise that industrial development alone will not solve the problem of 
famine. The real remedy lies in the development of irrigation, and 
the scientific development of agriculture to which industrial develop- 
ment by raising the general economic level of the country is only sup- 
plementary." 2 It is difficult not to believe that the temptation to make 
the opponent's case conveniently easy was too strong for Dr. Dey to 
resist. 

Nevertheless, the volume of employment has been regarded through- 
out the history of the Tariff Board as an^important criterion of judging 
the fitness of an industry for the grant of protection. Indeed, it was 
specifically laid down by the Fiscal Commission that new industries 
should not as a rule be granted protection. In these circumstances, one 
can only conclude that the emphasis on volume of employment is a logi- 
cal consequence of the principle of discrimination which was to qualify 
and modify the policy of protection that was recommended for the 
Government's acceptance. Once it is laid down that no industry can 
lay claim to protection unless its importance in the economic life, both 
at present and potentially in the future, can be demonstrated by the 
volume of employment it can create, the mad rush of applications for 



Dr. H. L. Dey, "The Indian Tariff Problem", p. 27. 
2 It should perhaps be pointed out here that the principle of employment was 
clarified and established by the successive Tariff Boards, since the Report of the 
Fiscal Commission has no specific references to it, though there are passages which 
suggest that the Commission was aware of its importance as a guiding principle. 



26 

protection which every country with an indiscriminate policy of pro- 
tection has experienced would be provided against. 

The Fiscal Commission expected protectionist policy in India to be 
effectively discriminating through (1) the choice of industries for grant 
of protection, (2) the regulation of the protective duties at not more 
than the requisite level, and (3) the certain prospect of termination of 
protection. 

It may be said, as indeed, many of the critics of the Fiscal Com- 
mission have said that the authors of protectionist policies all the world 
over have made similar claims which subsequent experience has wholly 
disproved. Such an argument, it is necessary to point out, would only 
show an unfortunate failure to grasp the spirit in which the Fiscal 
Commission approached its problem. A perusal of the report will show 
that it is one of the most unpretentious of documents which have deter- 
mined the economic history of any country. Nowhere in its 200 and 
odd pages is there any attempt on the part of its authors to display 
anything like profound knowledge of economic theory. The fact that 
the Commission had to do without the counsels of so eminent an 
economist as J. M. Keynes may probably explain it. But the fact 
remains that the Commission was content to refer in a few pages to the 
Free Trade vs. Protection controversy and to accept what is at once 
sound commonsense and impeccable theory, the infant industry argu- 
ment. The Commission, in fact, took one more step in the direction 
of caution. It applied the infant industry argument not simply to infant 
industries, but to what may be called the infant industrial nation. Hence 
the deduction that protection is to be accorded to industries which are 
not merely infant industries in themselves, but which are also capable 
of securing the development of an infant industrial nation. It would 
not do if the industry could some day hold its own against foreign com- 
petition. Its development must be a definite aid to the industrial deve- 
lopment of the country. Unemployment is sought to be cured, not 
immediately nor by the establishment of a few industries, but by the 
ultimate industrialisation of the country which no one could envisage, 
nor can even today, without a policy of discriminating protection. It 
is unfortunate that this sapient and prudent provision about the volume 
of employment should have exposed the authors of the policy to this 
criticism. If it is realised that addition to employment on the scale 
sufficient to relieve unemployment is not one of the claims made for 
the policy of discriminating protection or the industries which it has 
led to, then it will be seen that the attack on the policy on the score 
of poor employment is altogether misdirected. 

Yet, the opponents of protection in India, used as they are to the 
protectionist controversies in the advanced industrial nations of the 
West, repeat the arguments not only to make their reasoning internally 
sound, but also to spare themselves the trouble of thinking out the 
Indian economic problem realistically, and, in the true sense of the 
word, originally. They thus overlook the emphasis which the policy of 
discriminating protection, both in its original conception by the Fiscal 
Commission and in its subsequent application by successive Tariff 
Boards, has laid on buttressing the infant industry argument with what 
I have ventured to call the infant industrial nation argument. The 



27 

essence of the latter idea lies in the fact the establishment of industries, 
which can use our resources on about the same scale on, which Nature 
has endowed this country with them, will help to initiate that process 
of industrialisation which, when it works itself out fully, will solve 
those problems of famine and unemployment which neither a free trade 
policy nor a protectionist policy as it is ordinarily understood can ever 
solve. It is well at this stage to note that the starting point of the 
enquiry of the Fiscal Commission is not the unreasoned lament of the 
economic nationalist that the country is flooded by foreign manufactures, 
but that " the industrial development of India has not been commensur- 
ate with the size of the country, its population and its natural resources 
and that a considerable development of Indian industries would be 
very much to the advantage of the country as a whole." 

As I said, the Commission did not aim at any stage at sharpness 
of theoretical outline either in the apprehension of the problem or the 
formulation or exposition of their remedies. They were content to see, 
on the one hand, the enormous poverty of the country, the large extent 
of unemployment and economic want, and on the other, the vastness of 
certain kinds of economic resources. They were alive, too, to the large 
body of highly respectable economic thought which urged the illusive- 
ness of all hope of adding to the wealth of a country through protected 
industries. Prompted by sound commonsense, which often obviates 
the need for close scrutiny and fine calculation, they availed of the 
infant industry argument to find themselves a way out of the dilemma 
in which economic theory and the facts of Indian economy contrived to 
place them. They were careful to make no exaggerated claims for the 
policy which they recommended. At the same time, .they provided 
more than one safeguard against the pitfalls with which the path of 
protection is reputed to be only too full. If that policy has failed to 
fulfil the hopes which its authors entertained of it, the reason is to 
be sought in the errors of its application or its working and nothing 
can be gained by attributing to the Fiscal Commission errors which 
they were careful to disown and guard against as far as they could. 

To examine the defects in the working of the policy of discriminat- 
ing protection is outside the scope of this work. But it is relevant 
to point out here that, if the aim of the Fiscal Commission, viz., to 
shorten the period of protection by timely and appropriate revision of 
the protective aid, had been faithfully pursued and if unnecessary delay 
had not been caused in the establishment of industries, new or related 
to those in existence, the results of the policy during the last two 
decades would have been far different. 

Inasmuch as the policy of discriminating protection has not been 
followed as a consistent policy with organically inter-related parts, but 
has been allowed to be seen as desperate attempts to establish a few 
industries through protective aid, opponents of the policy have found 
nothing wrong in employing the apparatus of free trade thought to 
criticise the policy as a merely protectionist policy, without considera- 
tion either for the special circumstances of India or for the qualifications 
specified by the Fiscal Commission. It is as a rule assumed that 
emphasis on the special circumstances of a country is a betrayal of 
ignorance of the universality of the laws of economics. It is forgotten 



28 

that while the laws of economic science have unquestionable universal 
validity, prescriptions of practical policies based on the suggestions a 
priori of economic laws in their simple forms can have no such universal 
validity. Equilibrium economics is so much a body of hypothetical 
reasoning that it is as unhelpful to emphasise its logical consistency and 
compactness as it is idle to look for fallacies in it. If this body of 
reasoning suggests laissez jaire and free trade as obviously the best 
economic policy for nations and governments to follow, it can in the 
nature of things mean no more than that these policies have the least 
risk of being vitiated by errors and illusions which people unequal to 
following closely the labyrinthine course of economic causes and effects 
are bound to make. The free trade doctrine can, therefore, expect to 
have no more than a prima facie case set up for it by the science of 
classical economics. Economic science can only set up a presumption in 
favour of laissez faire and free trade. The finest analysis cannot destroy 
the importance of the facts of a situation or provide adequately for 
the changes in the human factor. For the free trader to presume that 
economic science is on his side or assume that every supporter of pro- 
tective duties is, regardless of the conditions of the support, ignorant 
of, or purblind to, the truths of economic science is to betray a serious 
misunderstanding of the nature and content of scientific economic 
thought. 

It will be realised, therefore, that if the advocacy of laissez jaire 
and free trade came closely in the wake of the formulation of economic 
thought, it was not because the relation between the two was as logically 
close as it is thought to be by the opponents of protection in India, but 
because laissez faire and free trade suited admirably the conditions in 
which they were recommended. It suited the conditions of the coun- 
tries to which those economists belonged ; and though they were care- 
ful in formulating the principles of the theory without bias, they were 
enthusiastic in establishing and preaching them because they were in 
their country's interest. It should not be forgotten that, though spatial 
limitations like countries are not important in the formulation of theory, 
in the advocacy of practical policies, their respective countries become 
important, for, as Sidgwick aptly points out, " it is only in the ciase 
of foreign trade that the investigation of the conditions of favourable 
interchange excites interest." (Quoted by Jacob Viner : Studies in the 
Theory of International Trade, p. 599). The early free traders like 
John Stuart Mill, who saw this relation clearly, sought to provide for 
the difference in circumstances by the evolution of the theory in regard 
to infant industries. This part of classical economic thought has un- 
fortunately come to be known, not as an important part of the struc- 
ture of economic thought, albeit unimportant in the structure as it had 
then been completed, but not designed, but as an unimportant proviso 
which will rarely, if ever, become operative. This result is to be attri- 
buted to the frequency and widespread nature of controversies between 
free traders and protectionists. As a result of these controversies, what 
was intended to be a warning against a heedless application of hypo- 
thetic reasoning to concrete situations came to be known merely as 
the " infant industry argument ", a sort of spurious exhibit in a vexa- 
tious piece of litigation. 



29 

An element of empiricism is often sought to be provided by the 
reference to the working of protective policies in other countries. But 
it is significant that in no country is the protective policy said to have 
failed to achieve its purpose of bringing about the establishment of an 
industry to which the country is suited by its natural resources. Such 
an allegation must be deemed to be implicit in the contention that no 
country has found it easy to remove protective duties once they have 
been laid. But it is obvious that the non-removal of protective duties 
after a reasonable time can be held to be a charge rather against the 
political system and the system of government of the country concerned, 
than against the economic character of encouragement of young indus- 
tries through protection. And it may be observed in passing that the 
danger of protective duties overstaying their popular welcome and 
economic justification is the least of the political dangers against which 
this country has to be on guard. That danger compares so favourably 
with the danger of palsy setting in on the limbs of India's body 
economic ! How far the Indian political system will be able to resist 
the poisons which its fiscal system may generate is a question on which 
it is both futile and inexpedient to be dogmatic. But it is certain that 
according to this criterion of facility of timely removal, a system of 
bounties has no advantages over a system of protective import duties. 
Dr. Dey in his impatience for the end of protection avers that "it is 
much easier and more practicable to terminate a system of bounties 
than one of protective duties. " Considering the financial strain which 
the Government of India has experienced during the last one decade 
and more, it is perhaps a matter for satisfaction that protective duties 
were as a rule preferred to bounties and Indian industries were not 
brought to an untimely end on the score of financial stringency. Few 
in India would care to dispute Dr. Dey's contention about bounties so 
far as the conditions of the last decade and more are concerned. But 
if it is suggested that, in the kind of political constitution that is 
indicated for the future, bounties will be easily ended in the interest 
of the general taxpayer and to the detriment of a profiteering indus- 
trialist, Dr. Dey's honours as a prophet will certainly be so many gains 
to the country. Such optimism, however, is not given to all. 

Whether protective aids are or are not discontinued in time is 
a purely political problem which, though it is not irrelevant to practical 
decisions on fiscal policies, should not be allowed to prejudice the 
merits of the purely economic issue between free trade and protection. 
And it should not be forgotten, too, that the continuance of protective 
duties after they have ceased to be indispensable for indigenous 
industry may often be inspired by the desire for security from the 
intrusions of foreign competitors who are not unlikely to adopt 
questionable methods of competition. In such cases the fleecing of the 
consumer is not an inevitable result of the failure to remove the 
protective duties ; for, in a large country like the U.S.A. with a big 
home market, internal competition may achieve for the consumer all 
the benefits which the free trader seeks to ensure for him through 
obvious risks to the stability of the indigenous industry and all that 
it can serve. This is a simple fact which free traders conveniently 
overlook ; and it is interesting to recall The Economist's contention 
in the recent controversies on the safeguarding of industries that the 



30 

protectionist in Britain should not quote the U.S. example in his 
favour, since the U.S., by virtue of its being the largest area over 
which complete freedom of trade prevails, constitutes an impressive 
illustration of the virtues of free trade. It should be readily 
recognised that what The Economist said of the U.S. is true in a large 
measure of India, too. If internal competition has not secured the 
same advantages of progressively lower prices, the reason is to be 
found not in the uniqueness of economic phenomena, but in the simple 
fact that productive efficiency is at an inordinately low level. 

The economic problem of India is the incomparably low efficiency 
of all factors of production. And this is at the root of all the ills of 
India, whether it be the average incidence of famine, the low returns 
of agricultural pursuits or our incapacity for competition in industry. 
If this were the whole of the picture of our economic position, then 
economists as well as politicians could advise the people to resort to 
a Stoic resignation to the poverty that is inevitable. They could them- 
selves look on with philosophic equanimity on the processes of Nature 
working themselves out remorselessly on the teeming millions of this 
country, reducing them, through Malthusian checks, to the minimum 
which can make a bare living by scraping the surface soil. But side 
by side with this appalling inefficiency, and in spite of the enormous 
age of agricultural land, there is a plentitude of natural resources 
and aptitude of the people for an infinite variety of economic occupa- 
tions, which counsel against Stoic resignation to the drift of things. 

While on the one hand, the natural resources suggest that the 
problem of improving the efficiency of the people can be faced and 
solved,, on the other, the potentialities for further deterioration of 
the economic position through the growing hiatus of productive efficiency 
of India and other countries suggest that the problem can be neglected 
only at grave peril to the life of a country as a whole. For opponents 
of protection who forget that the aim of the policy is industrialisation 
and not a mere handful of industries, do not appreciate this vital 
difference between India and the various countries which in the past 
have resorted to protection for the development of their industries. 
Only in the case of the U.S.A. in the early decades of the nineteenth 
century, could it be said that the aim was industrialisation. In the 
case of Germany specific industries were aimed at, though of French 
economy it could be said that it inclined too heavily on the side of 
agriculture, which called for correction. But none of these countries 
was faced with the problem which we in India have of a general 
inefficiency, born of the failure to study the technique of productive 
activity as such in all its phases and details and to acquire the capacity 
to effect timely improvements therein. 

From this standpoint the distinction between agriculture and 
industry, which free traders in India employ as a handle to turn against 
protection is altogether unreal, even if it has a semblance of logicality. 
This distinction has passed unquestioned despite its unreality merely 
because of the fact that India has a considerable export trade in a few 
agricultural staples, while in the sphere of industry, she uses manu- 
factured goods which are either imported from abroad, or produced 
at home by protected industries. But the existence of an export trade 



31 

only serves to mark the inefficiency of the factors of production in 
agriculture. It is an incontrovertible fact that, wherever India's agri- 
cultural products have had to meet the challenge of foreign competi- 
tion, they have not been more successful than the products of Indian 
industry. The efficiency of land and of the cultivator is not more in 
his sphere than the efficiency of the industrialist and the industrial 
worker in industry. The export trade has been made possible more 
by the peculiarities of agriculture as an occupation than by the com- 
petitive capacity of the Indian agriculturist. The reports of Indian 
Trade Commissioners invariably stress the point that Indian exports 
have been losing ground wherever they have to contend against the 
competition of rival sources of supply. When it is said that the appeal 
of the Indian product is its low price, meaning thereby not a competi- 
tive price for comparable values, but the attractions of mere unrelative 
cheapness, it will be realised that from the point of view of competition 
which alone concerns the free trader, the Indian agriculturist, will 
soon be, even if he does not seem to be now, in a position not mate- 
rially different from that of the industrialist. The consequences of 
the collapse of our export trade in agricultural staples when it comes 
about can only be imagined. Those who suggest that in the absence 
of protected industries, India will develop her agriculture as the pursuit 
in which she has natural advantages, are guilty of a parrot-like repetition 
of text-book lessons. They forget that what free trade can ensure is 
the division of avenues of productive activity according to natural and 
differential advantages, that, even as the law of Nature of which it 
is only a derivative, it will send the productively inefficient to the wall. 
For, those who are equally inefficient in all branches of production, 
cannot expect to have anything allotted to them in the division of 
labour which free trade will ordain. 

Given this productive inefficiency in agriculture not less than in 
industry, how is the problem to be tackled ? In so far as productive 
inefficiency may be traced, not to lack of intelligence, but to lack of 
familiarity with scientific methods, lack of organization and most of all, 
to the lack of an environment in which efficiency is prized, sought 
after and assiduously developed, industry, and not agriculture, is marked 
out as the sphere in which efforts at improvement can be usefully and 
hopefully begun. For, agriculture by its very nature, its diffuseness 
of operations; \ the amorphous character of the producing classes, its 
more tenacious attachment to tradition and proneness to conservatism 
does not lend itself to the inculcation of a new spirit. If Indian agri- 
culture is ever to become scientific and progressive, it will be only 
because the scientific spirit, begotten and nurtured in the sphere of 
industry, invades with irresistible force the adjacent realms of agri- 
culture. In industry, the scientific attitude to production can grow 
more easily because there, unlike in agriculture, it is not a matter 
of choice, but of compulsion, it appears not as an extraneous imposition 
but as the very essence of the productive processes. When industry 
grows and industries increase and expand, the environmental conditions, 
in which productive efficiency is prized, sought after and assiduously 
developed, are created ; and agriculture catches the infection, firstly 
because some departments of our agriculture are closely related to 



32 

industry and, thereafter because of the very pervasiveness of the 
scientific spirit. 

The cost of promoting the scientific spirit, therefore, is one which 
the whole country has to meet as. without it, its very * survival is 
threatened. The efforts to raise productive efficiency through the 
development of industry is a charge on the whole of the national income. 
List saw the possibility of such conditions and allowed himself to 
transcend the narrow boundaries of economics ordinarily understood, 
when he said, "The nation must sacrifice and give up a measure of 
material prosperity in order to gain culture, skill and powers of united 
production ; it must sacrifice some present advantages in order to insure 
to itself future ones." 

John Stuart Mill expressed the same idea ir comparatively narrow 
terms, "The superiority of one country over another in a branch of 
production often arises only from havh A< 3 begun it sooner. There may 
be no inherent advantage on one part or disadvantage on the Q^ier, 
but only a present superiority of acquired skill and experiences. A 
country which has this skill and experience yet to acquire may in 
other respects be better adapted to the production than those which 
were earlier in the field." 

It will be obvious from the above that the original thinkers of 
classical economics were not unaware of conditions like what obtain 
in India. But it may be asked whether, if industry holds the key to 
productive efficiency, it necessarily follows that protection is the best 
method of pronging industry. Dr. H. L. Dey, who is one of the few 
opponents of protection who have tried to tackle the economic problem 
of India instead of merely expatiating on the familiar theoretical 
aspects, has approached the question from two different points. 

On the one hand, he considers the cost of projection as an expendi- 
ture out of the annual national income and examines the priorities 
among the various charges on the national income. On the other, lie 
argues that there are other methods, which he claims far less costly 
and far more efficacious and effective, in bringing about the establish- 
ment of industries. On both these points, Dr. Dey's views nxerit care- 
ful consideration. Taking for convenience the latter, namely, that 
there are better ways of securing industrial development than the 
imposition of protective import duties, Dr. Dey argues that " the com- 
petitive weakness of Indian industries is largely traceable to grave 
defects in the principle and structure of business organization, injtde- 
quate and unsatisfactory technical equipment both in personnel and 
machinery, the failure to adopt modern methods of marketing, and last, 
but by no means least, over-capitalisation and the consequent excessive 
burden of fixed charges. Since these deficiencies are obviously, in 
a large measure, the inevitable result of the lethargy, thoughtlessness 
and mistakes and miscalculations of those who are individually and 
collectively responsible for the management of industrial enterprises 
in India, it is hardly necessary to labour the point that the application 
of the principal remedies must also be initiated and carried out by 
them. These remedies, as has been indicated in connection with each 
one of the threct industries examined in the previous chapters, are 



33 

largely matters of intelligent planning and effective co-ordination in 
respect of production and distribution both for the individual units of 
an industry as well as for the industry as a whole. In fact, it is neces- 
sary for the industrial leaders of India to replan and reconstruct whole- 
sale the industrial structure of India by adopting, in full measure, 
the new technique of business organisation, known as ' rationalisation ', 
which was unanimously recommended by the leading business and 
economic experts of the world at the International Economic Confer- 
ence of 1927, and which is being applied with increasing success by the 
ablest and foremost business organisers in the U.S.A., Germany and 
Great Britain, and also by the State in the U.S.S.R." 

It is difficult to find in the above any concrete remedy capable of 
being adopted by those who are anxious to provide against the dangers 
indicated by India's productive inefficiency. We have shown that pro- 
ductive inefficiency is not confined to industry ; and though in a different 
context Dr. Dey shows himself aware of the danger to agriculture, he 
has confined inefficiency to industry and comes out with the suggestion 
that the only way to remedy it is to remove the evil. Dr. Dey can 
hardly complain if those, who look for concrete remedies, regard his 
observations only as an elaborate form of petitio principii. 

However, there is one concrete suggestion in regard to the question 
of the sugar industry which, in so far as it is capable of application 
to other industries, may be deemed to be a comparatively precise 
prescription of Dr. Dey for the ills of Indian industry as a whole. 
Dr. Dey argues : " The evidence of history as well as the data of 
comparative costs would thus strongly indicate that the protective tariff 
is ^neither the most effective nor the most expeditious instrument for 
the development of the sugar industry in India. On the other hand, 
as is so well shown by the examples of Java and Hawaii, an appropriate 
organisation for guiding, controlling and co-ordinating extensive and 
continuous research and experiments on the different phases of the 
agriculture and the manufacture of the sugar industry will undoubtedly 
function as a much more efficient and trust worthy "machine for achieving 
the desired development." 

It is not unfair to deduce from the above that according to Dr. Dey 
the remedy for competitive weakness lies in instituting research into 
the problems which the protected industries are expected to solve 
during the period in which they are helped to keep themselves alive 
by the protective duties. The cost of such research will compare most 
favourably with the cost sustained by the nation in the attempt to 
develop industries through the imposition of protective duties over 
a long period. No one can deny that ; but the question is not how best 
to reduce the immediate outlay of the nation on industrial development, 
but how to secure industrial development. Industrial development and 
the growth in the people of India of qualities, which will render them 
more fitted for the struggle for life, and enable them to acquire com- 
petition are large scale social developments which can be brought about 
only if the appropriate stimuli and responses are evoked in the people 
at large. To most free traders, the growth of industry is a simple result 
flowing from the working of certain simple laws of economics. But the 
industrialisation of a country, even the birth and growth of particular 

3 



34 

industries are complex social phenomena ; and the facts pertaining to 
them, which form the subject of study for the economist, can only be 
said to have been abstracted for the purpose of the study. It is neces- 
sary, therefore, that even an academic economist, when he enters the 
field of practical policy and tackles a specially difficult problem such as 
the inculcation of the spirit of competitive efficiency in the Indian 
masses and classes, should note the more important deviations of life 
from the more or less unreal abstractions of his study and try to see 
how the processes he recommends will work in actual life. It is clear 
that Dr. Dey has not troubled to visualise the actual working of the 
remedy he advocates. To suppose that an industry with the maximum 
competitive efficiency can be brought into being all of a sudden, if all 
the pre-requisite research is completed in advance, is to show that 
the idea has neither been reasoned out fully from the arm-chair nor 
tested in the light of recorded attempts in that direction. 

While the case of India may be regarded as too crude to serve as 
an illustration in this regard, there have been cases even in advanced 
industrial nations like Great Britain where the lead in some of the 
new industries has been gained by others who have had the advantage 
of being the birth-place of the original inventions, "pie United States, 
for instance, has enjoyed such a lead in some of me new industries 
like the radio and motor cars. Germany had the lead in the dye 
industry. Knowledge among the British scientists and technicians of 
the facts pertaining to these manufactures did not obviate the need for 
expensive trials and failures and in some cases such as motor cars 
for even protective tariffs. The lead that America secured in the film 
industry could not be made up by the British industry except by the 
adoption of quotas. That such was the case with advanced industrial 
nations shows clearly that the actual utilisation of technical knowledge 
in effective and successful functioning of industry is materially differ- 
ent from its acquisition in a laboratory. The birth and growth of an 
industry, the actual experiencing of different problems and their pro- 
gressive solution in the course of the industrial operation, the training 
of men in numbers appropriate to the needs of each stage and the 
acquisition on their part of the skill necessary for their operations, the 
incorporation of that skill into the complex personality of the worker 
and the subtle creation of what may be called the atmosphere of 
industrialism, all these are vast, fundamental and complex changes, 
which are neither circumvented nor short-circuited by compressing the 
problems of a hundred factories into the four walls of a laboratory. 
To suppose that a modern industry can be produced all of a sudden 
in a country like India, like Pallas Athene from the head of Zeus, is 
to mistake the essential nature of industrial development. 

It would be useful to illustrate the point in reference to the sugar 
industry ; and it is fortunate that Dr. Dey's prescription is specially 
intended for the problems of the Indian sugar industry. Dr. Dey 
argues : " It is more than a decade ago that the Indian Sugar Com- 
mittee outlined a well-devised scheme for the organisation of a repre- 
sentative Sugar Board, which would promote a Sugar Research Institute 
and a Sugar School. It may also be mentioned that the Sugar Com- 
mittee's outline scheme was based upon the accumulated experience 



35 

6f the principal cane-sugar-producing countries of the world. That 
scheme has been so long held in abeyance largely no doubt on account 
of the lack of necessary funds. But since it has now been decided to 
accelerate the growth of the sugar industry through a large measure 
of public assistance, and since that assistance can be rendered more 
effectively for the industry concerned and more economically for the 
taxpayers of the country at large, through the proper functioning of 
an organisation like the Sugar Board than by means of a protective 
tariff, there is at present a much stronger case for the establishment 
of the Sugar Board with the Associated Research Institute and School 
than there was ten years ago." It may be doubted whether Dr. Dey 
realises that the failure of the Government to implement the recom- 
mendations of the Sugar Committee is an argument that is more in 
favour of protection than of the position taken up by him. The Sugar 
Committee was appointed when the memories of the sugar shortage 
of the last war were quite green in the public mind. The Committee 
went into the question and made specific recommendations. Dr. Dey 
suggests that the failure to adopt them was due to lack of funds. But 
whatever the reason, it may be reasonably held to suggest that economic 
problems of practical importance are tackled, whether by the people 
or by the Government, only under stress of practical expediency created 
by industries in existence and not worked abstractly like mathematical 
problems in the seclusion of a laboratory. Besides, it is not accurate 
to suggest that the findings of the Sugar Committee were altogether 
overlooked. The work in the Coimbatore farm owes its inspiration 
directly to the Sugar Committee, and the evolution of the improved 
varieties of cane, while it has enabled a surprising improvement in the 
recovery percentage of the sugar factories also brings out the fact that 
no experimental farms, however ably conducted, can wholly anticipate 
the problems which will be thrown up by actual working on commercial 
lines. If this is true of the agricultural side of the industry, how much 
more true should it be of industry itself ? 

Laboratory and research, invaluable in themselves, are not a short- 
cut in industrial efficiency ; and in a country in which among other 
causes, financial stringency stands in the way of adequate provision for 
them, it is futile to point to them as an alternative to the apparently 
costly methods of helping industries to function in real life through 
the provision of protective aids. 

It is necessary to refer to the other approach of Dr. Dey to the 
problem of productive efficiency in India. The strategy he adopts in 
his attack on protection may be best described, in the language of 
modern warfare, as a pincer movement. On the one side, he argues 
that with the national income and national expenditure as they are, 
the expenditure incurred on protection as a means of industrial develop- 
ment is not only heavy, but takes an unjust precedence over prior 
necessaries of national existence such as education. On the other side, 
he argues that more expenditure on education can be relied on better 
to cure the people of productive inefficiency than the large scale ex- 
penditure incurred through protective import duties. Perhaps, it is 
too much to expect anyone to delineate in some detail the system of 
education which can so induce efficiency as to eliminate the need for 



36 

protection. But in the remoteness and circuitous nature of its relation 
to productive efficiency, this remedy of education bears a striking 
contrast to the directness with which preliminary research is supposed 
in another part of Dr. Dey's book to bring efficient industries into 
existence overnight. 

The truth, however, is that attempts to evade the unquestionably 
enormous price which a backward nation has to pay for economic 
development must land one in patently unsuitable suggestions which 
will not bear a moment's scrutiny. It is as absurd to suggest that the 
cost of protection is recovered by the gains of additional employment 
as to contend that there are other and far less costly ways of teaching 
an economically primitive people to function as an industrially 
regimented modern nation. The bill is there for the nation to foot ; 
and the hoary wisdom of the very authors of free trade theories has 
laid down that, " a protecting duty, continued for a reasonable time, is 
the least inconvenient mode in which the nation can tax itself for 
the support of such an experiment " (John Stuart Mill) . Soviet Russia 
had to go without some of the common necessaries of life before she 
could push her Five Year Plans to success. And in India, we have so 
far made no heavier sacrifice for our industrial development than a 
higher price for some of the luxuries of life. And since the consumers 
of sugar and cotton textiles come from the very intelligentsia which is 
most insistent on economic Swaraj, even the charge of taxation without 
representation or consent cannot be laid against the protective duties 
in India. 

The charge of being an odious form of regressive taxation is, how- 
ever, laid against them by Dr. Dey. No supporter of protection in 
India need feel called upon to hold a brief for the system of taxation 
in this country, which is yet to acquire the features of a progressive 
system either in its technical or in its ordinary sense. But it is sur- 
prising that after noting the fact that the successive increases in the 
import duty in sugar led, not to decrease, but an increase in the 
imports of sugar, Dr. Dey should proceed to argue that the import 
duties lay the burden of taxation on shoulders least able to bear it. 

It will be seen that the more attempts are made to find simple alter- 
natives to protection, the more strongly will the conclusion emerge 
that for the industrialisation of a backward country there is no means 
except the establishment of industries ; and since industries are not 
started in a spirit of selfless national service and cheerful preparedness 
for certain loss, protective duties will have to be levied. The need 
for them in a country like India is all the greater and all the more 
indubitable, because inefficiency is not confined to one or two classes 
of people or producers nor one or two departments of productive 
activity. In the case of the sugar industry, as we shall show at greater 
length in a later chapter, competitive efficiency does not rest with the 
factory alone, but also with the cultivators, with those who supply 
them with seeds and manures, with the general background of industrial 
development in the country as may be evidenced by the ability to 
utilise by-products. This nexus of relations can be seen and appraised 
and the problems issuing therefrom tackled only in the context of the 
actual working of a large scale industry. To simplify these problems 



37 

in terms of prices of imported products and cost to the consumer may 
be useful as correctives to undue exaggeration of the value of rival 
systems of thought. But it should be realised that the justification 
of the policy of discriminating protection lies, not in the mere decline 
of prices but in the creation of an atmosphere of scientific application 
to the problems of production, without which not only Indian industry, 
but also Indian agriculture, in fact, the whole of the national economy, 
must sooner or later experience a complete collapse. We shall have 
occasion to show that in the sugar industry the industrial and agricul- 
tural problems appear together in an illuminating and practically useful 
conjunction ; and if only for this reason, the claims of the sugar industry 
to protective aids is unquestionable. And as for the contentions of 
*the free traders, which are no doubt weighty in their narrow compass, 
we have, for our part, maintained at the outset that in the conditions 
of internal trade and world economy today, the old controversy between 
free trade and protection has a sterile unreality, that in the calculations 
of the price paid by the consumer and the loss sustained by him as 
a result of protection, there is an element of speculation about the 
price he would have to pay in the absence of an indigenous industry, 
speculation which must necessarily vitiate the arguments ; that, on the 
whole, taking all circumstances into account, there is good reason for 
suggesting that the consumer has not been hard hit and that, last but 
not least, the gains of protection should be judged from the national 
standpoint and not from any narrower standpoint. 



CHAPTER IV 

HISTORY OF SUGAR INDUSTRY IN PRE-PROTECTION PERIOD 
A COMPARATIVE STUDY 



ENOUGH has been said in the last two chapters of both the world's sugar 
industry and of Indian economic policy in the post-depression period 
to indicate what distinctive features are to be looked for in the history 
of the sugar industry in India. It has been observed that as the sugar 
industry is the offspring of the post-depression period, public policy 
in respect of its protection was actuated by aspiration of a far reaching 
kind. That, however, is in regard to the present and the recent past. 
Sugar production has, however, been carried on in India from an im- 
memorial past. 1 And among the great protected industries, sugar has 
much in common with the cotton textile industry and little or nothing 
with iron and steel. For, sugar is at once the oldest and the newest 
of India's great industries. The position differs from that of cotton 
textiles, in so far as the manufacturing processes of spinning and 
weaving are in essence the same both in the cottages and in the factories. 
In sugar, on the other hand, the methods o modern sugar mills are 
a far cry from the manufacture of gur which, one may reasonably 
presume, has been carried on by more or less the same methods for 
nearly two thousand years. It is probably because of this difference 
that- the cotton textile industry was an applicant for protection, while 
protection had, so to say, to play the midwife at the birth of the 
sugar industry in India. The difference cannot obscure or alter the 
fact that both the sugar and the cotton textile industries are natural 
growths in the Indian soil. For sugar mills were not lacking even in 
the pre-protection period, though neither in number nor output can 
they compare with the cotton mills of the last century. Both have 
strong links with agriculture, though Indian cotton has only recently 
developed a high degree of dependence on the home market and im- 
proved sugarcane has been to some extent a creation of the mills' 
demand. A comparative study of Indian cotton and sugarcane may 
yield a number of points to economic statesmanship ; but it can hardly 
be attempted here. Suffice it to say that there was nothing in the case 
of sugar manufacture in the past which could serve in the same way 
as handlooms in the case of cotton textiles which formed a link 
between the methods of the past and the advanced manufacturing 
technique of modern times. At the same time, the sugar industry lent 
itself to that combination of plantation and factory which gave enormous 
advantage to the interests which developed the sugar industry in Cuba 
and Java. This made it impossible for unaided private enterprise to 
build up the sugar industry upto a point and then make an irresistably 
importunate demand on the Government for protection. The sugar 
industry could not, therefore, develop on the lines of the cotton industry. 
Nor was it like iron and sllel of such vital importance to warfare that 

i Vide Indian Sugar Industry, Its Past, Present & Future, 1934, by M. P. Gandhi. 



39 

it could enjoy the spontaneous solicitude of the Government. The 
logic of events more than the logic of facts or of argument had to be 
felt before the sugar industry could be enabled to take a long step 
forward. 

Hoary Pa&t of Indian Sugar 

Though there is room for diversity of opinion as to when exactly 
the manufacture of sugar began in this country, the word occurs in 
the Atharva Veda and in more than one place in the Ramayana and 
it is thus indisputable that sugar was known to the Hindus earlier than 
to any other race. Sugarcane has thus been known to India for at 
least 3,000 years ; and there are, besides, several indications that 
Northern India is the home of sugarcane. 1 The earliest reference t(V 
this in Western countries dates Jback to^p27 4.0, when sugar figures 
among the spoils taken by the Byzantines after their conquest of 
Dastagerd in Persia. It is also on record that the Chinese Government 
during the reign of Emperor Tai Tsung (627 to 650 A.D.) sent a batch 
of Chinese students of agriculture to Bihar to study the method of 
cultivation of sugarcane and manufacture of sugar. From the Mahom- 
medan writers we learn that sugarcane was introduced by the Arabs 
into Sicily about 703 A.D. and that it spread from there to other Western 
countries, especially Spain, as early as 755 A.D. 

About the thirteenth century, sugarcane cultivation spread over all 
the countries round the Mediterranean ; and these places became the 
sources of supplies of cane sugar to Europe and Africa. It also appears 
quite certain that, about the time of the second voyage of Columbus, 
cane was introduced into America ; and it is extremely probable that 
the local type now used only as chewing cane in Brazil was the variety 
known as " Puri " in Bengal. Later, with the introduction of sugar- 
cane cultivation in many parts of America by the Spanish, the Portu- 
guese and Dutch, the production of sugar increased so rapidly that it 
became an article of common consumption. 

The sugar industry in India throve fairly well up to the time of 
Napoleon, i.e. up to the beginning of the nineteenth century, and a 
large quantity of sugar was exported to European countries even then. 2 
But, when Napoleon was starved of sugar supplies from outside owing 
to the naval blockade, he engaged scientists to select from out the sweet 
vegetables growing in Europe a crop capable of producing sugar. This 
research and the subsequent improvement in cultivation led to rapid 



1 Etymologically * sugar 'is of Indian origin, the earliest form of the word 
being, Sharkara in Sanskrit, and Sakkara in Prakrit. Thence it can be traced 
through all the Aryan languages, as Schakar in Persian, Sukkar in Arabic, Suicar 
in Assyrian and Phoenician, Saccharum in Latin, Azucar in Spanish and Portuguese, 
Zuchero in Italian, Sucre in French, Zucker in German, etc. Vide The Indian 
Sugar Industry Its Past, Present and Future, 1934, by M. P. Gandhi. 

2 Up to the 17th century, cane-sugar was the only kind known in commerce. 
But in 1747, Margraf demonstrated the existence of about 6 per cent sugar in 
beet-root ; and in 1795, Achard manufactured beet sugar on his own farm in 
Silesia, and presented leaves of refined sugar to Frederick William III of Prussia 
in 1799. 



40 

expansion of sugar-beet cultivation which proved an obstacle to further 
growth of manufacture of cane sugar in India. But even at the end 
of the nineteenth century almost all the villages in India produced a 
sufficient quantity of crude sugar for their wants. With the spread of 
civilisation, however, the people of India gave up their prejudice against 
imported sugar and started consuming it in preference to the indigenous 
sugar, which was more costly. The increasing importation of cheap 
refined sugar from abroad operated to the detriment of the sugar 
manufacturing industry of India. The history of modern sugar may 
be said to begin from 1791*- in which year, the massacre of almost all 
the white population in the black rebellion in Hayati and San Domingo, 
led to the disappearance of the largest producers and exporters. The 
price of sugar rose rapidly ; and the East India Company took advantage 
of this rise to export sugar from India to England, not as producers 
but merely as merchants, buying in open market and exporting. In 
1791 four parcels were exported from Bengal to serve as loaf sugar 
for tea. This sugar was sold at Rs. 88-6-0 to Rs. 150-6-0 per cwt. Even 
then the East India Company lost money on the first parcel and gained 
only 6 per cent on all the four. 

The economic policy of the British Empire now began to influence 
the sugar industry in India. There were two groups of producers, the 
West Indian Merchants and Planters and the East India Company. The 
former seemed to have been more influential because the duties favour- 
ing the West Indian producers were in force for many years. An ad 
valorem duty of 37-16-3 was levied on sugar, being a manufactured 
article. This was much in excess of the duty specifically levied on 
West Indian Sugar. In 1821 there was a modification of the duty and 
in 1836 East and West Indian Sugar entered, England on equal terms. 

Following the emancipation of the slaves, the West Indian Planters 
were faced with the dislocation of business and this change of policy 
naturally evoked a violent protest from that quarter. As a consequence 
of the equalization of duties, considerable capital was invested in India, 
and West Indian and Mauritian planters were attracted here. So much 
so that by 1846 the export of sugar from India to Britain had reached 
60,000 tons. Factories were established at Azizpore, Motihari Balsund, 
Barachakia, Gorakhpore, and Rosa in the West Indian plain, for pro- 
ducing sugar direct from sugarcane. 

Enterprises depending on Gur Refinery were started in Bengal 
and of this, those at Doobah at Cossipore, Albion and Ballicoll seem 
to have been the largest. Doobah, which in one year turned out 7,000 
tons of sugar was believed to be the largest and the best equipped in 
the world. About this time enterprises were started in Madras under 
Messrs. Parry & Company, which still exist and the Aska Factory which 
was started by Messrs. Binny & Company in 1865 developed into the 
first cane-sugar diffusion factory. 

In 1846, under pressure of the Manchester School, British tariff 
policy swung violently towards free trade ; the slave-grown sugar was 
admitted into Great Britain on equal terms with that produced by free 



41 

labour ; and in^a few__y ears the industry in India entirely disappeared^ 1 
It took anotheiTSO years for a revival of interest in the sugar industry 
of India. Modern sugar factories were started in Bihar, from about 
1903. Since then there has been a slow and steady growth of the 
industry, although it must be said that no help was given by the Gov- 
ernment either by a protective tariff or by any other means. The 
imports were increasing considerably from 1,900 onwards and the 
only check that they suffered was in the war years when the import 
was reduced considerably, due to high prices. The imports in 1914- 
18 averaged 5,31,713~tons valued at Rs. 13.48 crores as compared with 
an average of 7,23,915 tons valued at Rs. 12.71 crores during 1910-14. 
But the tendency to expansion of imports began again in 1923-24 and 
reached the highest figure 9,39,600 tons in 1929-30. 

With these preliminary observations, we may now turn to the 
history of the industry during the twentieth century, to the tariff duty 
on the imports of sugar during this period, to the circumstances which 
led the Government to investigate into the possibility of the establish- 
ment of a sugarcane manufacturing industry in the country. 

Import Duty upto March 1932 

Let us see the changes in the import duty on sugar till 31st March 
1932. The importjiuly on sugar in India from 1894-95 to 1915-16 was 
only 5 per cent and was a revenue duty. In March 1916, the duty on 
sugar was increased to 10 per cent. In March 1921, it was again raised 
to 15 per cent, and in March 1922, to 25 per cent. In June 1925, the 
import duty on sugar which was on an ad valorem basis, was converted 
into a specific one and the rate was raised to Rs. 4-8-0 per cwt. This 
remained in force up to February 1930. It was raised to Rs. 6 per 
cwt. in March 1930, and to Rs. 7-4-0 per cwt. in April 1931. by the 
Finance Act, 1931. It was raised to Rs. 9^0 inmi'lsLgggtember 1931, 
by the supplementary budget. Even up to March 1932, me lJufy~\vas 
Rs. 9-1-0 per cwt. of which Rs. 7-4-0 was the protective duty, and 
Re. 1-13-0 constituted the surcharge duty of 25 per cent imposed for 
revenue purposes since September ISSl.^ 

The only change introduced by the Sugar Industry 

~ 



Act 3 1932. passed on 8th April 1932, in the duTy~bn sugar was to transfer 
sugar and sugar candy from the revenue to the protective tariff. These 
duties were, in the first instance, to have effect upto 31st March 1938, 



1 The export of sugar during 1874-75 to 1878-79 was as follows: 

Cwt. Rs. 

(In thousand) 

1874-75 . 498 31,92 

1875-76 . 420 25,39 

1876-77 . 1,093 92,51 

1877-78 . 844 74,58 

1878-79 . 279 20,43 

The sugar exported was of a very inferior quality used mostly in brewing in 
England. 

Vide The History of the Indian Tariff (1924-39) by B. P. Adarkar, being a 
bulletin issued by the office of the Economic Adviser to the Government of India, 
in 1940. 

3 The full text of the Act is given in the Sugar Industry Annuals, 1935, 1936, 
1937, 1938. 



42 

but statutory provision was made for offsetting duties, if at any time 
during the currency of the Act, it was found that foreign sugar was 
being imported at a price likely to render the protective duty ineffective. 



TABLE NO. 



Sugar excluding confectionery 



1. Sugar, crystallised or soft 23 D.S, and 1 

above 

2. Sugar crystallised or soft inferior to X 

23 D.S. but not inferior to 8 D.S. ... | 

3. Sugar below 8 D.S. and sugar-candy ... J 

4. Molasses 

Molasses: 

1. Imported in bulk by tank steamer 

2. Otherwise imported 



Protective duty from April, 1932 



Rs. 910 per cwt. 



Ad valorem 31-1/4 per cent 

Tariff values from 1-1-1934 
Rs. 1-20 per cwt. 
Rs. 1-100 per cwt. 



For duties in subsequent years* see Table No. 1 in Chapter IV 



We may now see the statistics of the quantities of sugar imported 
from 1920-21 to 1939-40. 



TABLE NO. 2 

Imports of sugar in India during the Post-war period. (Sugar oj all kinds, 

excluding molasses) 



Period 


Quantity in Tons 


Value in lakhs of Rupees 


1920-21 to 1922-23 


4,09,000 




1923-24 to 1925-26 


5,82,000 




1926-27 


8,26,900 


1,836 


1927-28 


7,25,800 


1,450 


1928-29 


8,68,800 


1,586 


1929-30 


9,39,600 


1,551 


1930-31 


9,01,200 


1,054 


1931-32 


5,16,100 


601 


1932-33 


3,69,500 


412 


1933-34 


2,61,300 


270 


1934-35 


2,22,900 


211 


1935-36 


2,01,157 


189 


1936-37 


13,979 


g 


1937-38 


12,698 


14 


1938-39 


33,470 


42 


1939-40 


2,46,681 


311 



Table No. 3 on next page shows the value of imports of sugar, 
revenue derived from imports, and the rate of import duty from 1920-21 
to 194041. 



43 

TABLE NO. 3 

Value of Imports of Sugar, Revenue from Imports, and Rate of Import Duty 
on Sugar from 1920-21 to 1942-43 





Value of foreign sugar 


Revenue from 




Year 
April-March 


(net) imported in 
British India in lakhs 


Import Duty 
on Sugar in 


Rate of Import Duty 




of Rupees 


akhs of Rupees 




1920-21 


1,850 


185 


10 per cent Ad valorem. 


1921-22 


2,750 


412 


15 


1922-23 


1,549 


487 


25 , 


1923-24 


1,545 


486 


9^ 
*-' t ft tt 


1924-25 


2,090 


578 


25 , ,, 


1925-26 


1,520 


659 


Rs. 480 per cwt. 


1926-27 


1,534 


744 


> tt 


1927-28 


1,450 


653 


tt t tt 


1928-29 


1,586 


782 


tt > 


1929-30 


1,836 


846 


tt t M 


1930-31 


1,047 


1,081 


Rs, 600 per cwt. 


1931-32 


590 


798 


Rs. 910 per cwt. 








(Rs. 74 being protective, 








Rs. 1-130 being revenue sur- 








charge from 1st September, 1931). 


1932-33 


422 


685 


tt tt tt 


1933-34 


270 


472 


tt tt tt 


1934-35 


210 


381 


Rs. 910 per cwt. 








(Rs. 7120 being protective, 








Rs. 1150 being excise duty 








from 1st April, 1934). 


1935-36 


190 


324 


it tt tt 


1936-37 


23 


51 


tt tt tt 


1937-38 


18 


25 


Rs. 940 per cwt. 








(Rs. 740 being protective, and 








Rs. 200 being equivalent 








excise duty from 28th February, 








1937). 


1938-39 


45 


45 


tt tt tt 


1939-40 


331 


396 


Rs. 8120 per cwt. 








(Rs. 6120 being protective. 








Rs. 200 being equivalent 








excise duty. With effect from 1st 








April, 1939). 


1940-41 


36 


18 


Rs. 9120 per cwt. 






(April to 


(Rs. 6120 being protective, 






January, 1941) 


Rs. 3 00 being equivalent 








excise duty. With effect from 1st 








March, 1940). 


1941-42 


107 


1-9 





1942-43 





5 


Rs. 11 171/5 per cwt. with 








effect from 1st April, 1942 (in- 








cluding 20% surcharge). 



It should be observed here that from 1916 onwards sugar has been 
subjected to an increasingly heavy duty in India ; and further it can 
be seen from Table No. 2 that the increase in the quantity of sugar 
imported from abroad has taken place in spite of a heavy import duty. 
As can be seen from Table No. 3, the import duty on sugar has yielded 
a vast amount of revenue to the Government of India. In 1900-01 it 
yielded only Rs. 53,000 whereas the amount produced in 1929-30 

i Vide Trade Journal, 30th May 1940. 
Burma excluded from 1937-38. 



44 

Rs. 870 lacs. 1 The quantity and value of imports as also the revenue 
show a rapidly declining tendency after 1929. It may be noted that 
the highest value of imports of sugar was Rs. 18 crores in 1929-30. It 
must be observed here, however, that the high duty on the import of 
sugar in India is by no means exceptional, as still higher duties are 
found in various other countries of the world. A statement has been 
given in Table No. 4 below, showing the import duty on sugar in several 
countries of the world. Recently, various countries have increased the 
import duties, i.e., the United Kingdom, many of the Continental Euro- 
pean States, Canada and China, while several others have adopted more 
far-reaching methods of regulation through state monopolies or the 
adoption of quota systems for the regulation of imports, e.g., Soviet 
Union, Australia, Turkey and Latvia. 



TABLE NO. 4 

Import Duties on Sugar in the Principal Countries in the World 
GREAT BRITAIN * 



Exchange Rates 


General Duty 
per cwt. 


Preferential 
Duties uncerti- 
ficated 
per cwt. 


Dominion 
Colonial 
Certificated 
per cwt. 


Excise Duty 
per cwt. 


GREAT BRITAIN 

Sugar of Polarization ex- 
ceeding 99 

Do. 98 not exceeding 99 
Do. 97 98 
Do. 95 96 


s. d. 

14 
(Rs. 7 8 0) 
14 
(Rs. 6 13 9) 
10 8-8 
(Rs. 5 4 2) 
10 2'0 
(Rs. 4 15 9) 


3. d. 

8 2 
(Rs.4 0) 
7 12 
(Rs. 3 7 8) 
6 9'5 
(Rs.3 5 3) 
6 5.2 
(Rs.3 2 5) 


s. d. 

4 8-7 
(Rs.2 5 0) 
3 10'3 
(Rs. 1 14 3) 
3 7'6 
(Rs. 1 12 6) 
3 5*2 
(Rs. 1 10 11) 


s. d. 

4 7 
(Rs. 2 3 11) 
3 71 
(Rs. 1 12 2) 
3 6 
(Rs. 1 11 5) 
3 3'8 
(Rs. 1 10 0) 



Note. Assistance afforded to the farmers is included in the best price paid 
by the factories which was based on sugar contents. The actual rate of assistance 
to the factories is related to a price for raw sugar in the open market of 4s. 6d. 
per cwt. (Table contd.) 



1 The yield from import duty is consistently decreasing, as will be seen from 
the following Table. During 1931-32 it only yielded Rs. 7.97 lacs, in 1933-34, 
Rs. 4.72 lacs, in 1940-41, Rs. 18 lacs, and in 1942-43, Rs. 56,000 only. 



Year 
Apr.-Mar. 


Yield of Rev. 
Rs. 


Year 
Apr.-Mar. 


Yield of Rev. 
Rs. 


Year 
Apr.-Mar. 


Yield of Rev. 
Rs. 


1931-32 
1932-33 
1933-34 
1934-35 


7,97,63,000 
6,84,79,000 
4,72,04,000 
3,81,35,040 


1935-36 
1936-37 
1937-38 
1938-39 


3,24,16,000 
50,52,000 
25,33,000 
45,22,000 


1939-40 
1940-41 
1941-42 
1942-43 


3,96,08,000 
18,24,000 
1,94,000 
56,000 



Burma excluded from 1937-38. 

* Vide International Sugar Journal, May 1939, and subsequent increase in duty 
in Great Britain in September 1939, as a war measure. 



45 

TABLE NO. 4 Contd. 

Import Duties on Sugar in the Principal Countries in the World 

UNITED STATES 





Rates of Duty in cents per Ib. 


Raw 96 polarisation 


Refined 


Full Duty 


Cuban Duty 


Full Duty 


Cuban 


Duty 


UNITED STATES 










4*90 dollars = 1 according to the 
latest federal Legislative Act, 
September, 1934 


1-875 
(Rs. 432) 


90 
(Rs. 203) 


1*9875 
(Rs. 472) 


954 
(Rs. 222) 



Note. Hawaiian sugars have been admitted to the United States free of duty 
since 1876. 

CUBA 





In pesos per 100 Kilos 


Minimum 


Maximum 


4'90 pesos = 1 sterling. Import Duty Raw Sugar... 
Refined Sugar 


I'O 
(Rs. 103) 
0-9375 
(Rs. 15 3) 


2-0 
(Rs. 206) 
1-875 
(Rs. 1 14 6) 



II. Preferential duty : Not existing. 

III. Consumption tax : 1.50 centavos per Spanish pound of refined sugar and 
sugar exceeding 96J degrees (Rs. 3-5-0 per md.) 

GERMANY, HOLLAND, ITALY, RUSSIA 







Original Currency 








Consumption ta- 


Total charge 


Exchange Rates 


Country 


Import Duties 


xes to be paid 
for imported 


imposed by 
duties and 








sugar 


charges 






Raw 


Refined Raw 


Refined 


Raw 


Refined 






Reich 


mark 


Reich 


imark 


Reicl 


imark 


12 18 marks ==1 


Germany 


27 


32 


21 


21 


48 


53 






Rs. 


Rs. 


Rs. 


Rs. 


Rs. 


Rs. 






(11 6) 


(13 1 2) 


(8 9 3) 


(8 9 3) 


(19 9. 9) 


(21 10 5) 






Guilders 


Guilders 


Guilders 


68 guilders = Rs. 100 ... 


Holland 


240 




27 1 33-75 


27 


36-15 






Rs. 




Rs. Rs. 


Rs. 


Rs. 






(151) 




(14 13 1)[ (18 8 4) 


(14 13 1) 


(19 13 5) 






Paper Lire 


Paper Lire 


Paper Lire 


93-02 Lire = 1 


Italy 


110-10 


16515 


364 


380 


474-10 


545-15 






Rs. 


Rs. 


Rs. 


Rs. 


Rs. 


Rs. 






(5 14 3) 


(8 13 4) 


(19 7 6) 


(20 5 3) 


(5 59) 


(29 2 7) 






Ad valorem 


Ad valorem 


Ad valorem 




Russia 


80% j 150% 


85-87% 


83-86% 


... 


... 



Note. There have been several changes in the Import Duties on sugar in various 
countries since the outbreak of the World War in 1939. 



46 

TABLE NO. 4 Contd. 
Import Duties on Sugar in the Principal Countries in the World 

JAPAN 





Rate of 
Import Duty 


Specific Duty 
by Law No. 4 
of 1932 


17 Yen = 1 (a) Under No. 11 Dutch Standard 
(b) Under No. 22 
(c) Other 
(d) Rock candy, sugar, cube, loaf sugar 
and similar sugars 


Yen per 100 kin 

2'50 
3'95 
5'30 

7-40 


Rs. per maund 

133 
1 14 6 
2 8 10 

391 



Appointment of the Indian Sugar Committee m(l929J 

Although a high revenue duty existed on sugar, its effects on the 
sugar manufacturing industry of India were not examined by the Gov- 
ernment before 19|9. The national importance of sugar in the country 
was not paid any attention to until after the Great World War, when 
the desirability of utilising the sugar resources of India were examined 
without any tangible result by the Government of India. 

In February, 1919, Mr. Wynne Sayer of the Indian Agricultural 
Service was appointed to compile relevant data, statistical and otherwise, 
as regards the best method of exploiting the advantages which India 
possessed in respect of sugarcane. Immediately after that in 1920 the 
Governor-General-in-Council appointed the Indian Sugar Committee. 
The resolution of the Government dated 2nd October, 1919, in appoint- 
ing this Committee stated that regarding the desirability of expansion 
of the sugarcane and sugar manufacturing industry, there could be no 
doubt, that the annual consumption had been increasing steadily for 
many years in India no less than elsewhere. It was also recognised 
that the sugarcane was indigenous to India which until very recent years 
stood first of all countries In the world"In"the area under cane. It was 
also notorious that the yield both of cane and raw sugar" per acre and 
the percentage of available sugar extracted from cane were depressingly 
low. While, therefore, India should be in a position, as she was in the 
past, to produce a surplus of sugar for export, she had, in fact, had 
to supplement her own supplies by imports, whose tendency to increase 
had been checked only by the War. The Government were also aware 
of the difficulties in extending the sugar industry, apart from the diffi- 
culties attending the cultivation and manufacture of cane sugar in all 
countries. There were several problems with which the Indian industry 
was confronted and which were peculiar to India. The systems of land 
tenure exhibited great variety and were complicated by the customary 
laws of inheritance and joint ownership. The bulk of the sugar pro- 
duced in India was consumed in its crude state as Gur or Jaggery and 
this fact had also a bearing on the prospects of a successful venture for 
the production of factory sugar in any particular locality. The Govern- 
ment of India felt that the time was opportune for the appointment of 
a representative Committee to investigat^into theproblem in cill its 
bearings and to advise whether a dsdSjiitFl^^ could 



47 

be laid down for the promotion of further development and appointed 
a Committee under the Chairmanship of 3Vh\ J. MacKenna, Agricultural 
Adviser to the Government of India, to examine the various sugarcane 
growing tracts of India with a view to Determine the nature of the 
expansion possible in such tracts either by the development of a factory 
industry or by improvements in the existing indigenous methods ; to 
review .tha-position of India with regard to the world's sugar supply 
and to formulate recommendations for the improvement of the position, 
etc. The Sugar Committee submitted a very favourable and compre- 
hensive report laying great stress on the importance of sugar in the 
national economy of India. 

The next stage in the progress of the Industry opened in 1929 
due to the existence of the remarkably high revenue duties on sugai 
imports. The high import duty on sugar subsisted- for many years, 
but it must be observed that the Government never cojnprehended the 
full significance of the development of sugar-manufacturing industry 
to the agricultural, rural and industrial economy of the country. They 
did evince some interest in this matter spasmodically, but no sustained 
effort w$s made to raise the sugarcane and the sugar industry to their 
legitimate place in the national economy. The Imperial Council of 
Agricultural Research, however, deserves credit for persistently draw- 
ing the attention of the Government to the feasibility and necessity of 
the establishment of this industry in the country. 

Imperial Council of Agricultural Research 

The establishment of the Imperial Council of Agricultural Research 
may well be regarded as an epoch-making event in the history of agri- 
cultural improvement in India. The inaugural meeting of the Council 
was held in June, 1929, and at this meeting representatives of the various 
provinces reported the progress made by the provincial governments 
in the preparation of a scheme for assisting the Sugar Committee. In 
this Committee the Council has a qualified and a representative body to 
which are referred jill questions affecting the welf ar^qf_thg^jugarcane 
industry .in .the caiiniryV The SiigaF Committee 1 met generally once a 
year, and has had fourteen sittings till December, 1941. This Com- 
mittee received a general mandate from the Council to examine and 
report on measures, necessary for the development of the sugarcane 
industry in India. One of the recommendations of this Committee, 
which met for the first time in October, 1929, was that the Government 
should be asked to institute a Tariff Board enquiry into the question 
whether protection should be given to the Indian sugarcane industry. 
This recommendation was accepted by the Council and its representa- 
tions were successful in inducing the Government to order a Tariff 



1 This Committee consists of 12 members, and includes representatives of manu- 
facturers, agriculturists, and of Government. The Committee has also co-opted 
about 10 members to maintain its representative character. In 1933, the Committee 
co-opted two members representing the Indian Sugar Mills Association of Calcutta. 
A ( few more additional members have been taken since 1938. Its present strength 
is 30. 

NOTE : This Committee was dissolved in 1944, owing to the appointment of the 
Indian Central Sugarcane Committee, (consisting of 44 members) in 1944. For 
details, see M. P. Gandhi's Indian Sugar Industry Annual for 1943, page Ixiv. 



48 

s Board enquiry into the question whether protection was required, and 
if so in what measure for the Sugar Industry in India. This enquiry 
was referred to the Tariff Board in May, 1930. In making this applica- 
tion, the Imperial Council of Agricultural Research had taken into con- 
sideration the fact that the three provincial governments, which were 
widely interested in the sugar industry, viz., the United Provinces, the 
Punjab, and Bihar and Orissa, (representing 80 per cent of the sugar- 
cane area in British India) together with the Government of Bombay, 
had asked for a Tariff Board enquiry. 1 

The Sugar Committee of the Imperial Council recognised in 1929 
the fact that a steady increase in the import of White Sugar had occurred 
in spite of the existence of a certain measure of protection which had 
been afforded by the specific duty on Sugar. Despite an increase in 
the cane area, and the yield per acre in some tracts and the amount 
of the White Sygar manufactured in the country, India was very little 
nearer to being self-supporting in 1929 in regard to sugar produced, 
than in 1919 when the Indian Sugar Committee submitted its report. 
The magnitude of the issue will be clear from the fact that the area 
under sugarcane in India in 1929 was 2.3/4 million acres pr about 
25 per cent of the total area under sugarcane in the world. The value 
of sugarcane products produced in India in 1929, on the basis of the 
prices prevalent in that year was approximately Rs. 48 crores, while in 
addition, about Rs. 21 crores were paid annually for imported sugar. 

The Sugar Committee also considered that the time had come when 
the Import Duty should definitely be made a protective duty instead 
of a revenue duty, and further that definite protection to the sugarcane 

Eying industry should be given for a period of 10 years or so in 
first instance. They also felt that Indian agriculture was passing 
ugh a period of reconstruction and the time was opportune for the 
jlopment of the Indian sugarcane industry. It was also pointed 
out that a good deal of the preliminary work, necessary for placing the 
Indian Sugar industry on a sound foundation, had been carried out. As 
a result of the work of the Coimbatore Cane-Breeding Station, the 
Shahjahanpur Sugar Research Station, and the Sugar Bureau, Pusa, 
seedling canes of real merit had been produced, and distributed and 
were being grown on considerably wide areas. 

Within two years of the great depression, the stage was thus set 
for the grant of protection to the sugar industry and for the achieve- 
ment of a rate of growth unparalleled in the history of Indian industry. 
The two forces which were working in this direction are firstly, the 
increase, under phenomenal financial pressure, of the import duties on 
sugar, and secondly, the notable evolution of improved varieties of 
cane by the Coimbatore Research Station. Thus did History shove 
the file of " Protection to Sugar " on to the table of the Hon'ble Com- 
merce Member of the Government of India. 



Volume of written evidence before Tariff Board, 1931. 



CHAPTER V 

HISTORY OF SUGAR INDUSTRY IN POST-PROTECTION 
PERIOD (1932 ONWARDS) 



ENOUGH has been said in the last chapter to show that by the time the 
question of protection to sugar was referred to the Tariff Board, the 
revenue duties had grown so high that the question had almost a faintly 
academic tinge. But the formal grant of substantive protection after 
an expert enquiry into the extent of protection needed is a matter of 
the greatestjmpor.t-tQ ajiascent industry ; and the earlier developments 
can only be reviewed as^caTculated to weaken and break down the usual 
resistance of the 1 Government of India to proposals for protection. 

The First Tariff Board Enquiry, 1930 

It is only to be expected, therefore, that when the Tariff Board sub- 
mitted its report in 1931, its recommendations were accepted by the 
Government, though, as usual, with certain alterations. An important 
point of dissent was the guarantee of protection to the industry for a 
period of fifteen years. The Tariff Board recommended that the industry 
was to enjoy protection for a period of fifteen years from 1932, and 
thaf in the first seven years, the duty on imported sugar was to be Rs. 7-4 
per cwt. and for the^i^inainliailpiriod Rs. 6-4 per_cwt. But tHe~Sugai 
Industry (Protection) Act, 1932, provided for a protective duty at the 
rate of Rs. 7-4 per cwt. on all classes of sugar till March, 1938, -when 
a further enquiry was to be made to ascertain whether the protection 
to the industry during the period from April, 1938, to March, 1946, 
should be continued at the same level or to a greater or lesser extent. 
The Governor-General-in-Council was also empowered to increase the 
duty imposed by the Act if he was satisfied fcfter such an enquiry that 
sugar was being imported into British India at a price which was likely 
to nullify the benefits intended to be conferred by the protective duties. 

The Table l on next page indicates the numerous changes that took 
place in the tariff on sugar since the- grant of protection in 1932 upto 
1943 : 

Recommendations 

The recommendation of the Tariff Board to levy a duty of Rs. 7-4 
per cwt. was only of a formal character, and the revenue duty was 
formally declared a protective one without any change in the level. 
The levy of the surcharge of 25 per cent according to the supplementary 
budget of September, 1931, gave considerable impetus to the development 
of the industry. 

1 Also vide Table No. 17, M. P. Gandhi's Indian Sugar Industry Annual, 1941 ; 
for the duties in the period before 1932, vide M, P. Gandhi's Indian Sugar Industry 
Its Past, Present and Future, 1934, p. 350. 

4 



50 



TABLE NO. 1 
Changes in Duty (Import and Excise) on Sugar from 1932 to 1942. 



Year 


Rate of Protective 
Import Duty 
Per cwt. 


Additional 
Revenue Duty 
or Excise Duty 


Total Import Duty 
Per cwt. 




Rs. a. p. 


Rs a. p. 


Rs. a. p. 


1932-33 (31st March) 
1933-34 


740 
740 


1 13 
1 13 (Equivalent 
Excise 
Duty) 


910 
910 


1934-35 (27th Febr.) 
1935-36 
1936-37 


7 12 (0-8-0 be- 
7 12 ing addi- 
7 12 tional mar- 
gin) 


150 
150 
150 


910 
910 
910 


1937-38 (31st March) 
1938-39 


740 
740 


200 
200 


940 
940 


1939-40 (29th March) 


6 12 


200 


8 12 


1940-41 (31st March) 


6 12 


300 


9 12 


1941-42 (1st April) 


8 1 7-1/5 (includ- 
ing 20% 
surcharge) 


300 


11 1 71/5 (Roughly 
equivalent 
to Rs. 7-1-9 
per maund) 



The duties were applied to sugars of all kinds and sugarcandy 
out any gradation (excluding confectionery) . The difference in the 
amount of the protective import duty in the years 1934-35 to 1936-37 is 
due to the levy of the emergency surcharge of eight annas ; and had 
this surcharge not been in force, the industry would have claimed addi- 
tional protection in 1937. According to a recommendation of the Tariff 
Board, the Government were empowered to levy an additional duty 
of eight annas per maund if the ex-duty price of Java sugar imported 
in Calcutta fell below Rs. 4 per maund. (Sugarcandy was separated for 
purposes of levy of duty from sugar from February, 1934, and importers 
had to pay a revenue duty of Rs. 10-8 per cwt. on sugarcandy) . 

The rapid progress of the industry behind the Tariff wall caused a 
decline in imports and the revenue from this source^cterftned progres- 
sively from Rs. 10 crores in 1930-31 to Rs. 25 lakhs in 1937-38, (vide 
" Gandhi's Indian Sugar Industry Annual, 1941 ", Table 42) . l Govern- 
ment, therefore, wanted to recover to a certain extent a portion of the 
lost revenue from this source. Legislation for the fixation of minimum 
price of cane was also considered necessary. 

jT^Y 

Accordingly, an excise duty of Re. 1-5 per cwt. was levied in 1934. 
The amount of the excise duty was determined according to the follow- 
ing method. It was not considered prudent that the whole of the reve- 
nue surcharge of Re. 1-13 should be levied as excise duty. After allow- 
ing for the additional protection of eight annas, the figure of Re. 1-5 
was reached. There was naturally considerable opposition to the 
imposition of the excise duty on a nascent industry when protection 



1 In 1942-43, the revenue was only Rs. 56,000. 



51 

was in force. The Government pointed out that the duty was only 
intended for revenue purposes and that this indirect tax could be passed 
on to the consumer. The countervailing duty of Re. 1-5 which left the 
total import duty at the same figure of Rs. 9-1 per cwt, they said, did 
not affect the measure of protection. Before the industry could settle 
down and adjust itself to the new tax on production, there was an 
increase in the excise duty to Rs. 2 per cwt. in March -1937, with the 
result that there was a considerable dislocation. With large over- 
production and a high level of duty, the industry was almost on the 
verge of collapse. This crisis was met by concerted action of members 
of the industry and the support lent by the Provincial governments of 
U. P. and Bihar. 

The total import duty at the end of the first period of seven years 
of protection was thus Rs. 9-4 per cwt. 

The Second Tariff Board Enquiry, 1937 

As originally proposed by the Government, a Tariff Board was 
appointed in March 1937 to go into the question of protection for the 
remaining eight years and review the progress achieved in the first seven 
years. The Board completed its enquiry in December 1937 and sub- 
mitted a report, which however did not see the light of day before 
March, 1939. It was decided that the duty then existing should be 
continued till March 31, 1939. Accordingly, the Sugar Industry 
(Temporary Extension) Act, 1938, was passed. 

The second Tariff Board based their recommendation of a duty 
of Rs. 7-4 on the basis of the cost of production of sugar of Rs. 6-13-10 
per maund plus 9 annas per maund for freight and 5 annas per maund 
for the difference in quality. As the ex-duty price of Java sugar was 
Rs. 2-7 per maund, the difference between the two prices, viz. Rs. 5-5 
per maund or Rs. 7-4 per cwt. was recommended as the protective duty 
for the rest of the period of protection. 

The main recommendations of this Tariff Board were as follows : 

The fair selling price of Indian sugar was Rs. 6-13-10 per maund, 
to which was added 9 annas per maund for freight and 5 annas for 
quality, making roughly Rs. 7-12 per maund. Java sugar could be 
landed at Rs. 2-7 per maund, and the protection required was, therefore, 
Rs. 5-5 per maund or Rs. 7-4 per cwt. This amount of protection was 
to be granted for a period of eight years. 

Permission should be accorded for the manufacture of power 
alcohol on the understanding that it was to bear the same rate of duty 
as petrol. / 

No special protection was considered necessary for the " guf " 
industry, apart from the protection granted to sugar. 

Research work on the agricultural side was considered inadequate, 
and an allotment of 3 annas per cwt. from the excise duty was recom- 
mended to be made for central research and assistance to provincial 
agricultural departments. 

A marketing survey of the sugar industry was also recommended 
to be undertaken. (This was completed in 1942, and a report was 
published in 1943.) 



52 

Government's Criticism of the Tariff Board's Recommendations 

The Resolution 1 published by the Government of India along with 
the Tariff Board report pointed out that the " figures proposed by the 
Board for certain items, notably manufacturing costs and profits and 
for adjustment of the difference in quality are susceptible of reduction. 
They also considered it questionable the assumption that Java sugar, 
the fair selling price of which so vitally affects the measure of protec- 
tion, could be sold ex-duty at as low a figure as Rs. 2-7 per maund. 
The Board's figure was based on special and purely temporary condi- 
tions in Java and is no longer accurate." The inclusion of a minimum 
price of Rs. 2-7 per maund for Java sugar by the Board, as the Gov- 
ernment of India points out, was not based on special and purely tem- 
porary conditions in Java. At the time the enquiry was being made, 
the quotation for Java sugar in Calcutta was Rs. 3-15-2 (26th August, 
1937) . But the Board pointed out that with the cost of production as 
low as Rs. 2-7 including freight, interest on capital and taking into 
account the progress of the industry in Java since the last enquiry, it 
was quite likely that, for the duration of the remaining eight years of 
protection, Java sugar offered keen competition. 

The Government's comments on the Tariff Board's observation on 
the effects of the excise duty were not quite justified. The Tariff Board 
pointed out : " The additional excise duty levied in 1937 has had un- 
fortunate consequences for the cane grower and manufacturer. At the 
prevailing level of prices, the present rate of excise duty is out of pro- 
portion. It cannot be denied that the excise duty had a disorganising 
effect on the industry in 1937 and that the incidence of the duty was 
mostly on the cane-grower and manufacturer. To deny that the incid- 
ence of the duty was heavy on the cane-grower and the manufacturer on 
account of the unduly low level of prices consequent on overproduction 
does not improve the position." 

The Effects of the Excise Duty 

The excise duty was levied, according to the Government, to check 
over-production, but it only added to the confusion in the industry ; 
and but for the general improvement in world markets in subsequent 
years, it would have been very difficult for the industry to get over the 
shock. The contention that " in the absence of foreign competition it 
is the natural inevitable tendency for indirect taxation to be borne 
'ultimately by the consumer" cannot hold good. It is not in every 
case that it is possible to pass on the duty to the consumer. It depends 
on the nature of the demand for the article on which the duty is levied. 
If, by reason of the increase in the price to the extent of the duty, there 
is a contraction in demand, the incidence of the duty is both on the 
consumer and the producer. 

The Government were extremely touchy regarding the observations 
of the Board about the excise duty which was levied purely for revenue 



the text of the Resolution of the Government of India No. 127-TC2/387 
dated 30th March, 1939, (Vide Gandhi's Sugar Industry Annual, 1939 and 1940). 



53 

purposes, and which was, therefore, outside the scope of the enquiry. 
If the excise duty had the effect of nullifying to a certain degree the 
measure of protection afforded to the industry, it cannot be denied that 
the Board was justified in examining the effect of the excise duty on 
the progress of the industry. To levy a high level of duty on internal 
production at a time when the industry was in a formative stage and 
the demand for sugar had to be stimulated, appeared to be tantamount 
to watering down the policy of protection, if not a complete negation 
thereof. 

Moreover, in para 305 of the Fiscal Commission's Report, it is 
pointed out that one of the Board's ordinary functions is " to consider the 
effects of the excise duties on Indian industries." The Tariff Board 
was, therefore, quite correct in including within the scope of its enquiry 
a consideration of the effect of the excise duty on the growth of the 
industry and was justified in its observation that " the additional excise 
duty levied in 1937 had unfortunate consequences for the grower and 
manufacturer." 

The Government did not however agree with the findings of the 
Tariff Board and pointed out that a very low price for Java sugar had 
been assumed and that conditions in the world sugar market had con- 
siderably improved. At the same time, there were developments within 
the industry which, according to Government, called for a lower level 
of protection. 

The figure of Rs. 6-12 per cwt, eight annas below the figure recom- 
mended by the Tariff Board, was therefore fixed from 1st April 1939. 
With the outbreak of the World War in September, 1939, and the need 
for more revenue, the excise duty was increased to Rs. 3 per cwt. from 
1st March, 1940, and the total import duty therefore came to Rs. 9-12 
per cwt. A further increase was effected in the import duty from 1st 
April, 1942, as a result of the imposition of a general surcharge of 20 
per cent on all imports (with certain exceptions), and the total duty 
on sugar was thus Rs. 11-1-7.1/5 per cwt. At the time when it was decided 
by Government that there should be a reduction in the level of the 
protective duty from Rs. 7-4 to Rs. 6-12 per cwt. they also announced that 
there would be another enquiry before the end of 1940. The Sugar 
Industry (Protection) Act, 1939, gave effect to tjpis decision. But as a 
result of the outbreak of war in 1939, it was announced by the Govern- 
ment in September 1940 that no further enquiry was to be undertaken 
in the abnormal conditions. This duty was continued at the existing 
level, first up to 31st March, 1940, and then up to 31st March, 1942. In 
April, 1942, the duty was further increased by 20 per cent and was 
fixed at Rs. 11-1-7.1/5 per cwt. up to 31st March, 1943. It is certain 
that no Tariff Board enquiry will be made in the industry before 1946. 

To gauge the progress of the industry after 1932, one has only to 
look at the following Table (Table No. 2) showing value of sugar 
machinery imported during the eight years ended 1939-40. Publication 
of statistics of value of imports of sugar machinery after 1930-40 is 
stopped by the Government of India. 



54 

TABLE NO. 2 

Total Value of Sugar Machinery Imported in British India 
(In thousands of Rupees) 



Source 


1932-33 


1933-34 


1934-35 


1935-36 


1936-37 


1937-38 


1938-39 


1939-40 


U. K. 
Other countries ... 


Rs. 

91,48 
61,63 


Rs. 

1,95,87 
1,40,51 


Rs. 

73,60 
31,84 


Rs. 

49,70 
16,00 


Rs. 

68,49 
26,66 


Rs. 

43,15 
26.21 


Rs. 

30,16 
31,20 


Rs. 


Total ... 


1,53,11 


3,36,38 


1,05,45 


65,70 


95,16 


69,37 


61,36 


50,84 



The above Table is an indication of the pace at which the Sugar 
Industry grew after the requisite stimulus of protection was given by 
the Government in 1932. More direct evidence is furnished by the 
following Table (Table No. 3) which gives not only the number of 
factories and the volume of production, but also the imports of sugar 
from year to year from 1931-32 to 1941-42 : 



TABLE NO. 3 

Number of Cane Factories working in India, including States, and Production of 

Sugar from Cane Factories, Gur Refineries, Khandsari, Net Import of Sugar 

in British India and Import in Kathiawar Ports during the last 

11 years, and estimates for 1943-44 















Net Im- 




Year 
(Nov.- 
Oct.) 


No. of 
cane fac- 
tories 
working 


Cane fac- 
tory pro- 
duction 
(Nov.- 


Sugar 
Refined 1 
from Gur 
(January- 


Khandsari 
(Conjec- 
tural esti- 
mates 


Total Pro- 
duction of 
sugar in 
India 


ports (Ex- 
cluding 
Re-ex- 
ports) of 


Imports of 
sugar in 
Kathiawar 
Ports 




in India 


Oct.) 


December) 


(Nov.-Oct.) 


(Nov.-Oct.) 


sugar in 
Br. India 


(Nov.-Oct.) 














(Nov.-Oct.) 








Tons 


Tons Tons 


Tons 


Tons 


Tons 


1931-32 


32 


158,781 


69,539 


250,000 


478,120 


438,797 


95,678 


1932-33 


57 


290,177 


80,106 


275,000 


645,383 


321,081 


68,649 


1933-34 


112 


453,965 


61,094 


200,000 


715,059 


233,366 


87,094 


1934-35 


130 


578,115 


39,103 


150,000 


767,218 


197,775 


113,364 


1935-36 


137 


932,100 


50,067 


125,000 1,107,167 


86,962 


45,218 


1936-37 4 


137 


1,111,400 


19,500 


100,000 


1,230,900 


11,160 6 


12,870 


1937-38 


136 


930,700 


16,600 


125,000 


1,072,300 


9,410 


12,284 


1938-39 


139 


650,800 


14,200 


100,000 


765,000 


254,400 


76,819 


1939-40 


145 


1,241,700 


31,700 


100,000 


1,373,500 


35,2603 


28,856 


1940-41 


148 


1,095,400 


48,500 


125,000 


1,268,900 


(11 months) 
5,000 


(5 months) 6 


1941-42 


150 


778,100 


13,800 


150,000 


941,900 






1942-43 


150 


1,070,000 


10,000 


214,000 


1,294,700 


... 




1943-44? 


152 


1,260.000 


10.000 


100,000 


1,370,000 







* Figures of gur production for calendar year 1932 are added to figures for 
1931-32, and so on. 

2 Our estimates. 

* Figures of gross imports (not net) available; Statistics discontinued. 

- actories in Burma > an <* production of sugar in Burma, are excluded from 
1936-37 season. 

5 Imports in Burma excluded from April, 1937 onwards. 

6 Statistics discontinued from March, 1940. 



55 

With the beginning of this decade then, India may be safely 
regarded as having achieved complete self-sufficiency in regard to sugar. 
Indeed, the stage was reached when the action of the Government in 
making India a party to the International Sugar Agreement was bitterly 
resented as imposing an unmerited handicap on the expansion of the 
Indian Sugar Industry. The nightmare of shortage of sugar which the 
last war raised was dispelled just when the approach of the present war 
should have made it more harrowing than ever to the public at large. 
That the industry was sometimes troubled by the nightmare of over- 
production and large carry-overs is, however, a different matter. What 
is important is that the aim of utilising India's resources to develop an 
indigenous sugar industry and to render the country self-sufficient in 
this respect, which was formulated during the first World War, was 
realised, if somewhat belatedly. That all this was done within less than 
a decade may not be a matter of unmixed satisfaction to the Indian 
people considering that the tariff walls were raised to insurmountable 
heights and the consumer was made to pay prices far higher than the 
imported product. But the satisfaction that so important a provision 
for war time was made, as it were, at the last moment, will not be 
toned down by considerations of cost which lose much of their force, 
even if they are not irrelevant, in a war economy. For good or other- 
wise, India now possesses a sugar industry which is the second largest 
industry in the country. India, it should be remembered, is the biggest 
producer of sugar (including Gur) in the world since 1931. (Vide 
Gandhi's Sugar Annual, 1941, Table No. 7). The industry has wide-, 
spread ramifications, in agriculture, in government and in the politics 
of important political parties. It has, doubtless, its problems, some of 
them as thorny as one could imagine. Nevertheless, the stage has been 
reached when the familiar" slogan of ^Mend or End " has to be dropped 
once and for all. For the " end " of the sugar industry on the ground 
that dubious comparisons of costs seem to suggest such a course is out- 
side the pale of serious discussion. Once the sugarcane industry forms 
so large a part of the fabric of our national economy, there are only 
three tasks to which practical statesmanship has to turn : (1) To 
appraise past experience, in respect of costs and yields so as to give 
restraint and guidance to similar aspirations in the future. (And this 
is where the apparatus of economic reasoning suggested by free trade 
theories is most useful, provided it is judiciously handled.) (2) To 
investigate the technical problems of the working of the industry in its 
narrow sense, and in a larger sense, of its functioning as a part of our 
economic machinery, and (3) To examine and solve from time to time 
the questions of policy which arise from the position and prospects of 
the industry. To these we may now turn our attention. 



CHAPTER VI 
THE COSTS OF PROTECTION TO SUGAR INDUSTRY 



WE have so far dealt with the growth of the sugar industry since the 
grant of substantive protection in 1932 and the preceding changes in 
the revenue duty which made of protection more or less a jait accompli 
when the Tariff Board was instructed to enquire into it. If the rate 
of increase in revenue duties was particularly high and the tariff walls 
well nigh insuperable, the growth of the sugar industry, too, exceeded 
all expectations. There are thus special features of the sugar industry 
for which adequate explanation can be sought only in the broader his- 
torical trends of recent times alike in national and world economy. 

These trends were delineated and examined in the earlier chapters 
of this thesis, and the conclusion emerged that in the conditions of 
national and world economy, in the depression and post-depression 
periods, the old controversy between free traders and protectionists had 
lost much of its reality, that while free trade was tending to be more 
and more a forlorn cry, protectionism was gravitating towards more 
complete forms of industrial regulation and that, in these circumstances, 
the question from the practical point of view was how to derive the 
utmost benefit from an established large-scale industry. It was insisted, 
however, that the general apparatus of reasoning invented by equili- 
brium economies should be employed to make sure that no serious 
blunders have been committed, or persisted in, in the distribution of 
scarce means among competing ends. It is to this task of appraising 
the costs and yields of protection to sugar that attention must now be 
turned. But it is well to remember while on this enquiry firstly, that 
in the economic conditions of modern times, the absence of free prices 
serves to complicate the task and secondly, that any enquiry into costs 
of protection is of necessity limited to a comparison of prices of the 
indigenous product and of the imported product and that it cannot take 
into account all the potentialities which the new industry may be deemed 
to have opened before the nation. To a large extent, the free trader's 
test is the more or less crude test of results. 

It is idle to cavil at such an attitude. For an enquiry into the costs 
of protection has not necessarily to be carried out at a certain point of 
time ; and the actual achievements up to that time alone can be taken 
into account. While the protectionist may reasonably argue that the 
enquiry is premature and therefore unjustified, and that the industry 
must have more time to prove its worth, he cannot calculate the results 
of protection on a purely imaginary basis. It is in this respect that the 
advocates of industrial regulation, as distinct from mere protection, are 
on surer ground. 

In the case of the sugar industry, the Tariff Board of 1931 may be 
said to have taken a position midway between the protectionists of the 
old school and the regulationists of modern times. While the Board 
satisfied itself that at the end of the period of protection which it recom- 



57 

mended "the cost of manufacturing white sugar in India should not 
exceed that in any other country except Cuba and Java " 1 it also 
envisaged a general diffusion of the benefits of protection to agriculture 
and the realisation of a number of indirect benefits to the national 
economy. Inasmuch as the date of the second tariff enquiry was 
hastened by action of the Government by as much as eight years, it 
might well be contended that an enquiry into costs of protection within 
six years of the grant of protection is premature and can neither be fair 
to the industry nor light the path of its future. Such a view can only 
serve to emphasise the importance of bearing these considerations in 
mind while enquiring into the costs of protection. It is also useful in 
stressing the difference between results so far achieved and the poten- 
tialities that still remain. 

After all, little is gained by shirking, with whatever justification or 
under whatever pretext, the acid test of costs. And all that can be 
urged from the point of view of the protectionist is that the cost to the 
consumer should not be confused with the cost to the nation. For it 
is just possible in certain cases that, while the consumer pays more for 
a protected article than he might have had to pay for the imported 
product, the nation as a whole may be a gainer from the establishment 
of the protected industry. In the latter event, criticism of protection 
on the ground of cost to the consumer would prove to be misdirected, as 
it would only be a criticism of the system of distribution. And it would 
also serve to illustrate the fact that what may appear uneconomic accord- 
ing to the criterion of " costs to the consumer " will be seen from the 
wider standpoint of the national economy as a whole to be fully justified. 
In fact, the price paid by the consumer is the narrowest view to take 
of the results of protection ; and by itself is invalid as a test of the 
economic character of the protection granted to the industry. For the 
price may, for various reasons, be a distortion of the cost of production, 
actually incurred by the industry. Taxes and other factors originating 
in State action, defective marketing and other circumstances tend to 
render prices as distinct from costs uneconomic. Even when prices 
bear a reasonable relation to costs, they have to be compared to the 
price which the consumer would have been obliged to pay, had there 
been no national industry. The reasoning has thus a hypothetical and 
even speculative character and opens the door to a flood of uncertainties 
that weaken the claims of this comparison to ready acceptance on all 
hands. 

It will be seen from all this firstly, that the advocate of protection 
has a number of preliminary objections to the case being taken up at 
all at any rate, by the tribunal of the moment, that he puts forth his 
arguments without prejudice to certain crucial contentions of his and 
that he is all the time stressing the importance of the supreme considera- 
tion of national, as distinct from consumer or other sectional, interest. 
Here, in this chapter, it is the arguments in the case, for and against, 
that are the preliminary concern. The various criteria may be set down, 
however, for convenience in the ascending order of importance : (1) 
The price paid by the consumer. (2) The cost of production compared 



i Tariff Board Report 1931, p. 37. 



58 

to costs in producing countries which are similarly placed. (3) The 
benefits flowing from protection, no matter by what channels, to the 
nation at large together with the privations. (4) Further potentialities 
of the industry. Costs of protection in the widest sense of the term 
can be assessed only if all these different points are adequately 
considered. 

Taking first the question of the price paid by the consumer, and 
keeping in mind the fact that it has only a bearing on, and cannot be 
conclusive of, the case for or against protection, we may begin by noting 
here the considered finding of the Tariff Board, 1937, that " the con- 
sumer has every reason to be satisfied with the policy of protection. 
He is paying less for sugar than he paid before the advent of protection. 
The price of sugar in India is today cheaper than in any country 
in the world except Cuba, Java and Brazil." 1 

Protectionists are prone to exaggerate the value, for their purposes, 
of this statement. For in these terms, the Board's defence of protection 
can hardly carry conviction to the ardent free-trader. For, according to 
him, the consumer could feel satisfied only when he obtains the goods 
at the lowest price which is economically possible. Even the certainty 
of supplies during war time which must weigh with the average con- 
sumer as a human individual and not a mere abstraction of the 
economist is to the free-trader an altogether irrelevant consideration. 
To say that he is paying less for sugar than before the advent of protec- 
tion is, therefore, no proof of the contention. Nor does it suffice that 
the price of sugar in India is today cheaper than in any country except 
Cuba, Java and Brazil. For it is precisely from the first two the third 
is not an exporter of sugar that the free trader would have the Indian 
consumer meet his needs of sugar. And the admission that the costs 
are higher than the costs in Cuba and Java may be tantamount to 
giving up the whole case for protection. 

The Tariff Board's remark, then, is no tower of strength to the 
protectionist, so far as this particular issue of cost to the consumer is 
concerned. It would be more effective, at any rate, more to the point, 
if the protectionist emphasises that the price of sugar in India ought to 
be compared with what the price of sugar might be in the absence of 
sugar production in India. It would then be open to him to draw atten- 
tion to the predominantly hypothetical character of such comparisons 
and to insist that nothing can be proved by speculation on the possible 
level of prices of imported sugar. In ordinary economic discussions, 
attempts are, no doubt, made to exhaust all possibilities by taking into 
account every recognisable factor of change, while making the requisite 
calculations. It is easy, enough to add the revenue duty and railway 
freight to the c.i.f. price of imported sugar. The actual ex-factory price 
of Java or Cuba sugar at a given time is also easily computed. But he 
would be a bold man who would be dogmatic about the costs and prices 
of foreign sugar in certain hypothetical conditions, e.g. in the absence 
of a large-scale industry in India, and in the decay of the subsidised beet 
sugar industry in some, if not all, of the various countries of Europe. 
Who can say what allowance should be made for the increase in the 

1 Vide Tariff Board Report, 1937, Summary, p. 167. 



59 

bargaining strength of the producing countries consequent on the 
decrease in competition and the increase in demand ? The diffusion of 
sugar production in the world reduced Cuba and Java to a desperate 
plight and led in turn to the phenomenon of dumping ; and nothing is 
so characteristic of dumping as the lack of any relation between costs 
and prices. In the same way, the rise of a quasi-monopolistic position 
for Cuba and Java may bring about a similar absence of relation between 
costs and prices, and in the direction of unconscionably high prices 
instead of unconscionably low prices as in the case of dumping. 

Apart from the subjective factor of the attitude and policy of the 
manufacturers, there is the objective fact that, as the scope for economy 
in production is extremely limited in the case of Cuba and Java, they 
cannot meet the increase in demand without subjecting themselves to 
the law of diminishing returns. 

Bearing in mind these important considerations, we may take note 
of the more important of the facts relevant to the question of price to 
the consumer. The following Table gives the retail prices of sugar in 
the principal countries of the world in 1938 : 



TABLE NO. I 

Retail Prices of Sugar (1938) 
(From International Sugar Journal, April 1939, p. 160.) 



Country 



| Price in Rs. per maund converted 
at the then exchange rate 

1 Rs. a. p. 



Argentina 








12 12 7 


Brazil 








6 14 8 


Chile 








994 


Cuba 








7 13 5 


Egypt 








12 3 3 


South Africa 








i 14 15 8 


Australia 








14 13 2 


Dutch East Indies 








6 12 7 


Philippines 








672 


China 








12 10 5 


Japan 








12 12 11 


Czechoslovakia 








1 21 3 3 


France 








16 6 


Germany 








30 9 8 


Italy 








35 3 6 


Netherlands 








27 6 6 


Norway 








16 6 


Poland 








19 2 


Switzerland 








9 13 3 


United Kingdom 
Canada 








10 7 4 
13 3 4 


U.S.A. 








12 1 5 


India 








10 4 



The countries mentioned in the above Table fall into three natural 
divisions : (1) those which produce for internal consumption, (2) those 
which produce mainly for exports, and (3) those which maintain pro- 
tected industries at home and have to supplement the internal produc- 
tion with imports from abroad. Prices in countries belonging to the 



60 

last category obviously do not lend strength to the anti-protectionist 
case as they are twice as high or even more than those in India. If 
we may distinguish the United Kingdom and the Dominions from the 
Continental beet sugar countries, even they, it will be seen, cannot claim 
to have obtained their requirements of sugar, at prices which compare 
favourably with the price to the consumer in Inida. The cane sugar 
exporting countries alone remain for comparison with Indian prices. 
Here it should not be forgotten that the marketing policy is not in favour 
of uniformly economic prices in all the foreign markets. Lower prices 
in one market are offset by higher prices in protected markets in certain 
other countries. The consumer can have no grouse against protection 
to sugar only on the ground that his counterpart in some other country 
is able to get sugar at a lower price. That fact by itself can prove 
nothing. The question is whether in the absence of a protected sugar 
industry in India, the course of events would have led to the satisfac- 
tion of the Indian demand at substantially lower prices. That, it has 
been repeatedly emphasised, is an unduly hypothetical or speculative 
question. Even the most cautious and circumspect reasoning would 
have to be wound up with a distressingly large dose of dogmatism. For 
purposes of national policy which takes account of consumer interest 
only in a broad view, it should suffice, firstly, that the Indian price is 
less than the price in all but the more important exporting countries ; 
secondly, that the two countries which produce sugar more cheaply than 
India cannot be depended upon in the absence of an Indian sugar 
industry, either to retain in full the differential advantages in produc- 
tion which they now have or to pass on their benefits substantially to 
the Indian consumer ; and thirdly, that the consumer pays less for his 
sugar than before the advent of protection. That is as good a case for 
a protective policy as one could wish. 

Hitherto the results of protection to sugar have been considered 
from the standpoint of the price to the consumer. The question of cost 
of production is clearly distinguishable from price to the consumer, not 
only because prices and costs are not identical but also because this 
question opens up a vista of other considerations as well. Here, again, 
a mere comparison of the costs of production in India and in some other 
sugar-producing country, or between the Indian sugar industry today 
and some time ago will hardly suffice for the purpose of determining 
whether protection to the sugar industry is justified or not. For the 
cost of producing any particular commodity does not depend solely on 
the producers of that commodity or on their efficiency. Apart from 
the efficiency of the labour employed in the industry which can improve 
only with time, there is the cost of the raw material and the facility 
for economies afforded by industries which can utilise its by-products. 
The cost of the raw material, too, is not wholly a function of the effi- 
ciency of its producers. It reflects also the relative bargaining strength 
of the buyer and the seller. And when the seller has behind him the 
sympathy and support of the State, the price paid for the raw material 
may tend to distort the picture of changes in costs of production of the 
finished product. In the case of the sugar industry, the fixation of 
minimum prices for sugar disables the manufacturer to a great extent 
for achieving a progressive reduction of costs. A higher price for cane, 
like the higher price for sugar, does not necessarily betoken a fall in 



61 

productive efficiency. On the other hand, some economy has been 
already achieved by the Indian cane-grower through the utilisation of 
improved cane. The higher price paid for cane is the result of govern- 
mental action aimed at improving the position of the cultivator without 
regard to the other aim of cheapening the sugar for the consumer. The 
ethics and economics of minimum prices of sugarcane will be discussed 
at a later stage. Here it should suffice to note that the test of progress 
is to be found not so much in prices at different times as in the technical 
criteria of yield per acre or extraction percentage. The unreliability or 
obsoleteness of the old methods of testing productive efficiency is again 
brought out in this instance. 

It is, however, worth while comparing the results of the two Tariff 
Board Enquiries that have so far been carried out. Here one fact stands 
out in somewhat disquieting relief, that the second Tariff Board Enquiry 
recommended the same amount of protection as the first, viz. Rs. 7-4 
per cwt., though the 1931 Board seemed fairly confident that after the 
first seven years the extent of protection could be reduced to Rs. 6-4 
per cwt. At first sight, it would seem that no progress of any kind has 
been achieved by the Indian industry during the first half of the period 
of protection. But one must not overlook the fact that while the Tariff 
Board of 1931 estimated " the fair selling price of white sugar manu- 
factured in a typical factory in India " at Rs. 9-5-9 per maund and also 
observed that at the end of the protective period (15 years) " this fair 
selling price should have fallen to Rs. 7-12-5 per maund, the Tariff 
Board of 1937 found that " the cost of manufacture in a representative 
la^ry "tfTclucRng overheads and profit is Rs. 6-13-10 per maund." Like- 
wise, in regard to cane, the previous Tariff Board estimated a fair price 
for cane of Annas 8 delivered at factory. The corresponding figure in 
the second enquiry is 5 as. 6 ps. per maund. This compares with the 
price of As. 6 which the first Tariff Board envisaged at the end of the 
period of protection. These figures give a fair idea of the improve- 
ment in efficiency in the production of the raw material and its manu- 
facture into white sugar. 

This picture, which, one must concede, is by no means too dis- 
heartening, is distorted when it is seen from the angle of the price paid 
by the consumer. For this price is shaped by the duties paid by sugar, 
whether the duty is an excise duty and its consequent countervailing 
duty pr whether it is a mere protective import duty. The extent of pro- 
tection required which we have noted is the same in 1931 and 1937, is 
determined not alone by the cost of production at home nor even by the 
cost of production of the competing sources of supply abroad, but the 
rate at which the latter could land sugar in India. The protective duty, 
therefore, remains unchanged not because the Indian industry has failed 
to secure any economy of costs but because the 1937 Board thought it 
" possible that Java sugar could be landed at ports at a price of Rs. 2-7 
per maund" against Rs. 4 assumed by the Board of 1931. It should 
hardly be necessary to repeat here the danger of exaggerating the value 
of this fall in the import price to any sapient judgment of the cost or 
efficacy of the protective policy. 

We may now examine the value of protection to the country as a 
whole. OnClThe is rid of the straight jacket of consumer's price or cost 



62 

of production, the protectionist may breathe more freely. He can point 
with pride to the fact that as against the former imports of sugar to the 
value of Rs, 15 crores per annum, we have now indigenous production 
of sugar (including Gur) of Rs. 75 crores per annum. The fixed capital 
invested in the industry may be valued at about Rs. 32 crores. The 
sugar industry ranks as the second jfciggest national industry in the 
country. It has provided employment for 1,00,000 skilled labourers and 
for no less than 3,000 technical men, and 20 million agriculturists are 
associated with its development. 1 It has thus given a great fillip to 
agriculture. Not only has it increased the total area under sugarcane 
from 2,905,000 acres in 1930 to 4,200,000 acres in 1940, but the yield per 
acre has also increased as a result of the increasing area under improved 
varieties of cane, which has gone up from 8,17,000 acres in 1930, to 
34,80,000 acres in 1940. It has taught the cultivator the value of utilis- 
ing improved seeds, of expedition in taking his product to the manu- 
facturer, of taking care about the value of his produce, of an increasing 
yield derived from improved methods of cultivation, etc.- And there 
is still much more to be done. A large bunch of technical problems 
both in regard to cane cultivation and sugar manufacture still remain 
to be solved. One of the greatest handicaps of the Indian sugar industry 
is the short duration of the crushing season, the low quality of the raw 
material at the beginning and at the end of the season, and the low 
yield per acre, which compares very unfavourably with Java and other 
countries, where an acre yields about 50 tons per acre, as compared 
with the low average yield of only about 16 tons in India. The evolu- 
tion of late ripening and early ripening varieties of cane has been taken 
on hand and when better results are produced, their value to the sugar 
industry can be easily imagined. Considering that the recovery per- 
centage has gone up steadily during recent years and that further pro- 
gress depends almost solely on the improvement of the quality of the 
cane, the possibilities on the cultivation side must be considered the 
most fruitful venue of research for which ample funds should be set 
apart. 3 

At the other end lies such problems as the utilisation of by-products 
and the establishment of industries which can achieve that end. The 
manufacture of power alcohol, the use of bagasse for better purposes than 
as fuel, these are some means of economy which lie beyond the power 
of the sugar industry. It may well be that the manufacturing process 
still leaves some scope for economy. Complaints have been voiced about 
sugar mills failing to choose the best men available. But whatever that 
may be, costs of manufacture are not everything in the costs of produc- 
ing a manufactured article. The efficiency of the producers of the raw 

l Vide Mr. M. P. Gandhi's speech at the Rotary Club of Bombay, on 13th 
October, 1942. (Annual for 1942). Vide 1943 Annual, for his speech at the Rotary 
Club of Ahmedabad on 3rd December 1943. 

2 The Imperial Council of Agricultural Research assessed the total value of 
the increase due to improvement in the sugarcane crop at Rs. 2J crores per annum 
(vide Gandhi's Sugar Annual, 1941, page 194). 

7") 8 In their Report, the Tariff Board recommended (page 143) that the Govern- 
[Ment should allot three annas per cwt. from the excise duty, for research work. 
We agree with this recommendation entirely and also endorse the Tariff Board's 
recommendation that "the only hope of the industry ever being able to compete 
on equal terms with other countries, is a reduction in the price of the raw 
material." 



63 

material and the alacrity with which industries for utilisation of by- 
products are established are often more important factors. They are 
all, even like the acquisition of technical skill in the industry, necessary 
conditions for the success of an industry. But necessary conditions are 
not exactly conditions precedent for such success. In industry, as much 
as in any facet of social life, progress in all the various department goes 
hand in hand. It is tempting to suggest that the technical progress 
painfully achieved by a protected industry can as well be aimed at by 
ad hoc research at much less cost than what the nation has to incur 
through the protective duties. The difference in costs must have a 
strong appeal. 1 But the logical sequence is not the sequence of historical 
events. And those who suggest that industries should be established 
only after the solution of technical problems in a laboratory or in experi- 
mental factory or farm not only overlook the difference between experi- 
ment and actual working but fail to realise that to ask for such 
encouragement of research in India as she is situate today, is to ask for 
the moon. When funds for research are not obtainable even with such 
large stakes in protected industries, it is idle to think that the Govern- 
ment would undertake research as a preparation for new industries. 

It will be seen that the costs of protection to the sugar industry 
relatively to the returns are not as unconscionable, as they are made out 
to be by writers like H. L. Dey and B. N. Adarkar in their books on 
" The Indian Tariff Problem ", and " The Indian Tariff Policy " respec- 
tively. At the same time, it is futile to swell the credit side of protection. 
Prof. B. P. Adarkar in his excellent volume on " Indian Fiscal Policy ", 
somewhat naively suggests, though he hardly says it explicitly, that the 
fall in the price of Gur which followed the grant of protection to the 
sugar industry may be deemed to be one of the benefits of protection. 
Less scholarly writers, not to speak of avowed partisans, are apt to 
exaggerate the value of protection. If one is not too much of a doc- 
trinaire or a partisan, one should find little difficulty in recognising that 
protection to the sugar industry is amply justified, though the results 
assuredly are not all that one would desire. 2 At any rate, there should 
be little difficulty in recognising that protection must be judged as a 
national policy aiming at far more than the replacement of foreign by 
Indian sugar and that a broad question of policy cannot be solved by 
transforming it into a piece of complicated arithmetical computation. 
For no calculation, however carefully made, can suffice to eliminate the 
element of speculation involved in determining the price at which the 
Indian consumer would obtain his requirements of sugar in certain 
purely hypothetical conditions. 



1 Vide Dr. H. L. Dey in " The Indian Tariff Problem ", p. 279, where he says : 
"When this yastness and complexity of the task of cane improvement in Northern 
India is realised, it would become clear that the principal problems facing the 
sugar industry, are to be solved mainly by means of organised research on an 
elaborate scale and for a fairly long period of time." 

2 Even Prof. H. L. Dey admits in "The Indian Tariff Problem", page 255, 
"We should admit at the outset that the real importance of the cultivation of 
sugarcane is that it gives a greater monetary return per acre than almost any 
other staple crop in India. This is certainly of great advantage to a densely 
populated country like India." 

Both the Tariff Boards in their Reports have laid considerable stress on the 
agricultural grounds for justifying protection to the industry. 



CHAPTER VII 
BENEFITS OF SUGAR PROTECTION TO CANE CULTIVATION 



IN the last chapter, an attempt was made to examine how far the actual 
results of protection to the sugar industry during the first seven years 
justify the protectionist policy. It was emphasised that this question 
ought to be approached from the standpoint of the consumer and the 
nation at large, as also from the near and the long view. Nevertheless, 
the enquiry was restricted to the viewpoint of the consumer and to 
what may be called the near view. At the same time, it was found 
that appreciable as were the actual results, the potentialities were more 
significant, if only because they open up wide vistas of possible develop- 
ment in the improvement of cane cultivation on the one hand and the 
development of industries for the utilisation of by-products, on the 
other. Public opinion in a predominantly agricultural country like 
India is naturally more solicitous of the welfare of the agriculturist 
and wistfully looks forward to the benefits which a policy of protection 
to industry may have to offer to the cultivator. The sugar industry, 
too, feels impelled by motives of enlightened self-interest to aid the 
improvement of cane cultivation ; for, as has been pointed out in an 
earlier chapter, the further progress of the technical efficiency of the 
sugar mills depends predominantly on the improvement of the quality 
of the cane and a reduction in its cost of production. The Tariff Board, 
too, in its first enquiry emphasised the importance to agriculture of 
protection to the sugar industry. 1 In this it reacted to the prevailing 
climate of economic opinion in the country which had learned to think 
in terms more of economic planning than of protection to industries 
which satisfy the criteria laid down by the Fiscal Commission. The 
Tariff Board report raised high expectations of appreciable progress in 
agriculture, at any rate in the cultivation of sugarcane as a result of 
protection to the sugar industry. 

It is necessary therefore to examine the effect which an expanding 
sugar industry has had on cane cultivation and how far improvements 
in the latter can be expected to help the former to grow in strength 
and stability. The nature of this impact has been to some extent indi- 
cated in the previous chapter while examining the costs and yields of 
protection to sugar. And it will be clear that with the efficiency of 
cane cultivation is bound up the economy of sugar production in India. 
It should also have been seen that progress has so far been in the 
direction of expansion of acreage and wider use of improved cane. 
But the essence of the problem in regard to cane cultivation lies in the 



i Vide Tariff Board's Report, 1931, page 27, et seq. It said : " The future of the 
sugar industry depends mainly on the cost of producing the primary material, viz. 
cane, and the problem is, therefore, one of protecting a particular branch of agri- 
culture until such time as improvements in methods of cultivation and development 
in research enable the agriculturist to increase his yields per acre and thereby 
effect a substantial decrease in the cost of cane, while maintaining or increasing 
his own profits." - 



65 

fact that cane is the raw material for a protected industry which is 
called upon to outgrow, as fast as it can, the need for protection. Since 
competitive capacity is determined by conditions in a cane producing 
country like Java, the task which we are faced with is to approximate, 
as near as we possibly can, the conditions in India to conditions in 
Java, 

It is in this respect, that India's agricultural problem in regard 
to cane is different from the problem in respect of other agricultural 
staples. India's agricultural products are, as a rule, staples of our 
export trade. Though our productive efficiency in these lines has not 
been wholly reliable and India has often been & danger of being 
elbowed out of her export markets, there is no hiatus between the 
Indian exporter and his foreign competitors such as there is between 
the Indian grower of sugarcane and his compeers abroad. The Indian 
exporter is helped either by the monopolistic or quasi-monopolistic 
nature of his position or by his advantage over his rivals in what are 
termed " price markets ". The threat to Indian jute has not yet emerged, 
though certain people have cried " wolf " quite often. Our monopoly 
of shellac still remains unshaken. Indian groundnuts would continue 
to flow into foreign markets after the war, despite their low quality. 
And the lower yield of cotton per acre as compared with Egypt or 
America will not seriously affect our export trade in short staples. But 
Indian sugar is differently placed in that it has to provide the raw 
material for an industry which subsists on a high level of protective 
duties and will be called upon to compete with countries which have 
both natural and organisational advantages. 

In another respect, too, sugar is different from our other agricul- 
tural products. Inasmuch as sugarcane has to be taken to the factory 
without loss of time for fear of dryage and consequent loss of sucrose, 
cane cultivation is more of an integral factor in the rationalisation of 
the sugar industry than, say, jute in the jute industry or cotton in 
the cotton industry. Cane, then, comes under the category of what 
may be called " plantation " industries rather than agriculture ordinarily 
understood. This, in fact, is what gives Java and Cuba an enormous 
advantage over Indian sugar and makes the competition between them 
so forbiddingly unequal. On the one hand, there are large plantations 
under the control of the manufacturers with every advantage that can 
be expected of modern large-scale enterprises, on the other, there are 
just small holdings of land that have suffered for centuries an un- 
interrupted process of fragmentation 1 and cultivators who are too con- 
servative and poor to respond actively to new methods of scientific 
cultivation. There are besides quite a large collection of technical 
problems which can be solved only by patient research. And in the 
conditions of this country to get the cultivators to adopt newly invented 
methods is a problem by itself, sometimes more serious and more 
knotty than the invention of these methods. 



1 In order to remedy this position the factories need assistance in acquisition 
of land in the vicinity of factories, although there are bound to be insuperable 
difficulties in the Legislatures agreeing to any such proposal which would dispossess 
the small holder of land in India, where liability of cultivation is traditional. 
Vide Tariff Board's Report, 1937, page 148. 

5 



66 . 

Happily, in the case of sugarcane, a great deal of research in can& 
cultivation had been carried out principally by the Coimbatore Station 
before the Government of India decided to grant substantive protection 
to sugar manufacture. The evolution of special varieties of cane through 
careful crossing of indigenous with foreign types of cane enabled the 
spread of improved cane over wide areas of cane cultivation. Not 
that it has been easy for the Agricultural Departments to secure the 
use of improved cane. But six years have sufficed to produce pre- 
sentable results. The following table will be informative in this 
connection. 

TABLE No. 1 

Acreage under Sugarcane, under improved varieties, production 

of Cane *per Acre, gross production of Gur, and calculated 

production of Cane-crop. 



Year 


Total acre- 
age under 
sugarcane 


Acreage under 
improved 
varieties in 


Average cane 
production 


Gross produc- 
i tion expressed 
> as gur (in 


Calculated pro- 
duction of sugar- 
cane (10-11 fac- 




in thousand 
acres 


thousand 
acres 


per acre 
(in tons) 


thousand 
tons) 


tors) (in 
thousand tons) 


1930 31 2,905 


817 ! 123 


3,359 


35,789 


1931-32 ' 3,077 


1,170 


14-1 


i 4,116 


43,316 


1932-33 i 3,425 


1,845 


14-9 


4,859 


51,129 


1933-34 


3,422 ^ 2,295 153 


5,055 


52,455 


1934-35 i 3,602 w 2,433 151 


5,292 


54,346 


1935-36 I 4,154 3,056 


15-3 


6,102 


61,202 


1936-37 4,582 3,452 


15-6 


6,932 


67,322 


1937-38 


3,869 I 2,968 15'5 


5,579 


55,637 


1938-39 3,130 2,673 


15'0 


3,572 


35.851 


1939-40 i 3,640 2,893 i 15'0 


4,748 


47,672 


1940-41 


4,598 


3,480 


15-0 


5,794 


59,090 


1 (Our est.) 








1941-42 


3,515 




4,371 


46,030 


1942-43 


3,600 




5,076 


... 


1943-44 


4,113 


5,696 


... 




' 









And the Second Tariff Board of 1937 writes with obvious exulta- 
tion : 

" The figures speak for themselves ; we add, however, a few ex- 
planatory comments. In 1917-18 the area under sugarcane in India was 
approximately 3 million acres and during the next fifteen years fluc- 
tuated round this figure without material alteration. It was not till 
1933-34 that as a result of the policy of protection any considerable 
expansion in acreage occurred. During 1935-36 and 1936-37 the figures 
exceeded 4 million tons but fell to 3,855,000 acres in 1937-38. 

" Concurrently with the expansion of cultivation, there has occur- 
red an equally marked improvement in the quality of cane. The 
acreage under improved varieties of cane has increased from 817,000 
acres, in 1930-31 to 3,341,000 in 1936-37 and the average yield per acre 
from 12.3 tons to 15.6 tons. The supply of improved varieties of cane 
is now generally adequate for the requirements of factories but this 
should not be taken to imply that the limit of improvement in quality 
has been reached or is even in sight." 



67 

Since the Second Tariff Board enquiry, there was a further increase 
in the proportion of the area under improved cane varieties to the total 
area under sugarcane (which, however, has been fluctuating from 
year to year 1 ) and the process would have gone on uninterrupted, but 
for the difficulties experienced by the industry in recent years. (Vide 
table above.) 

While the progress regarding acreage and the yield of cane has 
been substantial, much more has to be done with a view to reducing 
costs. Here, too, some improvement in costs of cultivation is noticeable. 
The 1931 Tariff Board estimated that the cost of cultivation of cane 
in Northern India was between 4 and 5 annas a maund. After allowing 
for interest on working capital, insurance against damage to crop, cost 
of transport at one anna a maund, they fixed eight annas per maund 
as the fair selling price for a factory. They expected that, at the end 
of the period of protection, there would be a reduction in the price 
to six annas a maund. That the Board was liberal in its estimate of 
the cost of production of cane per maund will be evident from the fact 
that the second Tariff Board have estimated the all India average cost 
at 3 annas 9 pies per maund when the average cost per maund for 
cultivation in U.P. was 3 annas and 7 pies. Including 6 pies for 
transport, the " fair selling price " is 4 annas and 3 pies. The original 
expectations have therefore been more than fulfilled. The tendency 
towards reduction in costs would have perhaps gone further but for 
the policy of fixation of minimum prices in U.P. and Bihar in recent 
years. It will be noticed from the table given ( above that there has 
been no increase in the average yield of the crop since 1936-37 which 
has been more or less stationary at 15.6 tons per acre. 

The area under the crop alsp has tended to fluctuate violently. 
Till 1936 the increase in the area under the crop was quite in accordance 
with the growth of the industry. But since 1936, as remarked above, 
there has been a considerable fluctuation in the area. While the 
fluctuations in the acreage have been due partly to the condition of 
rainfall during the period of plantation, the prevailing prices of sugar- 
cane, the price of gur as also the returns from alternative crops and 
the prospects and the price likely to be received from the cane crop 
in the next season, the fixation of inordinately high prices in U.P. and 
Bihar had a stimulating influence. The continuance of the policy of 
fixing high minimum prices could not discourage cane production though 
there was a glut in that season pulling the other way. As a result, in 
1940-41 the production of sugarcane was again on a large scale and 
the surplus cane had to be burnt in many cases as with the policy of 
restriction in production, which was enforced in view of the huge carry- 
over of sugar, and absence of outlet in any export markets, all the cane 
grown could not be utilised. The reduction in area in 1940-41 and 
1941-42 was mainly due to the notifications to the growers in advance, 
of the proposed reduction in the manufacture of sugar and the fixation 



1 The fluctuations in the area under cane are due to conditions of rainfall, the 
prevailing prices of sugarcane, the price of Gur, as also the returns from alternate 
crops, and prospects and prices likely to be derived from cane in the following 
season, depending considerably on the policy adopted by Government for restricting 
the total production of sugar, from time to time. 



68 

of uniform minimum prices for the season (not varying with the price 
of sugar, as was the practice in the past) . 

Apart from the problem of regulation of production of sugar and 
sugarcane, attention has to be paid to a further reduction in th$ cost 
of production of cane. No appreciable progress in this regard has been 
made during the past few years. If Indian sugar should be in a position 
to compete effectively, this is absolutely necessary, especially as the 
cost of the raw material in the manufacture of sugar is as much as 
53 per cent 1 of the total production costs and the principal competitor, 
Java, has during this period been able to secure a further reduction 
of costs. 

It was thought in 1931 by the First Tariff Board that the limit 
of technical efficiency had been reached by Java. Much as they were 
justified in their assumption owing to what seemed at that time to be 
ridiculously low level of costs, their finding has to a considerable 
extent been falsified. There has been an increase in the average rate 
of recovery to 13.21 per cent in 1935-36 from 10.46 per cent in 1931-32 
and during the three seasons ending 1937-38, for which figures are 
now available, it has averaged 12 per cent. The yield of cane per acre 
in Java has also increased from 50 to 55 tons. With an average recovery 
at 12 per cent and the production costs at Rs. 2 per maund including 
profit, interest on capital, etc. the price paid for cane is 2 annas per 
maund or even less. In Java most of the cane is cultivated in the 
company's own farms. Though Java possesses special advantages, and 
the same results may not be secured, the scope for progress in India 
can hardly be denied. 

The question of bringing down the cost of production, however, 
bristles with many difficulties. With a varying climate, different methods 
of cultivation and different kinds of taxation for irrigation purposes, 
it is not possible to adopt any common policy for the cultivation of 
higher yielding varieties. It is significant that though the South has 
larger yields per acre, higher costs of production are incurred by the cane 
growers in Bombay and Madras. As the Tariff* Board Report, 1937, 
points out, the standard of cultivation in the Bombay Presidency is 
exceptionally high and both the cost and yield per acre are above the 
figures of almost every other part of India. The high cost is due 
partly to the practice of heavy manuring but mainly due to the high 
rates charged for irrigation from canals. In Madras the cost of cultiva- 
tion varies with different parts of the Presidency but for the whole 
province the average cost of production is estimated at 5 annas per 
maund. 2 



1 The 1931 Tariff Board estimated it at two-thirds of the cost of producing sugar 
(vide page 27), while the 1937 Tariff Board estimated it at 53 per cent. Also see 
Gandhi's Sugar Annual for 1939, 1940, 1941, 1942 and 1943. 

2 It is very interesting to note the observation made by Mr. N. L. Dutt, Gov- 
ernment Sugarcane Expert, in charge of the Imperial Sugarcane Station, Coimbatore, 
in an erudite contribution on " The present position of thick Coimbatore sugarcanes " 
in the September, 1942, issue of Indian Farming. He says : " As regards cost of 
production per ton of cane, it was found at one of the experimental stations in 
Madras that the cost of Co 419 was Rs. 6 per ton (equal to about 3.1/2 annas per 
maund of 82 Ibs.) against Rs. 8 and Rs. 9 per ton of J 247 and POJ 2878 respectively. 
The use of Co 419 in the estimation of the grower and the factory has been rapid. 
That is why it is already one of the outstanding canes in the Bombay-Deccan. In 
Madras, it is fast becoming prime favourite in several areas. 



69 

Thus, reduction of the costs of production of cane with a view to 
improve the competitive capacity of the Indian sugar industry bristles 
with innumerable difficulties. The discovery of improved varieties of 
cane can by itself provide no solution. If Madras and Bombay have 
to incur high costs on account of the irrigational facilities, the U.P. and 
Bihar also experience in some measure the need for such facilities. 
There are besides the insect pests to be combated ; and this is a more 
important task in the sense that it is more immediate. The danger to 
cane crops as a result of diseases in cane cannot be over-emphasised. 

Diseases in Cane and Pests must be Eradicated 

Great harm is done to the crop not infrequently by insect damage 
in various provinces computed at millions of rupees to the agricultural 
community in the country. In 1939-40 for instance, there was a wide- 
spread outbreak of redrot and wilt in the cane-growing belt of Bihar, 
and it appeared that the infection was worst where the largest areas 
were kept under Ratoons. The Bihar Government issued a press com- 
munique in July 1940 pointing out the great danger of infection to the 
cane crop from Ratoons and they also observed that it was their intention 
to fix considerably lower prices for Ratoon cane than for plant cane. The 
Imperial Council of Agricultural Research also issued a note regarding 
the pyrilla pest and observed that the best time to prevent pyrilla 
damage was early in the year when sugarcane plants were generally 
young and not high or leafy to prevent labourers from going into the 
fields. They also stated that the records showed that the pyrilla was 
a particularly bad pest which occurred in 4 or 5 years and as the last 
outbreak was in 1937, the years 1940 and 1941 were considered dange- 
rous for the recurrence of the pest. They, therefore, recommended 
that widespread publicity should be given amongst sugarcane growers 
and they should be asked to keep a close watch on the sugarcane fields 
for any appearance of pyrilla in numbers, to collect and destroy imme- 
diately all leafs so affected and to avoid Ratooning as far as possible 
in 1940. 

Valuable Educational Effect of Cane Crop in India 

Sir John Russel, F.R.S., a distinguished British Scientist, in his 
Report on the work of the Imperial Council of Agricultural Research 
in applying Science to Crop Production in India, published in October 
1937, observed that the Imperial Council can justly claim credit for 
the great success in its activities in connection with the production 
and utilisation of the cane crop. Though the total area under sugarcane 
is only about 3| million acres out of 277 million acres cultivated in 
India, the importance of the sugarcane crop is out of all proportion to 
its acreage. So far as the cultivatfofe is concerned) sugarcane has a 
valuable educational effect. In the words of Sir John Russel, " He (the 
cultivator) learns the advantages of modern varieties of crops, of ferti- 
lizers, of proper cultivation ; the need to watch for plant diseases and 
to seek advice when he is in difficulties. The Agricultural Officer has 
more chance to come in touch with a sugarcane grower than will an 
ordinary small cultivator. From the national point of view, India is 
a heavy consumer of sugar including gur, of course, standing second 



70 

amongst the nations of the world and being surpassed only by the 
U. S. A. 1 

Improvement in Yield Possible in India 

It is true the yield of cane in the main sugarcane producing pro- 
vinces is still far from satisfactory as compared with the yields obtained, 
say, in Java. But it is definitely proved from the work of the Indian 
Research Stations, as also from the experience of factories growing 
canes, that high yields are possible. Experiments conducted with 
Co.-360 and POJ-2878 at three sugar factories, one Government Farm 
and three cultivators' fields in different parts of Deccan Canal area 
in 1935-36 showed encouraging results. On the Ravalgaon Sugar 
Factory, 50.5 tons of the former and 41.4 tons of the latter was the 
yield per acre. In a competition organised by the Maharashtra Chamber 
of Commerce in 1935-36, yields of 80 to 100 tons of cane per acre were 
obtained without any reduction of the sugar value. In Mysore, in 
1935-36, H.M.320 yielded as much as 36.86 tons per acre while H.M.606 
yielded 51.88 tons per acre and H.M.607 yielded 50.40 tons per acre. 
These results are no ground for despair. 2 

Education of Cultivators by Demonstration of Improved Methods 

Apart, however, from the immediate and important task of research 
work in connection with the problem of pests, referred to above, there 
is a great need for undertaking other measures which would bring home 
to the cultivator the necessity and the desirability of effecting improve- 
ments in the conditions of cultivation. The average cultivator in India 
is hardly aware of the latest improved methods of farming or manuring 
or crop rotation or selection of varieties suitable to the soil, and he 
simply carries on the old and traditional methods of cultivation from 
year to year without worrying about the importance of effecting any 
improvement in the quality or the quantity of the cane grown on his 
fields. Sugarcane is one of the most important crops of the country, 
the annual value of which has been estimated at over 60 crores of rupees 
and the prosperity of the second largest industry of the country is 
closely linked with it. The growth of the sugar industry adds sub- 
stantially to the resources of the ryot and even in the midst of a period 
of depression it has enabled him to pay his rent or land revenue, 
his irrigation dues, and other taxes. It is, therefore, the duty of the 
Government to devise suitable means of imparting to the ryot instruc- 
tion in modern methods of cultivation and to make available to him the 
fruits of organised research. It is satisfactory to note the work done 
in this connection by the Sugarcane Research Stations at Coimbatore, 
Shahjahanpur and Muzaffarnagar, Karnal, Padegaon in the Deccan Canal 
area,, Mushari (B & C), Pusa, Dacca, Mysore, the Jorhat Experimental 
Station in Assam, at Risalewala and Jullundur in the Punjab, at 



1 The consumption of sugar in the U. S. A. in the year 1934-35 was estimated 
at 5,870,000 metric tons, in the United Kingdom at 2,283,000 metric tons and in 
British India at 3,350,000 metric tons. 

2 Vide in this connection the observation of Mr. N. L. Dutt in an article on 
Indian Farming, in its issue of September, 1942, already referred to, where he 
says : " The yield of Co. 419 in Bombay and Madras was of the order of 55 to 60 
tons of cane per acre." , 



71 

Bangalore, Anakapalli, Madras, Hyderabad and other places, for grow- 
ing thick canes which have an importance of their own in India, and 
for improving the quality of cane generally and evolving suitable canes 
for particular areas by cross-breeds, etc. 1 Although improvements are 
slowly being effected in the quality of cane grown in the various pro- 
vinces, the time has definitely arrived when we should redouble our 
efforts to establish more intimate contact with the cane cultivator and 
to acquaint him by actual demonstration with modern methods of farm- 
ing. For this purpose, it is essential to establish a series of demonstra- 
tion farms and nurseries in all cane-growing provinces in order that 
they may devote their energies to the propagation of cane of higher 
sucrose content, of higher tonnage, of early and late-ripening varieties 
for the extension of the crushing season, of increasing the yield by 
suitable crop rotation, by provision of a suitable supply of water through 
irrigation or tube-wells, etc. These demonstration farms and nurseries 
should also serve as centres from where trained agriculturists would 
tour round the surrounding districts in order to show or demonstrate 
efficient methods of cultivation and manuring suitable to the soil in the 
various places and would distribute disease-free seed amongst the culti- 
vators. An important function of these farms would be to conduct 
researches into the best method of combating cane diseases and pests. 
In addition to the establishment of such farms, it is also necessary for 
the provincial governments to undertake other allied tasks, of effecting 
improvement in the cane cultivation by educating the ryot in the use 
of irrigation water, by providing better facilities of irrigation, by 
extension of canal system, and by affording suitable assistance in tapping 
the subterranean sources of water supply. 

Future Trend of Canes in India 

Among the new canes, Co.419 is fairly on the road to becoming 
somewhat of a universal cane in several parts of tropical India, while 
Co.421 is likely to prove of great utility in certain tracts of Northern 
India. The spread of Co.419 and Co.421 has been quick and pales 
into insignificance when it is known that in Java POJ.2878, " Wonder 
Cane " which was evolved in 1924, and which revolutionised the Java 
industry, occupied by 1929 (within a period of five years) 95 per cent 
of the area under cane in that country. Among other canes showing 
promise of development in particular areas are Co.290, a medium-thick 
cane, Co.360, Co.413, Co.426. Co.421 has yielded in Northern India, 
where it is found suitable, a yield of about 950 maunds (35 tons per 
acre) at the Experimental Stations Muzaffarnagar, Shahjahanpur and 
Gorakhpur in the United Provinces. Vide Indian Farming., issue of 
September 1942, pp. 473-477. 



1 Excellent work done in this direction of providing thick canes suited for 
tropical regions is narrated in an excellent article! in the July, 1942, issue of Indian 
Farming by Mr. N. L. Dutt, Government Sugarcane Expert who recently succeeded 
Sir T. S. Venkataraman who has immortalised himself by his epoch-making crosses 
between sugarcane and sorghum, and more recently between sugarcane and bamboo, 
which will confer everlasting benefits on Indian cane cultivation. The name of 
Sir T. S. Venkataraman should be written in letters of gold for his successful efforts 
in the improvement of cane- crop in India. 



72 
Tube-well Project in U.P. 

The first extensive tube- well project in this connection was sanc- 
tioned in the U.P. in 1939. It seeks to provide irrigation facilities in 
the dry tracts of the seven western districts of U.P. where for various 
seasons canal irrigation is not possible. They represent an investment 
of 52 lakhs of rupees. This project will cover nearly 1J million acres 
which will now be fully protected. About 1,300 tube-wells are now 
working and each one has been so located that it can command an area 
of two square miles with an approximate average of 1,000 acres of 
cultivable area. 

A fresh drive to organise the cane development work in the U.P. 
was launched by the Provincial Cane Development Department in 1941. 
The new plan of development, which has been formulated by Mr. R. L. 
Sethi, the newly appointed Cane Commissioner, seeks to give a fillip 
to the development work so that it receives due consideration. 

The plan among others, includes provision for the following : 

1. Development of compact zones round factories ; 

2. Selection and propagation of tested varieties ; 

3. Provision of suitable manures and tried cultural methods ; 

4. Zone trials, and 

5. Systematic regulation of seeds. 

The Cane Development Scheme was started towards the end of 1935 
with the help of contribution from the Government of India. The 
U.P. Sugar Factories Control Act provided for the reservation and 
assignment of areas and since 1938 that system has been in vogue. 

There was no increase in the number of zones in 1939-40 which 
was the same as in 1938-39 at 136 but the number of villages covered 
was considerably higher at 13,826, against 9,594 in the previous year. 

The scheme now extends to the areas of almost all the sugar 
factories in the province. 

For the successful working of the scheme the province has been 
divided into three ranges western, central and eastern. The total 
expenditure incurred by the Government on the scheme was 
Rs. 10,19,823. 

Over 32,00,000 maunds of improved seed were distributed to the 
cane growers. 

Manuring 

Progress was made in improving manurial practices. A con- 
sciousness was created amongst the cultivators of the necessity of 
proper manuring not only for getting immediate better yields but even 
more for preserving and increasing the fertility of the soil. 



73 

Improvement of Communications 

Special attention was paid by many societies towards improvement 
of the communications in their areas. The societies spent about 
Rs. 67,359 for the improvement of communications in the western range. 
Over and above this 349 pucca and 99 temporary culverts were con- 
structed. This expenditure was made from contributions from the 
societies, the growers and the factories. Other rural development 
activities of the department included the improvement of irrigation 
facilities, improvement of the quality of live-stock and propaganda for 
the improvement of sanitary conditions of the villages. 

Marketing 

There were 66 central cane supply unions and 839 primary cane 
societies for the development of cane and its supply to the factories. 
The total quantity of cane supplied by these societies during the year 
was 18,77,00,000 maunds, that is, 79 per cent of the total cane crushed 
by the factories in the province. In the western range the societies 
supplied as much as 88 per cent of the cane crushed by the factories. 

We have digressed somewhat from the main argument of this 
chapter, but only to show on how many different fronts the battle for 
lower costs of production has to be fought. The efforts of the U.P. 
Government in this regard cannot however reflect in full the complica- 
tions of this problem as, in the nature of things, administrative action 
can be attempted only on points on which experts are fairly agreed as 
to the correct solution. Even in the programme outlined above, two 
important issues, viz. ratooning and zoning are matters of controversy. 

Ratooning 

Ratooning is a subject on which there has been a good deal of con- 
troversy, particularly since there is some evidence that ratooning causes 
an increase in insect pests. The period of profitable ratooning varies 
greatly in different localities and depends on the soil, variety and the 
treatment which the crop receives. Ratooning, as at present practised, 
has acquired a bad name, perhaps because the crop is often neglected. 
Canes differ to some extent in their performance as plant canes and as 
ratoons. On the whole thin canes are better suited for ratooning than 
thick canes although thick varieties have also been found to ratoon well 
in certain places. This subject was discussed at the Sugar Committee 
Meeting in July 1936, where it was noticed that opinions of Directors 
of Agriculture of factory owners and of cultivators were divided as to 
the increase of insect pests in cane as a result of ratooning. The 
question is at present receiving the attention of the Imperial Council 
of Agricultural Research. It seems to be generally held that first 
ratooning is permissible, Itftit that ratooning of cane crop beyond one 
season does not find much favour amongst the factory owners. It is 
now being realised that ratoons are easily susceptible to disease and 
should be discouraged as much as possible. 

Zoning of Areas of Cane 

Of like importance to the efficiency of cane farming is the question 
of zoning. The main feature of this system is the allotment of a definite 



74 

area of supply to each factory from which it can draw at least the 
major portion of its cane supply and on which no other factory can 
encroach. At first sight zoning seems to be of the very essence of 
rational co-relation of cultivation and manufacture. But the first Tariff 
Board took exception to it on the ground that it eliminated competition 
and that the grower was at the mercy of the manufacturer in the absence 
of any rules regarding the payment of minimum prices. The Second 
Tariff Board 1 had no difficulty in recommending the system of zoning 
in U.P. and Bihar as according to the Sugarcane Act, 1934, minimum 
prices were in force and the idea was particularly suitable to these 
two provinces owing to the large areas under sugarcane and th^ close 
proximity of mills. 

The advantages claimed for the zoning system are that it makes 
the regulation of production of cane possible and avoids the possibility 
of overproduction in any one particular area if the factories notify in 
advance their requirements of cane for the season. Again, factories 
will develop an interest in the area allotted and try to improve the 
crop. This incidentally helps the problem of bringing down costs. 
The tendency to improve the cane crop develops in the knowledge that 
there will be no competition from the adjoining factories and that the 
factory concerned will be free to enjoy the fruits of its labour. Regula- 
tion of cane supplies is possible by the sowing of early and late ripening 
varieties. The factories will also be able to work a longer crushing 
season. 

Economy in Transport Essential 

While all this remains to be done, Java, too, is forging ahead with 
further economies. The leeway between her and India is still consi- 
derable ; and in the absence of protection, it might be found impossible 
to compete with Java sugar. The cost of production for Java sugar is 
estimated at Rs. 2-1-7 per maund before providing for interest on 
working capital. Including freight, the cost of Java sugar was estimat- 
ed at Rs. 2-10-0 per maund. Allowing for the difference in quality of 
Indian sugar, 5 annas per maund and freight 9 annas, the difference 
between the two costs of production was therefore Rs. 5-4-0 or Rs. 5-5-0 
per maund, equivalent to Rs. 7-4-0 per cwt. Even according to the 
Government who pointed out that production costs were assumed on 
a liberal basis, the difference between Java sugar and Indian sugar was 
as much as Rs. 3-4-10 per maund. During the remaining period of 
the years of protection it was highly improbable that the industry could 
go without a high level of import duty. The Tariff Board, however, 
never believed that it would be impossible to compete at any time on 
equal terms with Java and Philippines .a^ While the manufacturing 
side is not without scope for economy, it is cultivation that has to bear 
the brunt of the problem, by reducing the cost of cane through the 
cultivation of cane with a higher sucrose content and heavier yield per 



i Vide Tariff Board's Report, 1937, pages 44-46. It observed, however, that " if 
a zoning system is introduced, it will be necessary to control the erection of new 
factories and extension of existing factories by some licensing system," This was 
done ini U, P t and Bifctar by the Sugar Control Act, in 1937, 



75 

acre. To the extent that minimum prices blunt the spur to improve- 
ment, they must be held to delay progress. In these circumstances 
it may be said that the assumption of state cultivation of cane and the 
taking over by factories of farm cultivation may not only minimise 
costs of transport of cane but enable the crop to be improved and har- 
vested at the proper time to prevent wastage of sugar content. It has 
been found that some mills have an efficiency equal to Jlava as judged 
by their recovery figures, but their loss percentage of sucrose is higher 
as compared with that of Java which is 1 to 1.5 (vide Tariff Board 
Report, 1937, p. 72) . The difficulties in the way of such a development 
are many and it is futile to dilate on the question here. As far as 
possible, efforts should be made to reduce the cost of transport of 
cane by intensive development of areas round factories and proper 
zoning with due safeguards. State research should be intensified and 
greater attention paid to the manufacturer's point of view. The con- 
centration of the industry in two provinces has created special difficul- 
ties 1 and these will have to be satisfactorily got over. 

Another important factor to be considered in the discussion regard- 
ing the possibility of reduction in costs is the duration of the crushing 
season and the size of the factory. If the size of a factory is fairly 
big, it may be possible to effect a considerable reduction in overheads 
and it has to be remembered that this item is equal to the expenditure 
incurred in the manufacturing process. Unfortunately, the difficulty 
of getting adequate and proper supplies of cane makes it impossible to 
work mills for a period longer than five months. The early and late 
ripening varieties have not proved successful. In the early part of 
the season, mills get cane which is under-ripe ; and towards the end 
of the season, cane which is over-ripe. It is difficult to have a longer 
season with different crops as it will not be possible for the ryot 
to grow other crops. Some reform in this direction is therefore 
necessary. 

Regarding the economic size of the factory, the larger the size of 
the mill, the lesser the incidence of overhead charges. But the main 
points to be taken into consideration are the availability of cane in 
required quantities without any increase in transport costs, the ability 
to work mills for a longer season and greater access to markets. The 
first Tariff Board took the size of the economic unit at 400 tons crushing 
capacity per day as they were afraid that supplies of cane would not be 
available within a given radius. 2 The difficulties in this regard have 
been to a considerable extent overcome in U.P. and Bihar but the 
advantages in respect of markets have been offset by the growth of 
factories very close to one another. 



1 One such defect came to notice prominently in June, 1942, when owing to 
wagon shortage and transport difficulties, sugar could not be transported to long 
distances, and this led to scarcity of sugar, long queues of men for getting small 
quantities of sugar, black markets, etc. If this industry was developed more 
uniformly over the various areas, it would have been possible to arrange for a 
better distribution of sugar. 

2 The Tariff Board of 1937 adopted a factory with 500 tons capacity as a reason- 
able economic unit for the whole of India. Vide pages 60-61. 



76 
Average Cane-Crushing Capacity 

In recent years there has been an increase in the average crushing 
capacity of mills. The following table will show that there has been 
a gradual increase in the crushing capacity during the years 1934-35 to 
1940-41 and that in 1939-40 it was as much as 710 tons. In 1936 out 
of 140 factories 26 had a capacity below 250 tons and 50 below 500 tons. 
The majority%of the factories had, therefore, capacity below 500 tons. 
Comparison should not, however, be made with the average actual 
crushing capacity, as the potential crushing capacity is something very 
different and is affected by the length of the crushing season. Con- 
siderable extensions to plant have been affected in recent years to 
effect an increase in the production of sugar and a decrease in the cost 
of manufacture. Till 1934, this country had the smallest economic unit. 
The following table will be of interest : 

TABLE NO. 2 
Cane-crushing Capacity oj Factories in India. 1 



t 
Year 


Average cane crushing capacity of 
Factory (calculated on the basis 
of tons of cane crushed per day of 
actual working) in India 


Year 


Maximum cane crushing 
capacity of Factories 
per day in India 


1934-35 


517 


1934-35 


2,012 


1935-36 


568 


1935-36 


1,807 


1936-37 


630 


1936-37 


1,960 


1937-38 


660 


1937-38 


2,000 


1938-39 


630 


1938-39 


1,850 


1939-40 


710 


1939-40 


1,960 


1940-41 


690 


1940-41 


1,980 


1941-42 


640 


1941-42 


1,800 



From the foregoing it is very clear that, in spite of the considerable 
progress made in recent years, there is still a lot of ground to be 
covered. The difficulties in the way have been discussed in detail in 
this and other chapters. One of the important aspects of the question, 
the utilisation of molasses and by-products has not been given proper 
consideration till very recently, and the need for a power alcohol 
industry is grudgingly realised. With the continuance of the war, this 
question may be given greater consideration and Indian sugar might 
perhaps be in a position to take advantage of the present circumstances. 
The period given to the industry to prepare itself to face competition 
may be only five years, as protection will expire in March 1946, but 
the actual time available may be much more. Her only three serious 
competitors are the Philippines, Cuba and Java, but of these three, 
two countries, Philippines and Java, are under enemy occupation and 
the state of the sugar industry at the time of the cessation of hostilities 
cannot be precisely forecast. But on the assumption that the factories 
might have been damaged or razed out of existence, it may take some 
time after the conclusion of peace for the industries in these two countries 
to prove serious rivals to India. Cuba, of course, is far removed to be 



1 Vide Indian Trade Journal, Calcutta, dated 17th September, 1942, and previous 
issues. 



77 

a serious competitor to India. Besides, Philippines and Cuban sugar 
are mostly taken up by the U.S.A. With the additional time available 
and the possibility of great progress being made in the by-products 
industries, the entrepreneur would be in a position to economise in 
costs and if the Governments, Central and Provincial, are also sympa- 
thetic in their attitude, post-war competition need scarcely unnerve the 
Indian sugar industry. 

The immensity of what remains to be done in the sphere of culti- 
vation should not be allowed to blind us to the solid achievements of 
the past or to their significance to progress in the future. 



CHAPTER VIII 
FIXATION OF CANE PRICES 



THE effects on agriculture of the policy of protection to the sugar 
industry were examined in the previous chapter from the point of 
view of cheapening the cost of production of this all-important raw. 
material. And it was found that the picture was on the whole one. of 
presentable results and more or less impressive potentialities. To invent 
by patient research the best kinds of cane and the best methods of 
cultivation, to persuade the cultivators to adopt such methods and 
secure a heavy yield of good quality cane, all this is one thing ; it is 
quite another to provide the mills with cane which will enable them 
to compete on equal terms with Java. For Java is delectably free from 
that problem of securing a fair distribution of benefits between the 
grower and the manufacturer which in India has proved the source of 
controversy and of complication. In Java, the cultivation of cane is, for 
the mills, only one stage in the manufacture of sugar, while in India 
the price paid to the cane grower is the focal point of a large social, 
besides being an economic problem. When the Tariff Board emphasised 
the importance of the sugar industry to agriculture, it was understood 
to hold out a means of improving the economic well-being of the cane 
growers in the provinces concerned. This hope came in the wake of 
a decade of sullen discontent among popular politicians with the ways 
of the captains of India's protected industries. And the Central Legis- 
lature persuaded itself to pass measures enabling regulations to be 
framed for securing a fair price for the cultivator. 1 The fixing of 
minimum prices for sugarcane came in thus as essentially a piece of 
social relief, but so wedged in between the two processes of agriculture 
and manufacture that at times it may be said to have acted to the 
detriment of both. In the progress of the Indian sugar industry in 
relation to world developments, it is unquestionably a forbidding hurdle 
to be cleared ; and an understanding of this is necessary before we 
can pass on from the agricultural to the manufacturing side. 

Needless to say, the fixation of minimum prices did not come on 
the industry all of a sudden. At the outset, the Central Legislature 
did not contemplate any more than a few safeguards against the illite- 
rate cultivators being duped by the agents of the millowners. And 
the mills were at first required by the Provincial Governments to do no 
more than affix notices in conspicuous places near the entrances of 
the sugar factories showing the prices at which sugarcane was being 
bought at the factories. This was done by the U.P. Government in 



The enabling measure introduced in the Legislative Assembly on 13th 
March 1934, and subsequently enacted as the Sugarcane Act, 1934, which permitted 
the Local Governments to fix a minimum price or prices for the purchase of 
sugarcane intended for use in any factory. The Statement of Objects and Reasons 
appended to the above Bill and the Text of Bill will be found on page XXXV in 
Appendix II (c) of the Indian Sugar Industry, Its Past, Present and Future, by 
Mr. M. P. Gandhi, published in 1934. 



79 

November 1933, by publishing rules 1 under powers conferred on them 
by Section 6 of the Sugar Industry (Protection) Act, 1932. (For the 
text of this Act, vide Gandhi's Sugar Industry Annual, 1940) . 

Such publicity, it was thought, was sufficient to offset the dis- 
advantages of the poor cultivators of cane. From the obligation to 
put up such notices every fortnight, to being obliged to pay prices 
dictated by the provincial governments, was, indeed, a far cry, and 
it must be observed that minimum prices were not brought into force 
by the Governments of both the U.P. and Bihar without some searchings 
of the heart on their part and strenuous opposition on the part of 
the sugar millowners. It is useful and instructive to follow the contro- 
versy as it brought out the principal objections from the practical 
point of view to the adoption of this policy of fixation of minimum 
prices of cane. 



1 These rules were brought into operation from 1st December, 1933. In a 
Press communique, the U. P. Government stated that these rules did not enforce 
the payment of any prescribed prices or fix the rates which the factories should 
pay for the cane purchased by them. It was also added that they were intended 
primarily to educate public opinion and to provide cane -growers with data which 
may enable them to ascertain what a fair price for cane should ordinarily be. It 
was also made compulsory for factories in the U. P. to publish along with the 
price paid for the purchase of cane, a figure of price of cane worked out according 
to the following formula : 
S XP 

C = where 

200 

C = the price in annas per maund of cane delivered at the factory gate, including 
charges or allowances for transport, dryage, commission and supervision ; 
S = a figure fixed by the Government for each season for anticipated percentage 
of extraction of sugar which does not vary by more than 0.25 from the average 
percentage of extraction of sugar from cane for all sugar factories in the province 
during the three previous working seasons. (For 1933-34. This figure was fixed 
at 8.7.) 

P = the average fortnightly price in annas per maund as announced by the Director 
of Industries, United Provinces, Cawnpore, in the local Government Gazette based 
on the highest wholesale price quotation for white factory sugar made in the 
United Provinces on a f.o.r. Cawnpore basis minus four annas a maund. 

Although these rules did not fix the price of cane, it will be clear that they 
were definitely unfair to manufacturers. For instance, it is preposterous to take 
the highest wholesale price quotation for white factory sugar (leaving second and 
third quality sugar alone), and again not the ex-factory but the Cawnpore price 
with the addition of Railway freight, as a basis for calculating the minimum price of 
cane to all the factories in the U. P. 

What is more, when the rules were first published by the U. P. Government, 
they suggested, for the value of " P " the average price of Java white sugar in the 
Cawnpore market (not even the Calcutta market as was recommended by the 
Tariff Board), as the basis. The Cawnpore price for Java sugar was notably higher 
than the price of sugar made in U. P. for various reasons including the keen inter- 
national competition as a result of the growth of factories, the competition of 
Khandsaris, the low price of Gur, the addition of freight and Customs charges 
in the transport of Java sugar from Calcutta to Cawnpore which amounted to 
Re. 1-9 per maund, and the superior quality of Java sugar. As a result of protests 
from the mills, these rules were revised as stated in the above paragraph. 

SxP 
While we are in general agreement with the adoption of formula C = - 

200 

we feel that it would be fair if the fixation of the price of sugar would be based 
on average wholesale ex-factory price of sugar of all qualities. 

For details of the various objections to the formula, vide pages 166/170 of the 
Indian Sugar Industry, Its Past, Present and Future, 1934, by Mr, M. P. Gandhi, 



80 

In July 1933, a Sugar Conference was convened by the Govern- 
ment of India at Simla comprising the representatives of various inter- 
ests, namely, the Central as well as Provincial Governments, millowners, 
cane growers, etc. At this Conference, various important questions 
like cane price fixing, zoning, licensing, control of cane cultivation were 
brought up for consideration. 

The Chairman of the Conference pointed out that any intervention 
by the Government in any of the above matters must involve legisla- 
tion. The present position, tlhe Chairman described, was that a man 
could establish any factory when he liked, where he liked and could 
buy cane wherefrom he liked and pay what price he liked. Similarly, 
the sugarcane producer could bring under sugarcane such areas as 
he liked, give up producing sugarcane if he liked, and sell it at what- 
ever price he could get. That is, the policy of laissez faire prevailed 
on both sides, and things were left to adjust themselves. 

The champions of the cultivators who felt that the cultivators had 
been robbed of their legitimate profits and were being paid too low a 
price for their cane, and had the feeling that the manufacturers were 
reaping a rich harvest of profits, suggested that in order to increase the 
price of cane, minimum cane prices should be fixed, by legislation, as 
then alone the interests of the cultivators could be safeguarded. Others 
suggested that it would be unwise for the Government to intervene 
in the interplay of economic forces and that, if things were left to 
themselves, they would adjust themselves in the course of time. 

Speaking on the subject of fixation of minimum prices, the Hon'ble 
Dr. Gokul Chand Narang, Minister for Local Self-Government (in 
charge of the Industries Department), Punjab, observed that Khand- 
saris were known to be paying only 0-3-0 or even less per maund of 
cane to the cultivator and it was wrong to penalise the factory industry, 
which consumed only 5 per cent of the total quantity of cane produced 
in the country. He also stated that 0-6-0 per rhaund of cane was an 
economic price and that it represented cent per cent profit on invest- 
ment. Mr. H. C. Prior, Revenue Secretary of the Bihar Government, 
also suggested that in the opinion of the Bihar Government, distribu- 
tion of profits was not unfair. In fact, he stated that the factories 
had paid for cane about three times the price paid by the indigenous 
gur manufacturer. He pited an instance that the average price of gur 
made from cane in South Bihar was Rs. 2 a maund, and that it repre- 
sented a price of about 1| annas per maund of cane, as against about 
5 annas per maund paid by factories. A representative of the Indian 
Sugar Mills Association enquired what the position of the sugarcane 
grower would have been, if it had not been for the capitalists who 
had sunk their money and taken all the trouble they had in setting up 
the sugar factories. He further argued that even in areas where sugar- 
cane had been planted, and grown for the factories, and factories had 
not been able to buy those supplies, the sugarcane grower had not been 
able to get in the very same locality, more than 1| anna per maund 
for the cane which had been converted into gur, or had been used in 
khandsari factories. He observed that the fact remained that, as a 
result of the development of the industry, the sugarcane grower had 
benefited, to the extent that he has been getting over 5 annas per 



81 

maund instead of li anna or so, for his cane. Besides, the . cultivator 
had improved his quality of cane, thus getting a better return per 
acre, and he would not have gone in for the improvement of the 
quality but for the establishment of the factories. 

The Government of the United Provinces were strongly inclined to 
favour legislation for zoning factories and fixing a minimum price of 
cane. Sir Jwala Prasad Srivastava, Minister for Education, United 
Provinces, observed that in spite of the well-known defects of zoning, 
he felt that zoning would be an advantage to the cultivator and the 
factory, and along with zoning he suggested that there should be a 
minimum price of cane which should be arrived at with the help of a 
suitable formula, and further that there should also be a system of 
licensed contractors from whom alone the factories should purchase 
their cane, in order to guard against evasion of prices by factories. He 
observed and with considerable truth that there were numerous factor- 
ies which paid a fair price, which, however, did not reach the 
cultivators. 

In a memorandum circulated at the Simla Conference by Sir Jwala 
Prasad Srivastava, it was suggested that there was no difficulty in 
the United Provinces about laying down what the minimum price to 
be paid for sugarcane should be. The generally accepted formula 
laying down that the price of cane in annas per maund should be $$& 
where p is the price of sugar in annas per maund, and s the average 
extraction of sugar from sugarcane of all vacuum pan factories in the 
province during the previous year, would be, he observed, suitable for 
the province, and there was perhaps no objection to laying down a uni- 
form price for the whole province and that, if necessary, the figures 
could be varied with the time of the year at which the cane is delivered, 
though a uniform rate throughout the season would be better. The 
real point, however, he observed, was not in laying down the rate 
but enforcing it. The danger was that even in such conditions the 
price might not reach the growers, and therefore he suggested a system 
of zoning, as also a system of licensed contarctors who should, by 
legislation, be compelled to pay at least 90 per cent of the price they 
received, to the actual growers. He further stated that the fixation 
of a minimun\ price was a complicated matter, and lent itself to numer- 
ous abuses. 

It may be useful to note here how the proposal was viewed by the 
representatives from various provinces, and by the different interests 
represented at the Simla Conference. Mr. H. C. Prior, speaking on 
behalf of the Government of Bihar and Orissa said : " The view of my 
Government is that any legislation for zoning, licensing of factories, or 
fixation of cane prices is impracticable and will go against the interests 
both of the cane growers and of the development of the industry." 
He observed, " The sugarcane was then the most profitable crop for the 
raiyat to grow." He also added that a fair price was generally paid 
for cane and it seemed likely that in North Bihar the ordinary rules 
of supply and demand would result in a fair price being paid in the 
future. He concluded by saying that the Bihar Government considered 
that it would be absolutely impracticable to endorse by legislation the 



82 

payment of any minimum price. Dr. G. P. Hector, Director of Agricul- 
ture, Bengal, gave expression to the Bengal Government's view that 
legislation was not necessary. All that they were anxious about was 
that nothing should be said or done at this stage of the industry to 
frighten away capital. The Hon'ble Diwan Bahadur Kumaraswami 
Reddiar, Minister of Education and Excise (in charge of Industries), 
Madras, remarked that so far as the Madras Government were con- 
cerned, they had at that time no intention of introducing legislation 
in the local legislature. Speaking on behalf of the Bombay Government, 
Mr. V. V. Gadgil said that they had not so far considered, nor had 
they under contemplation, any Bill for fixing of prices, or zoning or 
licensing. The representatives of manufacturing interests, it need 
hardly be said, were also opposed to the proposal of legislation. Let 
us see what views were expressed on the question of fixation of mini- 
mum prices of cane by the Sugar Committee, and the Tariff Board 
of 1931. 

Practical Difficulties in Legislation 

The Indian Sugar Committee, too, discussed the system of the scales 
of payment for cane, and came to the conclusion that in Indian con- 
ditions, a sliding scale based on a price of cane equal to half the price 
of sugar manufactured from it, subject to a minimum of 6 annas per 
maund would be suitable. 

But the Tariff Board was sceptic about this proposal and came to 
the conclusion : " It is clear that no direct measures can be taken to 
ensure that a definite rate for cane is paid to producers/' They further 
observed, " Conditions differ so widely in India, as regards the output 
of cane per acre, the cost of cultivation and the sucrose content of 
the cane that no one scale of payment would be suitable to all condi- 
tions." 

The Tariff Board also remarked that even if a scale could be de- 
vised which would be suitable for the very varied conditions of cane 
cultivation in different parts of India, the methods of evasion are so 
numerous that it is improbable that this would be successfully en- 
forced. The Tariff Board concluded : " But we must leave it to the 
good sense of factory owners and to their realisation that eventually 
the interests of the factory and of the cultivators are inseparably con- 
nected, to ensure adequate payment to the agriculturist for his cane." 

We may now discuss the practical difficulties then envisaged and 
pointed out in enforcing legislation for fixing minimum price of cane. 
In the first place, it is not easy to determine a standard quality in terms 
of which the price could be fixed. For instance, should a factory buy 
cane giving a smaller yield of sugar at the same rate as cane giving a 
larger yield ? How are disputes regarding quality to be settled ? 
What will the grower of the inferior cane do with it if he cannot sell 
it to the factory at a lower rate ? Would not a fixed price take away 
the incentive to improve the quality of cane ? Is the law to apply to 
people who buy cane to make gur or manufacture sugar as khandsaris ? 
How can it be discovered whether a middleman bought cane to sell 
it to a factory or a gur maker or of khandsari ? 



83 

It was also argued that such a law would prevent direct contact 
between the factory and the cultivator, which was so desirable, and 
increase the number of middlemen. 

The Factor of Railway Freight 

There were also to be considered the disadvantages suffered by 
some factories in comparison with others, in the matter of railway 
freights. In some cases, the difference in railway freight between two 
factories amounts to 6 annas per maund of sugar, which is equivalent 
to a difference of half an anna in the price of sugarcane. Is it not 
unjust that a factory which is subjected to the handicap of a higher 
railway freight should have to pay compulsorily the same rate for 
cane as a factory more advantageously situated in this respect ? 

The difficulties as to what variations should be permitted in 
regard to quality or variety of cane or season of supply, and as to what 
might be done when the minimum price fixed was found to be in excess 
of the price of disposal of cane in any other manner, were serious, and 
it was difficult to devise an acceptable and equitable solution. There 
is, above all, the fact that the authority which fixes a minimum price 
for cane should also be able to assure the manufacturer of a minimum 
price for his sugar. 

Methods of Payment of Cane in Various Countries 

Methods of payment of cane vary from country to country in 
accordance with its peculiar conditions. A system found suitable in 
one country may be utterly unsuitable in other countries, due to dif- 
ferences in conditions of production, etc. Cane is raised in one of 
the three ways : 

(1) Entirely by independent cultivators (as in India). 

(2) Entirely by mills themselves. 

(3) Partly by the mill and partly by cultivators. 

It is hardly necessary to add that the most economic method is 
found where cultivation of cane and manufacture of sugar are con- 
trolled by the same hands as in Java, because the smooth and efficient 
working of ia mill depends on a well-regulated supply of cane of 
adequate quality. But that system is not practicable in India today 
for the obvious reason that agricultural holdings have suffered undue 
fragmentation owing to our laws of inheritance. 

Methods of payment must necessarily depend on the peculiar cir- 
cumstances of each country, and it would be foolish to attempt to adopt 
any system prevalent in another country, without considering the 
differences in conditions. 1 For example, we cannot adopt the practice 
in Java where 50 per cent of the sugar recovered is paid to the 
planter for his cane, because sugar factories in Java do not buy cane 
from planters, and plant, cultivate, and harvest their own cane on land 
temporarily hired for the purpose ; nor can we adopt the method of 



*Vtde page 16 of Maxwells' "Economic Aspect of Cane-sugar Production." 



84 

Queensland, where the price of cane is fixed by the Cane Price Board, 
and the price of sugar is controlled by the Government and fixed at 
a very high level; nor of the Hawaiian Islands, where also the great 
bulk of the cane is raised by plantation companies. In Mauritius, where 
there are a great number of small planters, the cane is bought at a 
fixed rate per ton. The rate thus fixed varies according to the quality 
of the canes, the locality, and other circumstances. There is also a 
system in vogue in whicn the planter is paid on the extraction of first 
grade white sugar or alternatively, on all sugars, per ton of cane 
delivered. The actual quantity of sugar paid to the planter under this 
system varies from 60 to 72 kilos according to the factory, its location, 
and its efficiency. 

Some Methods of Fixing Price of Cane in India 

In this country, cane has to be purchased by the factories as a 
rule from growers (except in Bombay where factories own their cane) , 
either direct or through contractors, in accordance with the rules and 
regulations fixed by the Government of the Provinces concerned. Till 
1934, the price of cane was fixed on the basis of Demand and Supply, 
and there was no Provincial Legislation fixing minimum prices of cane 
till 1934. 



Sliding Scale of Cane Prices Suggested in 1933 

To overcome the various objections pointed out before, a formula 
of sliding scale of cane prices was first suggested by the Sugar Techno- 
logist of the Imperial Council of Agricultural Research, in 1933. The 
principle of the sliding scale of cane prices suggested was that the 
price paid for a maund of cane should be equal to half the price of 
sugar made therefrom. 

The formula suggested by him is C = f where 
C Price of cane (in annas per maund) . 
S Extraction of sugar per cent, and 
P Price of sugar (in annas per maund) . 

The extraction percentage, it was stated, could be fixed for each 
province every year or for five years in advance, and was to represent 
the anticipated average extraction during each year. Thus the figure 
of 8.7 was fixed for percentage of extraction of sugar for 1933-34 by 
the United Provinces Government in accordance with the Rules pub- 
lished by them in November 1933. Similarly, other provinces, could 
fix a percentage to suit their own conditions. The percentage might 
vary, from province to province, and from year to year, according to 
the average extraction. 

For the sake of illustration, a table is given below showing the 
to different prices of sugar and different extraction percentages, cal- 
culated according to the formula C = 



85 

TABLE NO. 1 
Price of Cane corresponding to different extraction percentages 



Price of Sugar 


Price of cane (Annas per maund) 


Extraction 


Extraction 


Extraction 


Extraction 


Extraction 


Rs. a. p. 


8-5 


875 


9-0 


9'25 


9-50 


800 


5-44 


5'60 


5-75 


592 


6t)8 


880 


5-78 


595 


6-12 


6-29 


6*46 


900 


612 


6-30 


6'48 


6-66 


6-84 


980 


6 '46 


6-65 


6-84 


7-03 


7'22 


10 


6-80 


7'00 


7'20 


7'40 


7'60 


10 8 


7*14 


7*35 


7'56 


Til 


7'98 


11 


7-48 


7'70 


7'92 


8-14 


8'36 



The advantages claimed for this formula was that it has only one 
variable, viz. " p ", i.e. the price of sugar, and could therefore be 
understood even by the grower. It was also claimed that it would 
give some advantage to an efficient factory with a higher extraction 
percentage. 

The price of sugar, it is suggested, should be fixed periodically by 
some suitable authority, who would issue a statement showing the 
average wholesale price for factory delivery of first grade white sugar 
manufactured in India, during the preceding fortnight. 

The price paid by the factory for cane would then be calculated 
on the basis of the average price of sugar ruling in the nearest or most 
representative market for which official figures are published. 

The price of cane (value of " C ") for purposes of sliding scale 
should, it is suggested, be for cane delivered at the factory gate, 
including transport charges, dryage, commission, supervision charges, 
all being taken at their actual figures, subject to a maximum, in the 
aggregate, of one anna per maund. 

It was observed by the Sugar Technologist that the difficulties, on 
the score of methods of evasion which are easy and numerous in regard 
to the enforcement of any scale of prices fixed by law, were not serious. 
He also stated that the real sanction would be the knowledge by the 
grower that he is entitled to a certain price for his cane. Hence, he 
suggested that the factories should post notices at all places where 
cane was being purchased, by or for them, giving full particulars of 
price calculated according to the prescribed sliding scale, as well as 
of the charges on account of cartage, railway freight, etc. Any dis- 
putes might be referred to Cane Marketing Boards set up for groups 
of 5 or 6 factories. 

Let us now review the attempts made and methods adopted from 
year to year, for fixation of minimum prices of cane in the various 
provinces since 1933. 



86 

United Provinces Sugar Industry (Protection) Rules, 1933 

The United Provinces Government was the first to frame rules 
under the Sugar Industry (Protection) Act, 1932. These rules were 
brought into operation from 1st December 1933. 

The United Provinces Government stated in a press communique 
that they did not seek to enforce the payment of any prescribed prices 
or fix the rates which factories should pay for the cane purchased by 
them. They were intended primarily to educate public opinion and 
provide cane growers the data to enable them to ascertain what a fair 
price for cane should ordinarily be. 

These Rules 1 regulated the affixation of notices at conspicuous 
places near the entrances to the sugar factories, on the 1st and 16th 
of every month in Nagri and Urdu scripts, containing information as 
to (i) the rates at which cane is being purchased (either by new con- 
tracts or under previous contracts) at the factory (including its several 
purchasing centres) together with transportation and other charges, and 
(ii) price of cane worked out according to the formula C = -f^ 
where C = the price in annas per maund of cane delivered at the 
factory gate, including charges or allowances for transport, dryage, 
commission and supervision ; 

S = a figure fixed by the Government for each season for antici- 
pated percentage of extraction of sugar which does not vary by more 
than 0.25 from the average percentage of extraction of sugar from 
cane for all sugar factories in the province during the three previous 
working seasons ; 

P = the average fortnightly price in annas per maund as announced 
by the Director of Industries, United Provinces, Cawnpore, in the local 
Government Gazette based on the highest wholesale price quotation 
for white factory, sugar made in the United Provinces on a f.o.r. 
Cawnpore basis minus four annas a maund. 

From this hesitant exhortation to active enforcement of minimum 
prices was not a far cry. The minimum price for the purchase of 
cane was fixed by Legislation in the UP. and Bihar for the first time 
during 1934-35, with a view to secure a fair price to the growers, under 
Sugarcane Rules framed under the Sugarcane Act, 1934. 2 The follow- 
ing schedules which were adopted by the respective Provinces for fixing 
the minimum price of sugarcane for each fortnight according to varia- 
tions in the price of sugar, during the season 1934-35, continued to 
operate in 1935-36 and in 1936-37, provision was also made for minimum 
price of cane corresponding to an average price of sugar between Rs. 6 
and Rs. 6-8-0 in view of the fall in price of sugar during 1936-37. 

1 Any contravention of the rules shall be punishable with a fine which may 
extend to Rs. 50. 

2 This act was repealed in the U,P. and Bihar in 1938, when the U. P. and 
Bihar Sugar Factories Control Act was passed and Rules were introduced in 
1938. These have been subsequently amended, as found necessary. 



87 

TABLE NO. 2 

Fortnightly varying Sliding Scale of Cane-prices, in 
operation from 1934-35 upto 1936-37 



Bihar 


The United Provinces 




Corresponding minimum 




Corresponding minimum 




price of sugarcane 




price of sugarcane 


Average price 


intended for use in 


Average price 


intended for use in 


of sugar 




of sugar 




Open Pan 


Vacuum Pan 


Open Pan 1 Vacuum Pan 




Factories 


Factories 




Factories 


Factories 


Rs. a. 


Rs. a. 


As. p. 


As. p. 


Rs. a. 


Rs. a. 


As. p. 


As. p. 


Above 


To 




Above 


to 






6 


6 8 


2 3 


4 


6 


6 8 


2 3 


4 


68170 


2 6 


4 3 


6 8 


7 


2 10 i 43 


7 


78 28 


4 6 


7 


78 30 46 


7 8 


8 


2 10 


4 9 


7 8 


8 


3 2 


4 9 


8 


8 12 


3 


5 


8 


9 


3 4 


5 


8 12 


9 4 


3 2 


, 5 3 


9 


9 8 


3 6 


5 3 


9 4 


9 12 


3 4 


5 6 


98 10 3 8 


5 6 


9 12 


10 4 


3 6 


5 9 











Irreducible Minimum Price Fixed for the First Time in 1937-38, for 

the entire Season 

During the 1937-38 season, the minimum price for cane was not 
fixed every fortnight varying with the price of sugar both in the U.P. and 
Bihar. The minimum cane price schedule which was in force till 1936- 
37 was established in the beginning of 1937-38. In Bihar and U.P. the 
irreducible minimum price of sugarcane was fixed for the entire season 
of 1937-38 at annas 0-5-3 per maund for gate cane, and annas 5 per maund 
for rail borne cane. 

In November 1938 the Governments of U. P. and Bihar issued 
Notifications (8683-A/RIIA dated 17th November 1938, and No. 2017-D 
dated 16th November 1938) respectively, announcing the minimum 
cane price for Vacuum Pan Factories during the whole crushing season 
1938-39. The following were the cane prices thus fixed : 



No. 




Per standard maund 
of 82-2/7 Ibs. 








Rs. a. p. 


1. 


Cane purchased at the factory (or within a radius of 5 miles 
therefrom in Bihar only). 


069 


2. 


Cane purchased at outstations and transported by railway 
or other means at the cost of the factory exceeding 5 miles 
but not exceeding 28 miles 


066 


3. 


Cane purchased at outstations and transported by railway or 
other means at the cost of the factory for distance exceed- 
ing 28 miles 


063 



On the 13th January 1939, Government of U. P. increased the 
minimum price of sugarcane, with effect from January 15, 1939, upto 



88 

0-7-9, and with effect from 3rd March, upto 0-8-9 due to rise in the 
price of sugar. The Bihar Government increased cane prices from 
February 1939, upto 0-7-0 per maund. 

During 1938-39, in the Province of Madras in the Hospet area, the 
Government fixed a minimum price of cane at about Rs. 9-8-0 per ton, 
roughly equivalent to 0-5-7 per maund. During 1939-40 the minimum 
price in the Hospet area was fixed at Rs. 12 per ton for all varieties 
of cane. In Mysore, the minimum price was fixed, varying 
with the price of sugar, in 1939-40, as in the previous years. 

The Mysore Government fixed a minimum price of Rs. 12 per ton on 
all cane supplied from February 1940 to the end of May 1940. From 
August 1940 the minimum price was reduced to Rs. 11 per ton and 
further reduced to Rs. 10 per ton from October 1940. 

Levy of Cess on Cane at 0-0-6 per maund in the 
U. P. and Bihar and revenue therefrom 

The Government of U. P. and Bihar levied a cess on all sugarcane 
purchased by factories, with effect from the 1938-39 season, commen- 
cing from 16th November 1938. The revenue derived from the cane- 
cess in 1938-39 in the U. P. was Rs. 27,81,280 and in Bihar Rs. 14,34,000. 
In 1939-40, the revenue from the cane-cess in U. P. amounted to 
Rs. 40,04,350 and in Bihar to Rs. 17,86,000. The revenue from the 
source has not been funded or assigned either in U. P. or Bihar. It 
is understood, however, that large sums are spent annually on sugar- 
cane and its development and also on roads particularly in the vicinity 
of factories. 

Sliding Scale of Minimum Price of Cane recommended 
by Sub-Committee in U. P. and Bihar in 1939-40 

At a meeting of the U. P. and Bihar Sugar Control Board held at 
Patna on the 29th April, 1939, a Sub-Committee was appointed to 
report, inter alia, on the scheme of minimum price of sugarcane, and 
to consider the feasibility of a sliding scale of cane and sugar prices. 
This Sub-Committee consisting of two representatives of the Govern- 
ment, two representatives of the manufacturing interests, and two 
representatives of cane cultivating interests met at Nainital on 18th 
June 1939 and recommended to the Sugar Control Board for adoption, 
the following sliding scale of minimum price of sugarcane linked with 
the price of sugar: 

The basis of calculation of sugar prices will be the same as when 
the previous sliding scale was in use (i.e. in 1936-37). 

The scale was unanimously accepted on the assumption of the 
existing rates of sugar excise, viz. Rs. per cwt., Cess viz. 0-0-6 per 
maund of cane, and co-operative commission (for supply of cane to 
factories varying from 0-0-1 to 0-0-3 per maund) being maintained. 

As a result of the unanimous recommendations of such a sliding 
scale, the Governments of U. P. and Bihar decided to abandon their 
previous practice of fixation of a non-varying minimum price of cane 
for the entire season, and to re-introduce a system of fixing the 



89 

TABLE NO. 3 
Sliding Scale of Minimum Prices recommended by Sub -Committee 



Price of sugar per maund 



Price of cane per maund 



Rs. a. p. 



Rs. a. p. 



Rs. a. p. 



7 


12 


and under 









5 





7 


12 


to 8 











5 


3 


8 





8 


4 








5 


6 


8 


4 





8 


8 








5 


9 


8 


8 





8 


12 








6 





9 








9 


4 








6 


6 


9 


4 





9 


8 








6 


9 


9 


8 





9 


12 








7 





9 


12 





10 











7 


3 


10 








10 


4 








7 


6 


10 


4 





10 


8 








7 


9 


10 


8 





10 


12 








8 





10 


12 





10 


15 








8 


3 


10 


15 





11 


2 





8 


6 


11 


2 





11 


5 





8 


9 


11 


5 





11 


8 





9 


. 


11 


11 





11 


14 





9 


6 


11 


14 





12 


1 


; 


9 


9 



minimum price of cane, every fortnight, varying with the price of sugar 
according to the above sliding scale or such modifications thereof as 
they wished to make, with effect from the commencement of the cane 
crushing season in November, 1939. 

As has been -stated above, during the season 1934-35, 1935-36 and 
1936-37, cane prices were fixed fortnightly in U. P. and Bihar according 
to the then accepted schedule, which was more favourable to the 
manufacturers than the schedule in force in 1939-40. 

Minimum Cane Price Sliding Scale adopted 
by Bihar and U. P. in 1939-40 

On 27th October 1939, the U. P. Government issued the following 
Press Note in connection with the fixation of minimum price of cane. 

The Sugar Control Board appointed a Sub-Committee to examine 
the question of suitable minimum sugarcane prices payable by vacuum 
pan factories, and this sub-committee, which included representatives 
both of sugar manufacturers and cane-growers, unanimously recom- 
mended that the minimum price for sugarcane should be fixed every 
fortnight in accordance with a sliding scale linking the cane price to 
the average price of sugar calculated as formerly on the basis of the 
ten highest price quotations at Cawnpore, 1 for first grade sugar 
manufactured in the United Provinces for delivery by factories on an 
F.O.R. basis. The Government have accepted this recommendation, 
but have on consideration of all the relevant circumstances slightly 
modified the scale of sugarcane prices recommended by the Sub-Com- 
mittee. The scale decided upon by the Governments of the UP. and 
Bihar was as follows: 



i This was amended on 7th December 1939, and instead of ten highest prices, 
"the average of all available market quotations of first grade sugar" was taken. 



90 



TABLE NO. 4 
Scale of Cane Prices adopted by Governments in 1939 



Per maund of sugar 



Per maund of sugar 



Rs. a. p. 



Rs. a. p. 



Rs. a. p. 



Under 7 


10 














5 





7 


10 





to under 7 


14 








5 


3 


7 


14 





8 


2 








5 


6 


8 


2 





8 


6 








5 


9 


8 


6 





8 


10 








6 





8 


10 





8 


14 








6 


3 


8 


14 





9 


2 








6 


6 


9 


2 





9 


6 








6 


9 


9 


6 





9 


10 








7 





9 


10 





9 


14 








7 


3 


9 


14 





10 


2 








7 


6 


10 


2 





10 


5 








7 


9 


10 


5 





10 


8 








8 





10 


8 





10 


11 








8 


3 


10 


11 





10 


14 


o 





8 


6 


10 


14 





11 


1 





o 


8 


9 


11 


1 





11 


4 








9 





11 


4 





11 


7 


o 





9 


3 


11 


7 





11 


10 








9 


6 


11 


10 





11 


13 








9 


9 


11 


13 





12 











10 






On the 7th December, 1939, the U. P. and Bihar Governments 
decided to make an allowance of 0-4-6 per maund of sugar on account 
of the rise in the price of raw materials as a result of the war and to 
deduct this amount from the average sugar quotations before correlating 
it to the price of the cane. 

After the increase in the excise duty on sugar from Rs. 2 to Rs. 3 
per cwt. with effect from the 1st March, 1940, the U. P. and Bihar 
Governments decided to reduce the minimum price of cane by 9 pies 
per maund (working out the cane prices in accordance with the 
schedule which remained unaltered) . 

From llth April 1940, the practice of fixing minimum price of cane 
with reference to the sliding scale schedule given above was abandoned 
and the price of cane was fixed at a flat rate with a provision for pay- 
ment of a higher price to the cultivators if the factories were able to 
sell sugar at a higher rate thus introducing virtually the system of 
deferred payment for cane. 

Opening Minimum Cane Prices in 1939-40 

The minimum price for sugarcane for the period from November 
1 to 15, 1939, was fixed as follows in the U. P.: 



No. 





Per standard maund 


1. 


For purchase at the factory 


Rs. a. p. 
089 


2. 


For purchase at Railway stations within 28 miles 


086 


3. 


For purchase at Railway stations beyond 28 miles 


083 



91 



The minimum cane prices in Bihar from 1st November to 15th 
November, 1939, were as follows : 



No, 



1. 
2. 

3. 



Cane purchased at the factory or within a radius of 5 
miles therefrom 

Cane purchased at outstations and transported by railway 
or other means at the cost of the factory for distances 
exceeding 5 miles but not exceeding 28 miles 

Cane purchased at outstations and transported by railway 
or other means at the cost of the factory for distances 
exceeding 28 miles 



Price per standard maund 
of 82-2/7 IDS. avoirdupois 



Rs. a. p. 
089 

086 
083 



The above prices were exclusive of the cane-cess of 0-0-6 per 
maund both in U. P. and Bihar. 



Minimum Sugarcane Prices in the Season 1939-40 

For ready reference we are giving a table showing the cane prices 
per maund in U. P. and Bihar for the entire 1939-40 season : 



TABLE NO. 5 
Cane Prices in 1939-40 



Date 


Cane prices 


Deduction 
Granted 




Rs. a. p. 


Rs. a. p. 


November 1 to December 15, 1939 


089 





December 16 to December 31, 1939 


099 


6 1 


January 1 to January 15, 1940 


10 9 


9 1 


January 16 to January 31, 1941 ... 


10 3 


JO 9 l 
10 6 2 






ro o 9 


February 1 to February 15, 1941 


10 


< 6 2 






[O 1 O 8 


February 16 to February 29, 1941 


090 


f As in the first 


March I to March 2, 1941 


099 


j fortnight of 


March 3 to March 15, 1941 


090 


L February. 


March 16 to March 31, 1941 


090 


fO 6 1 
<0 6 2 
to 9* 


April 1 to April 10, 1941 


089 


| As in the prc- 
l vious fortnight. 


April 11 to April 30, 1941 


063 


9* 


May 1 onwards 


056 


9 



*For the districts of Bahraich, Gonda, Fyzabad, Gorakhpur, Basti, Azamgarh 
and Ballia. Belief is for all cane. 

2 Relief for " Desi " cane in Basti and Gonda districts between 26-1-40 to 31-5-40 
and in Gorakhpur districts between 3-2-40 to 31-5-40. 

3 Relief in Gonda district only. 



92 



Date 


Cane prices 


Deduction 
granted 1 




Rs. 


a. 


P- 


Rs. a. p. 


November 1 to December 15, 1939 





8 


9 


... 


December 16 to December 31, 1939 





9 


9 


61 


January 1 to January 15, 1940 





10 


6 


6 1 


January 16 to January 31, 1940 





10 


3 


/ 6 (a) and 
10 1 6 (b) 


February 1 to February 15, 1940 





10 





JO 6 (a) and 
10 1 6(b) 


February 16 to Februry 29, 1940 





9 


9 


1 6 (ft) 


March 1 to March 2, 1940 





9 


9 




March 3 to March 15. 1940 





9 







March 16 to March 31, 1940 





9 







April 1 to April 10, 1940 





8 


Q 




April 11 to April 30, 1940 





6 





May 1 onwards 





5 


6 





The above prices were exclusive of the cess on cane of 0-0-6 per 
maund levied from the commencement "of the season in 1939-40 upto 
10th April, 1940, after which the Government decided to forego the cess. 

Non-varying Cane Prices in the 1940-41 season, in U. P. and Bihar 

The Governments of U. P. and Bihar decided to fix a non-varying 
minimum price for the purchase of cane for the entire season, thus 
abandoning the previous practice of varying the minimum prices of 
cane according to the sliding scale in use during the season 1939-40. 
The Government of Bihar issued a notification on the 4th December 
fixing the minimum price of cane during the crushing season 1940-41 
at 0-4-6 per maund. The Government of U.P. issued a notification 
on 6th December fixing the minimum price of cane at 0-4-6 per maund 
with effect from 15th December, 1940. On the 23rd December the 
Government of Bihar issued a notification fixing the minimum price 
of cane at 0-4-3 per maund with effect from the 23rd December, 1940, 
for the crushing season 1940-41, while the Government of U. P. issued 
a notification on the same date reducing the minimum price of cane 
to 0-4-3 per maund for factories situated in Gorakhpore, Gonda, 
Bahraich, Basti and Fyzabad Districts to 0-4-3 per maund. The mini- 
mum price of cane in the other Districts was kept at 0-4-6 per maund. 



Difference in price between gate-cane and rail-cane abolished 

It must be noted that the difference prevailing between gate-cane 
and rail-cane hitherto has been abolished and the same price is fixed 
both for gate-cane and rail cane. 



1 For the districts of Champaran, Saran, Darbhanga and Muzaffarpur. From 
17-12-39 to 11-1-40. 

(a) For the Sadar Sub-Division of the district of Saran and the districts of 
Darbhanga and Muzaffarpur from 12-1-40 to 31-1-40. 

(b) For the Bettiah Sub-Division of the districts of Champaran and Gopalgunj 
Sub-Divisions of the district of Champaran and Gopalgunj Sub -Division of 
the district of Saran from 12-1-40 to 29-2-40. 

#,B. Relief is for Co-210 and Co-213 cane. 



93 

Cane cess and additional cess on cane 

For the 1940-41 season, the Government of Bihar issued a notifi- 
cation on the 25th November fixing the cess of 9 pies per maund on 
all cane purchased by factories in Bihar (out of this 9 pies 0-0-3 
represented the usual cane cess and 0-0-6 represented the repayment 
of the excise loan given to factories in previous year.) The Govern- 
ment of Bihar issued a further notification on the 23rd December 
increasing the cess from 9 pies per maund to 12 pies per maund (0-0-6 
per maund being the cess on cane and 0-0-6 per maund being the 
repayment of the excise loan) and reduced the cane prices as stated 
above by 3 pies per maund. The Government of U. P. issued a notifi- 
cation on the 6th December announcing the levy of a cess on cane at 
the rate of 3 pies per maund together with an additional cess of 6 pies 
per maund being the repayment of the excise loan given last season 
to the factories and they issued a further notification on the 23rd 
December announcing the cane cess at 12 pies per maund, 6 pies being 
the cess on cane and 6 pies being the additional cess for cane purchased 
by all factories in the Province. The Government of U. P. reduced 
the cane prices in the few districts stated above to 0-4-3 per maund 
with effect from 24th December, 1940. The minimum price of cane 
in other districts in U. P. was fixed at 0-4-6 per maund. 

The total cess on cane in 1940-41 was 0-1-0 per maund. 

The reason of the U. P. Government for reducing the price of cane 
in the districts mentioned above was that there was likely to be a 
considerable amount of cane left standing in those areas when the 
quotas of canes allotted to factories had been crushed. The price of 
cane in those areas was therefore reduced and the cane cess raised 
by 3 pies so that the proceeds of this extra cess of 3 pies might form 
the nucleus of a fund to which the Governments would respectively 
contribute and from which compensation would be paid to tenants 
whose cane was left standing at the end of the season. 

A reduction of 0-0-6 per maund of cane was given in March, 1941, 
to some factories in Bihar which drew their cane from areas where 
there was surplus cane. 

Non-varying minimum price for cane in U, P. 

and Bihar in 1941-42 1 * 

After the successful practice adopted in 1940-41, it was found 
advisable by the Governments of U. P. and Bihar to fix again a non- 



1 In the 1942-43 season, in view of the poor cane crop and the high prices 
prevailing for gur, the U. P. and Bihar Governments fixed the minimum price of 
sugar at As. 8 per maund but it was increased with effect from 1st January 1943 
to As. 10 per maund, a relative increase in the price of sugar having also been 
announced with effect from that date. 

In the 1943-44 season, the minimum cane price in U. P. and Bihar was further 
increased from As. 10 per maund to As. 12 per maund, but it was stipulated that 
the additional two annas was to be paid in Defence Savings Bonds or Certificates 
which were to be cashed one year after the war was over. , 

A recent announcement by the U. P. and Bihar Governments for the 1944-45 
season fixes the minimum price of cane at As. 14 a maund out of which As. 2 
per maund are to be invested in Defence Savings Bonds. The price of sugar was 
also increased by Rs. 1-7-0 per maund in order to enable the factories to pay 
an additional sum of As. 2 per maund of cane. 



94 

varying minimum price for cane, though at a slightly higher level, 
for the 1941-42 season. It was thought desirable to offer a greater 
return to the ryot in view of the smallness of the crop for the season. 
Thus, the minimum price was fixed at five annas per maund against 
4 annas per maund. The relative selling price for standard sugar 
was fixed at Rs. 9-10 per maund. Deferred payments were to be made 
to the growers if the selling price exceeded Rs. 9-12-0 per maund. 1 

Price fixation militates against efficiency 

It will be seen from the above history of price-fixing in the pro- 
vinces which adopted it and particularly those of U. P. and Bihar that 
the motive behind these measures was that the State should lend its 
strength to the cultivator to get his share of the prosperity of the 
industry. Obviously the Governments were not activated by a desire 
to handicap the industry in its progress towards greater efficiency. 
The idea that State intervention in the interest of the cultivator can 
only create complications for the industry and ultimately defeat its 
own purpose is beloved of orthodox economists and is quite in accord 
with the theory of laissez jaire. The issues arising from this view 
will be considered from the theoretical standpoint at a later stage. 
Here it should be noted that the working of price-fixing during these 
years is not calculated to inspire the enthusiasm of honest well-wishers 
of the cultivators. It could hardly be considered unfair to the authors 
of price-fixing if it is suggested that there was more enthusiasm than 
practical knowledge behind these measures. 

What is a " fair price " 

Whatever definition one may give to the phrase "fair price of 
cane" it is certain that no price that involves loss to the industrialist 
can be considered to be fair. Any price paid under the dictates of 
political authority, and not according to the indications of value offered 
by prices in a free market, can be proved to be fair or unfair only by 
the ultimate fate of the finished product. The price of sugar being 
subject to many unforeseeable factors, there is always the possibility 
that what seems at the start to be fair to the cultivators may prove to 
be a case of serious injustice to the industrialist. This possibility is 
inescapable, except when the amount paid to the cultivator at the 
time of purchase of cane is only a part of the price and the accounts 
are left to be adjusted after the sugar is marketed and the sale pro- 
ceeds are realised by the millowner concerned. So long as such a 
system is not adopted and it is not easier to adopt than any other 
available alternative any stipulated price has the danger of proving 
unfair to the cultivator or the industrialist. 

In the case of price-fixing in the U.P. and Bihar, it was more than 
a theoretical possibility and was often the nearest approach to certainty. 
Measures to secure minimum prices for the agriculturist have always 
to reckon with reluctant psychological effects on the cultivators. All 

*On the basis of sugar prices fixed, after the Sugar Control Order of the 
Central Government came into force on 14th April, 1942, the cane-grower was to 
get the balance of the deferred payment for his cane supplies, the total price being 
0-7-0 per maund, exclusive of cesses in U. P. and Bihar. 



95 

schemes of agricultural regulation in the post-depression period have 
as a rule tackled the problem from the two ends of volume of produc- 
tion and supply on the one side and prices on the other. In the case 
of sugarcane, the effects of the price paid in one year on the production 
in the next have been overlooked. And even if the authorities had 
been aware of it, it is more than doubtful whether they would have 
undertaken the restriction of production. 

A chain of consequences 

But, as things were, price-fixing measures have led to a chain of 
mishaps for the industry which are not easy to avoid, once the 
Government accepts the responsibility for fixing the price of cane. 
Criticism of the prices awarded by the Governments has generally 
been based on a comparison of such prices with prices paid by 
Khandsaris or by the manufacturers of gur. Such criticism cannot be 
expected to appeal to the authorities who hold that an industry which 
has obtained protection on the ground of its importance to agricul- 
turists ought to pay a fair price for the agricultural raw material which 
it consumes. All other standards would appear to the Governments 
as extraneous. Criticism to be valid must fasten on the fact that cane 
prices tend to increased cane production, larger carry-overs, frequent 
crisis in the sugar market and that such elements of instability cannot 
be to the advantage either of the cultivator or of the industry. 

An inversion 

If the mills are asked to pay a higher price for their cane than 
other consumers of it, then the agriculturist may be said to have his 
dividend in his pocket before production has begun. It is an inversion 
of the logical and chronological order in which events must occur and 
the effect of such inversion would be to prevent such events from 
occurring at all. Once the industry gets stuck in a depression, it will 
be long before it is able to pay the same " fair " price to the cultivator, 
so that every year of " fair " price is bound to be followed by two or 
three years of " unfair " prices. Indeed, this has been proved by recent 
experience. And official regulations regarding price-fixing must in- 
evitably be in the direction of decreeing a tentative price, leaving final 
adjustments to be made at a later stage after the results of the prices 
of the entire production of the season are available. 

Price-fixing not entirely to blame 

One word of caution has, however, to be uttered while appraising 
the experiences of price-fixing during the last few years. For, its 
opponents will naturally be eager to attribute all the difficulties of 
the sugar industry, not merely to the rates decreed by the authorities 
for cane, but to price-fixing as such. Theoretically, there ought to be 
a certain price which is fair even according to laissez faire theories, 
though the fairness must be proved by the event of ultimate sale of 
the finished product. And that price cannot become unfair merely 
because it happened to have the support of a provincial Government. 
Even if such a price had been fixed from year to year, it can hardly 
be concluded that the sugar industry would have been wholly free 



96 

from the problems with which it was faced. The problem of carrying 
over large stocks produced at high costs into a period of low prices 
is by no means peculiar to the sugar industry ; and it is perhaps, too 
late in the day to argue, even if it were practicable, that the sugar mills 
should get cane by the same methods by which jute mills get their 
raw jute ; when the experiences of fixation of cane prices are 
examined, it must be borne in mind that the price-fixing has a com- 
paratively small share of the blame for the over-production of the 
sugar industry. But one thing is certain, that price-fixing has queered 
its own pitch, so to say, and that it will be a long time before it gets 
a fair chance to prove its worth. Also the methods by which the 
principle of a tentative price can be brought into application have to be 
worked out in a manner which would be equitable to both the interests. 

Pros and Cons of Price-fixing 

It remains now to consider whether price-fixing is necessarily 
deemed to be a costly and dangerous futility. The position of the 
laissez faire economist hardly needs to be stated at length. For, it is 
no more than the contention that the laws of supply and demand being 
natural laws, any interference with them will bring on that terrible 
vengeance which nature wreaks on man whenever he stupidly seeks 
to secure a triumph over her. Besides, to impart rigidity to one part 
of the structure of costs because the market is otherwise free is to 
condemn the structure to ruin. All this is as valid as it is intelligible. 
But those who advocate fixed prices for cane have certain presupposi- 
tions of their own ; and as has been observed earlier, criticism by 
extraneous standards can claim little validity for itself. In this case, 
the presuppositions are that the market for sugar is a closed market ; 
that prices of sugar cannot fluctuate beyond certain limits, that the 
price of cane can be altered from year to year, while the responsibility 
for regulating production according to the state of the market must 
rest with the industry. It is argued, therefore, that price-fixing need 
not stand in the way of the industry increasing its efficiency, that the 
cane prices need not raise costs or endanger fair prices for sugar. 

A Problem of Costs or of Distribution ? 

It is not difficult to appreciate this point of view. The difference 
between the two parties arises mainly from the fact that, while the 
laissez faire economist views the price of cane as a question of costs 
and of production, the. advocate of price-fixing regards it as a problem 
in distribution. The latter only insists that, when the millowner pays 
the price for cane, the problem of distributing the profits or other 
advantages of a protected industry should be solved at least so far as 
the cane-grower is concerned. Empirically, when a price is paid for 
cane, it is not only the cost of the raw material but also the cultivator's 
share in the advantages created by the grant of protection to the 
industry. So far as the millowner is concerned, there are other items 
in his costs and the computation of his profits or his share in the 
advantages of a protected industry can be done much later. But, for 
the cultivator, the price he gets for his cane closes his accounts in this 
regard. The question, therefore, is whether this price can be so fixed 
that this closing of accounts can be indubitably equitable to him. To 



97 

award a tentative price with room left for a final adjustment at a later 
stage is to postpone the solution of the problem of distribution envi- 
saged here. But that is precisely the line on which the Sugar Control 
Act attempts to solve the problem. 

The Structure of Costs 

But the gravamen of the charge against price-fixing, from the side 
of economic theory, is that it imparts rigidity to costs and incapacitates 
the industry for its main task of reducing costs of production. The 
emphasis on lower costs arises from the anxiety that the stage of 
removal of protective duties and resumption of free trade should be 
reached as soon as possible. The means by which costs are lowered 
rarely worries the economist ; for he never concerns himself directly 
with the problem of distribution. The same laws which ensure 
economy in production and costs are expected to bring about fair 
distribution as it is understood by laissez jaire theory. But the post- 
depression period is remarkable for a growing scepticism towards such 
theories and a refusal to wait for their slow working for the economic 
security of men and women. Theories of underconsumption are in 
the main a reaction from the over-emphasis, which orthodox economics 
has laid on the production side and particularly on the reduction of 
costs of production. While there can be no question that increased 
efficiency both of labour and of plant and machinery, of men and 
material, ought to be ceaselessly striven for, the tendency to include 
wages as only an item in the costs schedule to be cut as relentlessly 
as any other is strongly to be deprecated. It is no accident that, while 
protection in India is awarded with a view to bring new industries 
into being, protection in the advanced industrial countries of the west 
is given with a view to maintain standards of Kving. The conflict 
between lower costs and standards of living, laissez faire ignores. 
While theoretically it may be resolved in the long long run and in 
ideal conditions of free trade, the conflict is real in real life. To ask 
the sugar industry to reduce costs regardless of what the cane grower 
gets for his pains is to believe that the only way of distributing the 
benefits of protection is to cheapen the goods for the consumer. Much 
indeed can be said against this view: firstly, the "consumer" is an 
unreal abstraction, and what the cane-grower may get by way of 
cheaper sugar will be poor compensation for what he loses by the 
drive for lower costs. And the cane-grower is not a consumer of white 
sugar ! Secondly, there is no guarantee that cheaper raw material 
would lead to proportionately lower costs of sugar production or that 
the benefits of lower costs will be passed on to the public. The demand 
for fixed cane prices is a demand that the mills should not monopolise 
the benefits of protection and that when the " consumer " cannot be 
helped to get a share of them, at least the cane-grower can and ought 
to be. 

Anticipatory Solution 

Price-fixing ought to be viewed as a severely limited objective 
It is in essence a half-hearted, piece meal, slipshod way of solving the 
problem of distribution so far as it concerns the cane-grower and is 
to be condemned- or supported as such. But when such attempts are 

T 



seen to flow from any ambitious scheme of regulation which oversteps 
-the limits set by free trade theories, it is necessary to see the bearings 
of such anticipatory solution of the problem of distribuion. 

The Human Factor in Cutting Costs 

It has been observed already that the insistence on wage standards 
and on fair prices for agricultural raw materials is only a case of such 
anticipatory solution. In so far as distribution is attempted before the 
productive processes are completed and the results of productive 
activity can be known, it is a reversal of the correct order of events 
and must be attended by some risk of eventual unfairness. But oppon- 
ents of price-fixing or wage-fixing condemn them not so much on 
grounds of possible unfairness, as on the ground that those regulations 
will interfere with the industry's attempt to cut down costs and cheapen 
the product for the large mass of consumers in the country. It is in 
relation to this laudable aim of progressive decrease of costs that these 
measures have to be considered. The question to be considered in 
this connection is whether the cheapening of a product through relent- 
less cutting of costs, regardless of what the human factor gets in return 
for the pains, is the only or the best means of securing economic pro- 
gress. Experience of the last two decades has shown that such decrease 
in costs is more often than not a pyrrhic victory for the capitalist, for 
the industry and for the community. When the reduction in costs is 
accomplished in a number of industries at the expense of labour or 
the growers of the agricultural raw material, a crisis in consumption 
occurs inevitably. One is therefore driven to the position that economy 
from a communal standpoint, as different from that of the investors in 
an industry, consists in the most effective use of material in the pro- 
duction of goods and services and that somewhat different standards 
have to be applied to the labour involved. 

The Crisis in Consumption and Maladjustments thereof 

If it is true that the adoption of the same attitude to men as to 
material leads to a crisis in consumption, then it is necessary that; the 
industry should be told that savings at the expense of labour will not 
be regarded as genuine economy in production. Logically, the distinc- 
tion between men and material, so far as production costs are con- 
cerned, wears thin indeed. For, it would mean that labour-saving 
devices are the very reverse of economy in production. Nevertheless, 
it. should not be difficult to recognise that when such devices throw 
men out of employment, the resulting maladjustments are highly un- 
economic, at least temporarily from the standpoint of the community 
as a whole. In other words, what may be economy from the point of 
view of the production side is " diseconomy " from that of the distri- 
bution side, 

Lower Costs not an Unmixed Blessing 

Orthodox economics refuse to regard this even as a possibility ; 
and the whole structure of the science is such that it cannot compromise 
with the logical proposition that when economic life is free, there is no 
problem of distribution as such to be faced. But in real life, problems 



99 

of distribution call for at least as much attention as problems of pro- 
duction. The assumption that the race for lower costs has only to 
be run for the best results to be achieved is seen to be unwarranted. 
Lower costs are no longer regarded as the unquestionable or unmixed 
blessing they were formerly said to be ; and problems of distribution 
are, therefore, frankly faced. 

Price fixing an " ad hoc " solution in distribution 

However, the solution of these problems is not easy. Problems of 
distribution are inextricably inter-woven with questions of ethics : 
and solutions are limited by what is politically practicable. The 
decrees of political authority in regard to distribution are usually 
dictated by political considerations. Except in the impossible condi- 
tions of absolute economic equality such decrees can only be an un- 
helpful tinkering with the problem. But they are important because 
they signify the growing element of regulation in economic policy, /They 
are tokens of social determination that problems of distribution ought 
not to be allowed to accumulate in one uncontrollable crisis of under- 
consumption. They indicate, too, that there is a large mass of opinion 
which would much rather face the consequences of interference than 
lay up a huge problem for future generations by letting everything 
alone. Above all, it is a bland assertion that a cut in wages or in the 
price paid for agricultural raw material is no economy at all. It is a 
sharp rebuke to the capitalist that if he is so intent on cheapening 
sugar for the consumers, he had better show his mettle in other 
directions. 

It should not be thought, however, that price-fixing for cane 
necessarily implies indifference to the cost of production of cane or 
that the industry is called upon to pay a price for cane which leaves 
a fair margin of profit for the cultivator regardless of his efficiency 
as a producer. When the Tariff Board observed that the provision of 
cheap cane is vital to the growth of the sugar industry they did not 
mean that the cultivators should provide cane to the millowners at a 
loss, but that the cost of cultivation should be reduced by the adoption 
of improved methods of cultivation and securing higher yields of cane 
per acre and of better quality. Both the cultivator and the millowner 
have thus a score of technical problems to face and solve, and price- 
fixing must be viewed as an interim award by an " ad hoc " tribunal 
for distribution. 



CHAPTER IX 

ECONOMIES IN PRODUCTION BY UTILISATION 
OF BY-PRODUCTS 



WE have seen in Chapter VII what the protection to the sugar industry 
has done for cane cultivation and, what is more important, what 
agriculture so aided and revivified can do for the sugar industry. We 
have also noted, somewhat parenthetically, how agriculture has, to 
some extent, through official fixing of price for cane, retarded the 
progress of the sugar industry towards lower costs of production. All 
this is important in as much as the further cheapening of Indian sugar 
rests more with agriculture than with industry. We must now turn 
to the other end of sugar manufacture, and consider the utilisation of 
by-products. It is a common-place of text-books of economics that 
the utilisation of by-products is a main source of economy in large- 
scale industry. It is, in fact, a scientific rendering of the common 
adage "waste nothing, want nothing." This adage is, however, one 
which the country, rather than any particular industry should take 
to heart, particularly when it sets about establishing new industries 
at great cost to the consumer. We have said before that in India the 
problem is to make the most of every new industry established by 
means of high protective duties, rather than one of ticking off the 
results of actual working as each year passes in the stipulated period 
of protection. While this is true, at the same time the sugar industry 
has been handicapped not a little by the fact that it has been obliged 
to waste its valuable by-products and thus forego one of the means of 
cheapening its costs. 

Utilisation of By-products, (Molasses and Bagasse) : 
Molasses, most important by-product 

Molasses is the most important by-product of the Sugar Industry, 
from the point of view of the factories as also of indigenous small-scale 
manufactures. Molasses is that liquid substance or syrup which 
remains after the massecuite has been cured. It is often boiled again 
for making lower qualities of sugar, and the molasses finally obtained 
is exhausted and contains very little sucrose. The other by-product 
is bagasse or as it is sometimes called megasse. This bagasse is the 
residue of fibrous matter which remains after the cane is crushed. 
Out of 100 maunds of cane about 10 per cent of sugar and 3.6 per cent of 
molasses are recovered by the factories and about 5.2 per cent of sugar 
and 4.5 per cent of molasses are recovered by the Khandsaris. 

Precipitous Fall in Price of Molasses 

Formerly, the molasses produced by the factories and khandsaris 
was consumed largely in the tobacco industry and in the manufacture 
of plain country spirits. The consumption of molasses in both these 
ways has fallen by more than 75 per cent at the present time. While 



101 

there has been such a heavy fall in the consumption of molasses, its 
production has naturally increased considerably since 1931, as a result 
of the establishment of a very large number of factories. The pro- 
duction of molasses in India was estimated at 269,000 tons in 1930-31 
and 366,000 tons in 1931-32. And in 1939-40 it amounted to as much 
as 625,000 tons. 1 The molasses obtained in the khandsari sugar factories 
is richer in sucrose than factory molasses and is either sold direct to 
the consumers or made into second class eating gur. The sudden 
increase in the production of molasses with a concomitant decrease in 
its consumption has created a problem of first rate importance and 
should engage the anxious attention of all sugar manufacturers. At 
present, it is not possible to realise even one anna per maund for the 
molasses while a price of Rs. 2-12-0 was obtained in the year 1930-31. 
When the Tariff Board reported they assumed in their calculations that 
the factories would be able to realise about Rs. 1-8-0 per maund for 
their molasses. The Indian Sugar Committee stated unequivocally 
that " the time is remote when the sugar manufacturer in India need 
anticipate any difficulty in disposing of his molasses." This has how- 
ever proved to be incorrect, since 1934. 

Impossibility of throwing away Molasses 

It is really unfortunate that a situation has developed whereby 
not only can this most important product of the sugar industry not be 
profitably utilised, but it involves expenditure for its disposal.- If the 
molasses are thrown in the adjacent river or watercourse, there is no 
doubt that the water will be polluted. If it is allowed to run into pits, 
it would prove a serious nuisance to the neighbourhood. The situation 
is one in which a certain source of wealth is turned into a loss to the 
manufacturer and a possible menace to public health in the neighbour- 
hood of the factories. 

y 

Outlets for Molasses 

The problem therefore should be examined very closely in order to 
remove a great handicap of the industry almost since the very first 
year of the regime of protection. The quantity used in curing tobacco 
will decline further, owing to the increasing use of biris and cigarettes, 
and decrease of hookah and chilam. We must therefore think of other 
outlets for disposal of molasses. These are : 

(i) Methylated spirit, 

(ii) Cattle food. 

(iii) Production of the yeast as a source of food, 

(iv) Fertiliser, 

(v) Road-surfacer. 

(vi) Cheap confectionery, 

(vii) FueL 

(vizi) Alcohol for power in partial substitution of petrol. 

These channels, we shall now consider. 
* In 1942-43, it was 469,000 tons and 1943-44, it was 538,000 tons. 



102 

Methylated (Denatured) Spirit, and Potable Spirit 

A glance at the Import trade statistics will show that about a 
million gallons of methylated or denatured spirit are imported annually 
from Java. During the year 1932-33 the import was 8,56,800 gallons, 
valued at Rs. 8 lakhs, as compared with 10,52,400 gallons valued at 
Rs. 10 lakhs in 1931-32. During 1937-38 the import was 379,010 
gallons, valued at Rs. 3,14,042. An increase in the duty from 7i per 
cent ad valorem to about 25 per cent would make it possible to shut 
out its import completely and to substitute the same by the indigenous 
product. An outlet for a part of our production of molasses can thus 
be found in the development of the Indian Spirit Industry. Spirit can 
be manufactured from molasses. A large quantity of it is used by 
the various industries, e.g. Lac Industry, Varnish Industry, Paint and 
Furniture-polishing Industries. As a result of the great fall in the 
price of molasses it would be possible to encourage the distilling 
industry in the country without affecting in any way the industries 
consuming spirit, and to supply the country's requirements from 
internal production cheaply owing to the tremendous fall in price of 
molasses. The loss to Government's revenue will be only about 
Rs. 75,000 per year. 

The production of country spirits in India has decreased consi- 
derably, during the last 12 years. About 1920, the quantity of 
molasses consumed for making potable spirit was 4 times the quantity 
used in 1938. But the excise duty has resulted in the consumption 
being scarcely large enough to justify the operation of distilleries. 
At present (1939) the distilleries suffer due to lack of an outlet and 
have hardly enough work for 6-7 months in a year. This is partly 
due to the Government's policy of reducing the consumption of potable 
spirituous liquor, and of deriving maximum revenue from minimum 
consumption. One result of the excessive taxation has also been the 
increase in the practice of illicit distillation of liquors by the poorer 
classes. Distillation could be increased, if the increase were socially 
desirable. But inasmuch as the popular parties are wedded to a policy 
of prohibition, the solution of the problem of molasses has to be sought 
along other lines than that of liquor production. 

Cattle Food 

The scope for the use of molasses as cattle food does not appear 
to be great due to the difficulty in marketing combined with a tradi- 
tional conservatism of owners of most of the cattle in India, as they 
are used to free grazing with hardly any expenditure on other food- 
stuffs. But now the molasses can be given away without cost by 
factories, a certain amount can thus be consumed. This may solve 
the problem of disposal, but it is not a means of finding a market for 
this by-product of the sugar industry. 

Yeast 

The use of molasses as a source of yeast is new to Indian ideas, and 
is not likely to develop very much. 



103 
Fertiliser 

It is possible to use molasses as a fertiliser in its raw state, but our 
cultivators will have to be educated to its use and ample supplies of 
water would have to be provided in order to dilute the molasses before 
it could be put on the land. 

Used in a small quantity, it tends to improve the land ; 
Sir T. Vijayaraghavachariar recently observed that he had seen molasses 
being used as manure. This avenue of use for molasses should 
therefore be explored and the Agricultural Department should carry 
on research in regard to the same. It is also possible, we are informed, 
by using a particular Plant to recover the potash from molasses and 
to produce ash with a high content of potash therefrom. 

Potash is necessary to plant-life in order to enable starch, sugar 
cellulose arid carbo-hydrates to be produced. Potash plays a large 
part -in the development of leaves and woody parts of the stems of 
plants and gives the plant more resistance to attacks of fungous diseases 
or the like. 

Sugarcane on an average extracts from the soil about 100 to 150 
pounds of potash per acre and it is desirable that this should be 
replaced either by potash recovered from molasses or from fresh resour- 
ces, if the land is not to be impoverished and the yield of crop maintained. 
It is possible to return the available potassic content of molasses in an 
easily assimilable form to the land and to use it for the fertilisation of 
sugarcane or other crops, 

One essential for this invention is a furnace to burn molasses 
at the lowest temperature and recover the highest possible yield of 
potash. There has also to be provision for burning waste molasses 
from cane sugar factories or gur refineries comprising a furnace into 
which the said waste product suitably pre-heated is introduced into 
or a revolving drum from which it falls as drops or threads to be 
burned as it falls. It has been estimated that the working cost for 
dealing with 12,000 maunds of molasses in 24 hours works out to li 
annas per maund of molasses. Taking the average ash contents of 
molasses to be about 9 per cent, 100 maunds of molasses will yield 
9 maunds of ash which may have an approximate potash content of 34 
per cent or 3 per cent of valuable fertiliser value. Such a product 
based upon other potash products will have a value of Rs. 2-12-0 
per maund at the factory. Reduced to one maund of molasses the 
estimated value of the product will come to about 4 annas from which 
the cost of treatment will take away 1 annas. The estimated profit 
will therefore be at least 2 annas per maund of molasses thus treated. 
For the whole season this will give a substantial profit. 

Utilisation of Molasses for Reclaiming Usar Lands 

During the year 1938, the Government of U. P. appointed a 
Committee to report on the suitability of the methods advocated for 
the reclamation of Usar lands with special reference to the use of 
molasses etc. The Committee submitted its final report to the 
Government in December 1939. The Committee considered very 
carefully the feasibility of utilising molasses for reclamation of Usar 



104 

land. It also critically examined all the data available in U.P., Bihar, 
Punjab, Madras, Bombay and Mysore, and came to the conclusion that 
molasses could be utilised with advantage for reclamation of Usar 
areas, but for the fact that the cultivators might find the cost of the 
treatment to be distinctly prohibitive. The majority of the members 
of Usar Lands Reclamation Committee found it a little difficult to 
recommend this method for places which are not within 10-12 miles 
of a sugar factory. The Committee also felt that there was need for 
further work both in the field and laboratory so that the question of 
molasses as a reclaiming and fertilising agent might be critically 
tested. In short, wherever the cost of treatment permits it, mixtures 
of molasses and pressmud in different proportions can be utilised in 
reclaiming alkali lands. 

Road Surfacer 

Another use, though comparatively insignificant, to which molasses 
can be turned, is for road surfacing, by mixing it with a certain 
amount of Pitch. Experiments in this direction are far from complete ; 
and it still remains to see how far this can be a commercial success, 
in competition with other products. 

Confectionery 

Molasses were used for cheap confectionery in the villages, but 
since the decline in the price of gur and sugar, its consumption has 
considerably decreased. 

Fuel 

Molasses can also be used as fuel. Some experiments were carried 
out in Java, and a few factories burnt a mixture of bagasse and 
molasses. In Australia several mills burnt molasses as fuel in their 
furnaces. Molasses mixed in small proportion with bagasse burns 
well and produces profitable calories. This practice is followed in 
many centres in the Philippine Islands when there is a shortage of 
bagasse or when this has only a small calorific power, which happens 
as the requisite quantity of molasses is too small for this purpose to 
solve the problem of its disposal. 

A countless number of furnaces have been proposed for the 
burning of molasses alone in the Philippine Islands, but none of them 
to our knowledge has given satisfactory results. Besides, the construc- 
tion of special furnaces, its repair and maintenance entail heavy 
expenses for which there is no compensating benefit. The possibilities 
of this, however, should be investigated in India. 

In some factories the press-cakes are mixed with slack coal and 
brickets are manufactured. These bricks are used for burning. 

Power Alcohol 

It is certain, however, that the best and most promising outlet in 
India for the molasses would be in its manufacture as power alcohol. 
The entire scientific world is unanimous in its recognition of the fact 



105 

that the fuel of the future for engines of internal combustion is alcohol. 
This can be produced from vegetable materials with which nature 
provides us generously and there as no danger that they will be 
exhausted in the course of time. The development of this industry 
is of considerable importance in the industrial development of this 
country ; it is vital because of the possibility of providing the country 
with a motor fuel which is both cheap and easily obtainable. Alcohol 
has many advantages over gasoline. One of these is the fact that its 
source is not a wasting asset^ The raw material for it is produced 
annually, and alcohol is the only fuel which can be produced without 
danger that its existing natural source of supply will be exhausted. 

The manufacturer of sugar finds in molasses first class material 
for the production of alcohol. 1 The future development of the alcbhol 
industry can easily go beyond the limits of the imagination of the great 
enthusiasts, not because its growth can be achieved easily but because 
of the constant and increasing demand for motor fuel at low prices. 

The value of alcohol as a fuel for internal combustion engines has 
been recognised in various countries, e.g. France, Germany and 
America. In Germany alcohol was used during the last World War in 
very great quantities by the army for motor transport, for which 
purpose it was mixed with benzol. The importance of alcohol as a 
fuel depends on its possibilities in the future as a substitute for 
kerosene or petroleum. 

Alcohol has a lower caloric power than kerosene or benzol or 
benzine ; but since it requires less air to effect combustion, less caloric 
power is lost, and since its resistance to compression is greater, it is 
of more value as a fuel than the other two substances. Kerosene or 
petroleum is not a chemically pure substance but a mixture of great 
number of substances. Its properties cannot be determined definitely, 
since they vary as the grade of petroleum varies. While alcohol is 
low in caloric power, it possesses an ignition temperature around 
270 degrees and can be used only with a pressure of from 70 to 90 
pounds per square inch. Due to this the thermic efficiency can be 
increased from 22 per cent to 30 per cent. 

The start of engines burning alcohol offers no difficulty, and 
engines burning alcohol develop 20 per cent more power than the same 
engines when they burn gasoline. The combustion of alcohol is perfect 
and the escaping gases do not exude an offensive smell. Pure alcohol 
offers great advantages. Since alcohol contains oxygen in molecules, 
it requires less air for combustion than gasoline does. Another out- 
standing feature in favour of alcohol which should not be lost sight of, 
is its clean combustion. The carbon formation is practically nothing. 
The cleanliness of alcohol as fuel, compared with gasoline, can be 
demonstrated by burning a small quantity of gasoline and a small 
quantity of alcohol and holding a cold piece of metal or a glass object 
over the flames of each product. Alcohol which is of uniform com- 
pression and contains one-third of its weight in oxygen, burns com- 
pletely and does not leave any deposit or residue. 

1 " Molasses is the cheapest raw material in common use for the production of 
alcohol for industrial purposes, the price being governed by supply and demand." 
Vide, report of the Imperial Sugarcane Research Conference, London, 1931. 



106 

Alcohol also does not produce violent explosions such as gasoline 
and other motor spirits proluce. As a result, the motor runs smoothly, 
thus reducing the wear and tear. The engine is not overheated as in 
the case of gasoline or other fuels. It keeps the spark plugs clean, thus 
assuring more efficient ignition. Alcohol, it is also recognised, is a 
good " anti-knock " fuel. 

As alcohol generates less heat in the combustion process, it needs 
less water for cooling. It is less disagreeable to work with and the 
danger of poisoning due to inadequate supply of air does not exist 
when alcohol is used in an engine in a closed place. Medical experts 
have expressed the opinion that the rapid increase in cases of neurosis 
or hysteria in big cities is due to the fact that the air is poisoned by 
carbon monoxide. This could be prevented with the use of alcohol 
as fuel instead of gasoline. 

Even if the cost of production of alcohol is high due to the neces- 
sity of using denaturants which are very costly and of little use but 
whose use is imposed by legislation coupled with taxes which must 
be paid to the Government, the manufacturer of alcohol can still put 
his product on the market at low prices. If the manufacturers of 
alcohol can succeed in getting the Government of India to abolish 
the use of costly denaturants and substitute less costly ones for them 
such as petroleum and gasoline for motor alcohol and exempt alcohol 
from any excise duty as on petrol, the immediate success of the 
industry would be assured. It must be observed that 95-96 alcohol 
mixed with gasoline or ether will prove unsuitable for use as the 
continuous evaporation produced in the carburetter will lower the 
temperature to a limit which will give way to the separation of alcohol, 
then the gasoline or ether, more volatile, evaporates, leaving alone the 
alcohol which will hinder normal evaporation of the motor. Pure 
alcohol, however, mixed with gasoline in fixed proportions improves 
the quality of the former. It is mixable at all temperatures, never 
reaching a point of separation. The best way therefore of having an 
outlet for the production of alcohol is to make the distilleries manufac- 
ture pure alcohol. 

Assistance to Power Alcohol Manufacturing Industry 
Compulsory use of Alcohol with Petrol 

Power alcohol can be produced in India and mixed with petrol in 
the proportion of one part of alcohol and three parts of petrol or 20 
per cent alcohol and 80 per cent petrol. Several countries have in 
fact passed legislation making it imperative for petrol companies to 
use a certain percentage of alcohol with petrol. Below is a statement 
showing the form in which assistance might be given to the industry 
and what is done in other countries. 

. AUSTRALIA.: A mixture of 17 per cent alcohol and 83 per cent 
petrol is used on a small scale legislation contemplated. 

AUSTRIA. (1) The law provides that mixing shall be compulsory 
if the (duty paid) price of petrol exceeds the price of alcohol not 
operative. 



107 

(2) The petrol Cartel takes over the alcohol from the State 
Alcohol and arranges disposal. During 1933 it is expected that they 
will take over about 250,000 gallons. 

BRAZIL. Petrol companies are required by law to purchase power 
alcohol equivalent to 5 per cent of their petrol imports. The law is 
suspended as most of the alcohol produced is only of 94 per cent 
strength and the concentrating plant is of insufficient capacity. 

CZECHOSLOVAKIA. The addition of 20-25 per cent of alcohol to 
motor fuel is compulsory and 98 per cent of the petrol sold is this 
mixture. The amount of alcohol so used is about 11 million gallons. 

FRANCE. (1) Importers of Petrol are under a legal obligation to 
take from Government a quantity of alcohol equivalent to 8-10 per cent 
of their petrol imports. 

(2) The State buys alcohol from the refineries up to a certain 
limit of quantity at 41 per ton (Rs. 1-15-3 per gallon) and sells it 
to the petrol distributors at a much lower price corresponding roughly 
to the (internal) price of commercial motor spirit, viz. 17 per ton 

(13 annas per gallon) the loss being partly made by a special addi- 
tional import duty of Is. 3d. per gallon on all imported petrol and 
kerosene. The amount of alcohol to be allocated for motor fuel for 
1933 is estimated at 45 million gallons. 

(3) All " heavy " petrol must be mixed with 20-25 per cent of 
alcohol, this is sold at 24 d. per gallon cheaper than "light" petrol. 
A mixture of 20 per cent alcohol is permitted without a declaration 
in fuel grade petrol. 

(4) The cost of these subsidies to the State is estimated at 206 
million francs or say 3 crores of rupees. 

GERMANY. The oil importers and indigenous producers are required 
to purchase from the alcohol monopoly a quantity of power alcohol 
corresponding to 10 per cent by weight of their imports of petrol and 
benzol plus 6 per cent of their imports and | or production of kerosene 
at a control price of 45 per ton. The amount of alcohol taken over 
is estimated at 42 million gallons. The mixtures permitted range from 
10 per cent to 30 per cent alcohol. 

GREECE. (1) It is proposed to standardise a mixture of 78 per 
cent petrol with 22 per cent alcohol but also to permit the use of 
unmixed petrol. 

(2) To fix annually the quantity of mixture to be made. It is 
estimated that 1| million gallons of alcohol would be so used. 

HUNGARY. (1) Petrol over .735 S.G. must be mixed with 20 per 
cent alcohol (unless used for agricultural purposes) about 90 per cent 
of the motor fuel used is this ' Motalco '. 

(2) The duty on light petrol (below .735 S.G.) is 4d. per gallon 
higher than that on ' Motalco '. 

ITA&Y. A definite allocation of the total production of industrial 
alcohol is made to the motor industry at present 2 million gallons 
which is less than 3 per cent of the total consumption of motor spirit. 



108 

This is taken over at a control price (Rs. 1-6-10 per gallon) but does 
not pay the petrol duty. 

LATVIA. The mixture of 25 per cent alcohol with 75 per cent 
petrol is compulsory. The alcohol is a State monopoly. 

SWEDEN. There is no legal regulation but power alcohol is free 
of all duty. The mixture used is 25 : 75. The quantity of alcohol 
used for motor fuel is about 2 million gallons. 

YUGOSLAVIA. The mixture of 80 per cent petrol with 20 per cent 
alcohol is compulsory except for aeroplanes. 

It can be seen from these statements that whereas in several 
countries the use of a specified mikture has been made compulsory, in 
others, the principle has been adopted of requiring the oil companies, 
by legislation, to purchase annually a quantity of power alcohol cor- 
responding to a certain percentage of their imports and production of 
petrol and benzol ; and in some countries even of their kerosene. The 
adoption of this method leaves a certain amount of latitude to the 
petrol distributing companies in distribution, and in practice the mix- 
ture is sold at a price somewhat lower than pure " light " petrol in 
spite of the fact that it actually costs more. A more positive method 
of promoting the use of alcohol as a motor fuel is its exemption from 
duty as in Sweden, but the Government of India is hardly in a position 
to forego any revenue. 

Modification in Denaturing Rules in India Essential 

Several countries have been experimenting for years with power 
alcohol in order to make it a commercial success for use fn internal 
combustion engines. The United States of America, South Africa and 
Philippine Islands have succeeded considerably with mixtures of 
alcohol and ether, e.g. Natalite but these countries are fortunate 
enough to have received the full support of their governments. The 
greatest drawback in this country, however, to any experiments in this 
direction materialising lies in the present Excise Rules relative to 
denaturation. The Government insists upon the use of Caoutchoucine 
as an ingredient for denaturation. This substance which is obtained 
from the destructive distillation of rubber is not suitable for denaturing 
alcohol intended for use in internal combustion engines as it leaves 
a gummy residue which clogs valves and fuel jets. True, Government 
have of late relaxed to some extent the use of Caoutchoucine for de- 
naturation in special cases, e.g. manufacture of high grade soap and 
have permitted in its place the addition of 5 per cent Wood Naphtha, 
but the price of this ingredient is prohibitive. It is held by some that 
the use of Caoutchoucine or Wood Naphtha is not imperative as a de- 
naturant so long as Pyridine, the other ingredient insisted upon, is 
used. Pyridine in itself renders alcohol unfit for human consumption 
and if denaturation be permitted with Pyridine along in increased 
proportion of 1 per cent instead of i per cent as at present the diffi- 
culties regarding the denaturation of commercial spirit will be imme- 
diately overcome and power alcohol could then be produced to sell 
considerably below the current price of petrol in the mofussil. 



109 
UJP. and Bihar Joint Power Alcohol and Molasses Committee 

In January 1938, the Governments of U.P. and Bihar appointed 
an expert committee to devise ways and means for starting the manu- 
facture of Power Alcohol from molasses and to report on the best 
method of mixing Power Alcohol with petrol and also to explore the 
possible use of molasses and their practical application. 

The Committee submitted its report to the Governments of U.P. 
and Bihar in June 1938. The report was published in July 1939. The 
findings of the Joint Committee on various important questions per- 
taining to the enquiry regarding power alcohol and their recommenda- 
tions are given below. 

U.P. and Bihar Joint Committee's Findings 1 

The Committee has dealt with the subject of power alcohol tracing 
its growth in the various countries of the world, and also with reference 
to the importance it Has now assumed so far as India is concerned. 
It has endeavoured to deal with the properties of power alcohol and 
has, with the materials available, forecasted what the cost of manu- 
facture would be. The Committee has also suggested that it would 
be possible for power alcohol being produced at a price, which would 
enable it to bear, if necessary, an excise duty equal in amount to that 
of petrol without imposing any additional burden either on the tax- 
payer or the motor-owner. 

It would be seen that if the entire surplus quantity of molasses, 
estimated at 265,000 tons, be converted into power alcohol, about 15 
million gallons of it can be produced, calculating one ton of molasses 
as equivalent to 57 gallons of power alcohol. The total consumption 
of petrol being as high as 100,000,000 gallons, the abovementioned 
quantity of power alcohol can be easily utilised, particularly as there 
would be little difficulty in the disposal of power alcohol in the interior, 
where it can be sold at the same price as petrol. Thus the replacement 
of 15 million gallons of imported petrol by indigenous power alcohol 
would mean a saving of about Rs, 40 lakhs per year to the country. 

The Committee emphasised that the case for the development of 
the power alcohol industry within the country has assumed particular 
importance with the separation of Burma from India. It appears to 
be in the national interest to encourage the manufacture of power 
alcohol, and thus get rid, to such extent as is possible, of the dependence 
of the country on imported petrol, the regular supply of which cannot 
be assured during an outbreak of hostilities, when it would be iti 
greatest demand. 

Power alcohol is an ideal fuel having great flexibility, which makes 
is possible to be used in higher proportions for heavy types of vehicles. 
If, therefore, for some reasons there is a serious shortage of petrol in 
the country, or imports are obstructed, or if the price of petroleum 
which is dependent to some extent on political considerations is en- 
hanced to an uneconomic level, the country would have an alterna- 
tive supply of fuel, namely power alcohol, to fall back upon. 

iThe writer (Mr. M. P. Gandhi) had the honour of being a member of this 
Committee. 



110 

The Committee estimated that the quantity of petrol consumed 
in the United Provinces and Bihar will soon reach a figure of 10 million 
gallons 1 so that the requirements of power alcohol for the two provinces 
would be in the neighbourhood of 25 million gallons, for the manufac- 
ture of which about 44,000 tons of molasses would be required. But 
there is no doubt that if a start is made, it will be possible to supply 
power alcohol to the neighbouring areas as well, and the quantity of 
molasses so utilised will increase gradually. Although, therefore, the 
relief given to the molasses situation in the initial stages would not 
be very substantial there is the certainty that, once the industry is 
established, it will be possible to extend considerably the use of 
" industrial alcohol " and methylated spirit. The Committee was thus 
convinced that the power alcohol industry satisfied all the necessary 
conditions required for the establishment of a new industry, namely a 
cheap and abundant supply of raw material in the form of molasses, 
an adequate supply of labour, and an extensive home market present 
as well as potential. 

Findings of the Joint Power Alcohol and Molasses Inquiry Committee 

The findings- of the Committee on various important questions 
pertaining to the inquiry regarding power alcohol are given below : 

(a) The quantity of surplus molasses per annum is estimated at 
about 265,000 tons for the whole of India. 

(b) The scheme for the export of molasses from India has virtually 
been a failure, 

(c) (i) The use of power alcohol-petrol fuels mixed in proper 
proportions in place of straight petrol is not likely to give rise to any 
trouble and would not ordinarily require any change to be made in 
the adjustment of the engine or carburetter, (ii) The use of a 50 : 50 
power alcohol-heavy petrol mixture in motor lorries and buses may be 
found to give more satisfaction in tropical countries like India than 
in Europe, (iii) Straight alcohol, even of the usual rectified spirit 
strength, can be used without much trouble in specially designed 
stationary engines or for running tractors and other agricultural 
machinery. 

(d) There are two recognised processes for the manufacture of 
power alcohol, namely, the Azeotropic and the Saltdehydration process. 
Judging from the number of installations all over the world, both the 
processes seem to be quite satisfactory. 

(e) The conditions in the United Provinces and Bihar are very 
favourable for the manufacture and use of power alcohol made from 
molasses. 

(f) The power alcohol industry can be established without a 
subsidy from the Government. But, even if it were slightly more 
costly, the industry should be encouraged, as it would lead to the 
development of other industries. 

1 In 1937, the off- take of petrol was estimated at 5.1/2 million gallons in the 
United Provinces and 2.1/4 million in Bihar. 

2 Vide also the views expressed in this connection emphasising the urgent neces- 
sity of establishing this industry, in order to prevent difficulties which would be 
caused in the event of a blockade of India by see, etc., in a separate Note attached 
to this Report, by Mr. M. P. Gandhi, vide Report, page 141, Appendix XVIII-E, 



Ill 

(g) Power alcohol can be marketed in the United Provinces and 
Bihar, as also in the other adjoining inland areas at substantially the 
same, if not lower, price at which petrol is now being sold. 

(h) The average price of petrol, ex-pump calculated for most of 
the large towns in the United Provinces during the greater part of 
1937 was Rs. 1-9-0 per gallon. 

(i) Power alcohol can be manufactured at such a cost that an 
excise duty almost equal to that on indigenous petrol can be levied 
on it. 

(j) The manufacture of power alcohol seems to be a subject under 
the control of the Provincial Governments. 

(fc) (i) The cost of manufacture, by the Azeotropic or the Salt- 
dehydration process, of power alcohol, starting from rectified spirit 
and excluding the cost of denaturation, would be about As. 6i per 
gallon, when the cost of molasses is As. 6| per maund delivered at 
distillery. By adopting a modified process, it may be possible to bring 
down the cost to about As. 6 per gallon. Again in case molasses are 
available at As. 4 per maund, these prices would further go down by 
about As. 1 per gallon respectively, (ii) The price at which power 
alcohol may be delivered at the petrol mixing depots in these two pro- 
vinces may not be higher than Rs. 1-4-0 per gallon, after paying As. 6 
per maund for molasses, As. 1 for denaturants, and As. 10 as excise 
duty. 

(I) The average cost of imported petrol at the railside petrol 
depot in the United Provinces works out to about Re. 1-5-0 per gallon. 

Recommendation of the Joint Committee 
The Committee, therefore, made the following recommendations : 

(a) The power alcohol industry should be established under the 
control of the Provincial Government. 

(b) A Power Alcohol Advisory Board should be established. 

(c) The duties and functions of the Board would be to advise the 
Government generally on all matters connected with the industry. 

(d) Necessary legislation should be enacted at an early date for 
the compulsory mixture of power alcohol with petrol. 

(e) Petrol should not be allowed to be retailed until it has been 
mixed with power alcohol. 

(/) The present petrol distributing organisations in these two 
provinces should be required to take up the distribution of the fuel. 
Failing satisfactory arrangements being made with them, the Govern- 
ment should make alternative arrangement for the same. 

(g) Power alcohol should be made available at all petrol depots 
at a uniform price contracted with the Governments, inclusive of any 
excise duty. 

(h) Petrol used for admixture with power alcohol should conform 
to specifications laid down by the Government. 

(i) The denaturants for power alcohol may be one of the following : 
(1) " Coal tar Benzole "3 parts by volume, or (2) Wood Spirit 2.5 
parts by volume per 100 volumes of power alcohol. 



112 

(j) The Government should explore the possibilities of promoting 
the use of alcohol-mixed fuels for power purposes in agricultural 
operations, especially in sugarcane areas. 

Industrial Alcohol 

The findings of the Committee on various important questions with 
regard to the uses of industrial alcohol and also of molasses for other 
industrial and agricultural purposes are given below : 

(1) There is a large field in India for expansion in the use 
of alcohol for industrial purposes. 

(2) The use of "methylated spirit" for purposes of heating and 
lighting may be considerably increased by suitable propaganda 
especially when there is the possibility of marketing it at a price com- 
petitive with kerosene. 

(3) The "Vend-fee" of As. 8 per gallon levied on methylated 
spirit is very high as compared with the excise duty on kerosene. 

(4) The high rate of " Vend-fee " on methylated spirit is a great 
handicap against its more general use. 

(5) The present market in India for vinegar, acetic acid, com- 
mercial organic solvents, and such other products wherein alcohol is 
used as a raw material, is small, but is capable of being developed. 

(6) The use of molasses as a fuel is unremunerative. 

(7) The use of molasses for making road compositions is still in 
the early stage of experimentation. 

(8) Investigations regarding the utilisation of molasses for making 
composite cattle-feed have so far not given any discouraging result. 

(9) Yeast for cattle-food can be manufactured from molasses at 
the same time as alcohol, and the economic possibilities in this direction 
seem to be attractive. 

(10) The use of molasses as manure in normal soils has not received 
much support from the majority of agricultural experts in India. 

(11) The use of molasses for reclaiming usar soils has aroused 
considerable interest and is being tried in different parts of India. 
At many places encouraging results have been obtained and extended 
trials are being given to this process of reclamation. 

Recommendations 

(1) " Industrial Alcohol " for use in internal combustion engines 
should be (i) more heavily denatured than power alcohol ; (ii) free 
from any kind of excise duty, and (iii) sold at almost the cost price. 

(2) Research work should be undertaken by the Government on 
all technical matters connected with the use of industrial alcohol for 
power generation in stationery engines, tractors and lorries. 

(3) Intensive propaganda work should be done to popularise the 
use of methylated spirit for household purposes, such as for heating 
and lighting. 



113 

(4) Facilities should be given by the Excise Department to en- 
courage experimental investigations for the commercial use of industrial 
alcohol for solvent and other purposes. 

(5) Investigation should be made into the commercial and practi- 
cal possibilities of combining the manufacture of alcohol with that of 
yeast for cattle feeding. 

(6) The results of the experiments now being carried out under 
the Imperial Council of Agricultural Research on (i) the feeding of 
cattle with bagasse oilcake, molasses cakes, and (ii) road making and 
surfacing compositions, should be closely watched by the Government, 
as these uses may form in future substantial outlets for molasses. 

(7) The Agricultural Departments of the two provinces should 
give an exhaustive trial to the method of reclaiming usar soils by the 
application of molasses, and study carefully the economic aspects. 

Concluding Remarks 
The terms of reference to the Committee were : 

(1) To advise on the manufacture of power alcohol out of 
molasses ; 

(2) To report on the best method of manufacture ; 

(3) To report on the best method of manufacturing petrol-alcohol 
mixture ; and 

(4) To explore the possibilities *>* m.nTmfjirtma^ of the use of 
molasses in -tibe other practical applications. 

Under the first heading, the Committee has stated that the manu- 
facture of power alcohol out of the molasses is a feasible proposition, 
being an economic one, and that power alcohol could be manufactured 
and sold in the United Provinces and Bihar, and in the other interior 
places, at a price which could be less than the present selling price of 
petrol, and which could bear, if necessary, the same excise duty as 
the Government of India may levy on petrol. 

The Committee feels that the best method of developing this 
industry, which is an important one, would be by introducing legisla- 
tion in the United Provinces and Bihar, and in such other provinces 
as would like to do so, making it compulsory for all petrol sold in 
these provinces, to be mixed with power alcohol in a definite proportion, 
say, 20 per cent by volume of power alcohol. 

The petrol alcohol mixture should be prepared under Government 
supervision, which could be effectively done by the entire production 
and distribution being regulated by an Advisory Body referred to 
elsewhere. 

As regards the best method of manufacture, there are two well- 
known processes Aseotropic and Salt-dehydration both of which can 
be tried in India. 

The mixture of petrol and alcohol does not appear to present any 
serious difficulties. The best and the practical method of effecting this 
appears to be, for alcohol to be transported in bond from the various 
places of production, to places where there are bulk installations by 



114 

the distributing agencies for effecting alcohol-petrol mixture, the actual 
mixing being done in a suitable manner, as may be decided upon to 
safeguard the interests of the Excise Department. 

The Committee was of opinion that the other uses which molasses 
could be put to, e.g. for the surfacing of roads, for feeding cattle, and 
for reclaiming usar soils, are still in the experimental stage, and the 
various problems connected with them have not been sufficiently worked 
out. 

The Committee, therefore, felt that from the economic point of 
view, the most profitable outlet for molasses an important by-product 
of sugar industry now running almost to waste is in the manufacture 
of alcohol required for power generation and for other industrial pur- 
poses. It is also convinced that several other industries such as the 
manufacture of commercial organic solvents, acetic acid, chemicals 
requiring alcohol as one of the raw materials or ingredients in their 
manufacture will develop in the country with the establishment of the 
power alcohol industry. 

There can be no doubt that in modern times the production of 
motor fuel is a matter of vital importance to every country, and it 
would b* desirable if India developed her resources for the production 
of a motor fuel which can be pressed into service, if and when neces- 
sary for purposes of speeding up the mechanisation of the army, and 
the development of air-craft. The early establishment of the power 
alcohol industry on a sound basis will enable India to become an object 
of strength not only to herself but also to the Empire. 

Bihar and U.P. Governments 1 Resolutions on Utilisation of Molasses 

The Government of U.P. published a resolution in the U.P. Gazette, 
dated the 8th July 1939. The Bihar Government also published an 
identical Resolution in the Bihar Gazette. For ready reference, we 
are giving the full text of this Resolution : 

"The problem of utilisation of molasses, especially for the manu- 
facture of power alcohol, has been engaging the attention of both the 
Governments and public for some years. The Governments of Bihar 
and United Provinces accordingly appointed a Committee in January 
1939, to go into the whole question and report as to the best way of 
dealing with the problem. The Committee consisted of : 

(1) Dr. N. R. Dhar, D.SC., F.I.C., I.E.S., Professor, Allahabad 
University. 

(2) Mr. G. H. Dickson, Messrs. Begg Sutherland & Co., Cawnpore. 

(3) Mr. Ananthasubramanyan, Mysore Sugar Co., Ltd., Bangalore. 

(4) Mr. P. S. Maker, Chief Chemist, Majhaulia Sugar Factory, 
District Champaran, 

(5) Lala Padampat Singhania, Cawnpore. 

(6) Mr. M. P. Gandhi, Chief Commercial Manager, The Rohtas 
Industries, Ltd. 

1 Vide U. P. Government Gazette dated, July 8th, 1939. 



115 

(7) Dr. S. S. Bhatnagar, O.B.E., D.SC., F.instp., Professor of 
Punjab University. 

(8) Dr. N. C. Chatterji, D.SC., Harcourt Butler Technology Insti- 
tute, Cawnpore. 

" The report of the Committee was received in the midde of June, 
1938, and has been further examined by both Governments. The most 
important points that have to be considered in this connection are 
whether the manufacture of power alcohol is a sound economic pro- 
position and what arrangements are to be made for the disposal of 
the power alcohol when manufactured. 

Molasses Worth Rs. 13.5 Lakhs Lost Annually 

"The total quantity of molasses produced in vacuum pan sugar 
factories in the United Provinces and Bihar has been estimated at 
300,000 tons a year of which, it appears, nearly 200,000 tons are mixed 
with factory effluent and discharged into neighbouring fields and water 
courses as waste, thereby polluting the local sources of water supply, 
giving rise to offensive odours and causing numerous complaints from 
the local inhabitants. Some 3 years ago an exporting company under- 
took to purchase molasses at As. 4 per maund, but it appears that 
in 1936-37 they purchased some 80,000 tons at an average price of 
just over As. 1 a maund, while the quantity purchased since is much 
less. The value of the molasses lost at As. 4 a maund comes to 13i 
lakhs of rupees annually. 

" If power alcohol were to be manufactured from molasses, it is 
estimated that the output would be 2.2 gallons of alcohol from one 
maund of molasses or 60 gallons from one ton. Hence Bihar and the 
United Provinces could, between them, produce 120 lakhs of gallons 
of power alcohol a year. The Committee have, however, recommended 
that for the present only as much power alcohol should be manufactured 
as can be absorbed in Bihar and the United Provinces and the Gov- 
ernments of both Provinces are disposed to accept this view. They 
also agree that the minimum economic unit for manufacture should be 
taken to be a plant of a capacity of 2,200 gallons a day, which, it is 
estimated, will cost about 2 lakhs of rupees. A number of such plants 
may be put up at convenient places, the plant being duplicated where 
a central distillery is found to be more convenient for the purpose of 
distribution of power alcohol in the case of Bihar. 

Cost of Manufacture 

"The cost of manufacture, if a plant of this size is installed, has 
been estimated by the Committee at from 3 to 3i annas per gallon 
of alcohol produced, excluding the cost of molasses. Since the report 
of the Committee was written, it has come to light that no recurring 
royalty will have to be paid for the use of the patent process to be 
adopted. Hence the cost of manufacture may be taken to be As. 3. 
It has been suggested that this cost can be reduced by having one 
large-scale plant instead of a number of smaller ones, but this need 
not be considered for the present* Even allowing for the price of 
molasses at As. 4 per maund, and another As. li the cost of transport 



116 

thereof, the cost of the molasses in one gallon of power alcohol comes 
to As. 2 and the cost of production of one gallon of alcohol to As. 5J. 

" In order to arrive at the actual selling price, it is necessary to 
add to this figure the amount of the excise duty, if any, and the actual 
distribution and selling costs. The latter should not exceed 3 annas 
a gallon and even if the excise duty is calculated at the same rate as 
the customs duty on petrol, the total cost comes to Re. 1-3-0 per gallon, 
which is appreciably lower than the price of petrol in Bihar and United 
Provinces. It thus appears that it is an economic proposition to manu- 
facture power alcohol, provided it can be used in these Provinces. 

Contemplated Legislation 

"Practically the only use for power alcohol is as a motor fuel, 
mixed with petrol. The Governments of Bihar and the United Pro- 
vinces are satisfied that the admixture of 20 per cent of power alcohol 
with petrol is unobjectionable from the point of view of the motor 
industry and are prepared to undertake legislation to make such 
admixture compulsory in the United Provinces and Bihar unless other 
suitable arrangements can be made for the same. As the total quantity 
of petrol consumed in those Provinces is in the neighbourhood of 90 
lakhs of gallons a year, it is possible to replace some 18 lakhs of gallons 
of petrol by pow;er alcohol. In other words, some 30,000 tons of molasses 
can be utilised in this way. 

"The Provincial Governments realise that this will not altogether 
solve the problem of surplus molasses. But a useful beginning can 
be made and it may be possible later to arrange to supply power 
alcohol to other provinces also at a price which is not appreciably higher 
than that of petrol, excluding the surcharge. For the present, how- 
ever, the two Governments intend to proceed with the making of 
suitable arrangements for the manufacture and sale of power alcohol 
in these Provinces. 

" In conclusion, the Governments of Bihar and the United Pro- 
vinces desire to thank the members of the Committee for their arduous 
work and their valuable report which will serve as a useful guide for 
the development of the power alcohol industry." 

The representatives of the Bihar and the U.P. Governments met 
the representatives of the Sugar Syndicate, Ltd. for a discussion and 
the methods of starting the manufacture of power alcohol, e.g. whether 
the power alcohol distilleries should be located in definite regions, 
what should be the price fixed for molasses to be delivered to the 
power alcohol distilleries, whether sugar factories would like to fix up 
any quota system regarding supply of molasses, etc. In view of the 
terms offered by the U.P. Government, the Board of the Indian Sugar 
Syndicate, Ltd. decided at its meeting held in July 1939, that it would 
not like to take the responsibility of running the power alcohol industry. 
The Board of the Indian Sugar Syndicate passed the following resolu- 
tion in this behalf, 

"In view of the discussions that the Syndicate's deputation had 
with the Government on the subject, the Board agreed that the terms 
that the Government proposed to impose on the manufacture of power 
alcohol from molasses did not warrant the Syndicate to take the finan- 



117 

cial responsibility involved in the venture and that the matter be 
left to the individual discretion of member factories." 

Madras Power Alcohol Committee 

It is worthy of note here that a Committee was appointed by the 
Government of Madras also for considering the possibility of utilisation 
of molasses. It submitted its report in 1939 and found that an admix- 
ture of alcohol with petrol for use in motor vehicles is a practical 
proposition and that it is desirable that the Government should take 
steps to make use of such mixture compulsory, that in time the Madras 
Presidency may be able to supply all the requirements of absolute 
alcohol, that a beginning may be made in suitable areas, and further 
steps may be taken in the light of the experiences gained there and by 
the Mysore Government at Mandya. 

In regard to the cause of the manufacture of power alcohol, the 
Committee observed that at present the Mandya Sugar Factory is the 
only concern which is manufacturing absolute alcohol in India. It has 
a production of 1,500 gallons per day. The cost of production of 90 
per cent absolute alcohol has been found to be 5J annas per gallon at 
Mandya, With Interest at 6 per cent per annum on the capital, at 
10 pies per gallon, which was not included in the calculation and also 
the cost of dehydration at 1 anna per gallon, the total cost would come 
to about As. 0-7-4 per gallon of absolute alcohol. 

The Committee also reported that alcohol of 95-96 per cent strength 
unmixed with petrol has been used by the Mandya sugar factory with 
satisfactory result in the running of tractors, lorries, buses and even 
cars which are provided with special readjusted engines. Mixtures of 
60 parts of such alcohol and 40 parts of petrol have also been used 
for running buses at Bangalore without any adverse effects on the car 
engines being observed. The Committee also reported that it feels 
that even if it is eventually found that power alcohol cannot be marketed 
at the same price as petrol, the Government of India should, in the 
national interest, be urged to face loss of revenue and to levy a lower 
duty on power alcohol than on petrol. The Committee had, therefore, 
no hesitation in recommending legislation to enforce such mixing. 
The Chairman of the Committee was Dr. D. N. Strathie, i.c.s., Member 
of the Board of Revenue and Commissioner of Excise, Madras, and 
there were nine other members. 

During 1940, the report of the Director of Industries, Madras, was 
published, and it states that some doubt was expressed as to 
whether power alcohol, even taking the low rate of I^s. 7 per ton of 
molasses, could compete with petrol at any point in this Province after 
paying the Central Excise duty. Eventually, the Government decided 
that the proposed legislation for the compulsory admixture of power 
alcohol with petrol for use as motor fuel should be dropped, and if the 
question is to be re-opened at a later date, a committee representative 
of all the Provinces and the Government of India should be set up to 
consider the matter further, in the light of all the information and 
experience that will then be available* 



118 
Power Alcohol in Mysore 

While the Provincial Governments were thus hesitantly debating 
on the possibility of the manufacture and use of power alcohol, the 
Mysore Government was steadily taking one step after another to 
achieve the purpose. 

Ever since the establishment of a distillery at Mandya by the 
Mysore Sugar Co., Ltd., experiments were conducted with regard to 
the suitability of 96 per cent alcohol, both by itself and as an admixture 
with petrol, as motor fuel. Early in 1939, the distillery began the 
manufacture of absolute alcohol and on the strength of the experience 
gained with the use of alcohol as motor fuel, the Mysore Power Alcohol 
Act was passed making it compulsory for the admixture of 15 per cent 
of alcohol with all petrol sold in the State. This Act came into force 
on the 1st October 1939, to begin with in the districts of Bangalore 
and Tumkur, and since that date all petrol sold in Bangalore and 
Tumkur Districts contains 15 per cent alcohol produced at Mandya. 

The annual consumption of petrol in the Mysore State is about 
30 lakhs of gallons, and on the basis of a 15 per cent mixture, there 
is scope for absorbing about 4,50,000 gallons of alcohol. This would 
mean that the import of petrol into the State can be reduced by this 
quantity. It is the desire of the Mysore Sugar Company to be able to 
supply the entire quantity of alcohol required for admixture with 
petrol for sale throughout the State and it hopes to do so as soon as 
possible. 

To the progressive Mysore State, then, goes the credit of being 
the pioneer in this field in the whole of India. The example of the 
Mysore Government coming on top of the exigencies of the war situa- 
tion was difficult to ignore ; and in August 1940 the Power Alcohol 
Bill which was passed by the Provincial Legislature in October 1939 
received the assent of His Excellency the Governor of the United Pro- 
vinces. This Act made provision for controlling the production, supply 
and distribution of power alcohol in U.P. and to make its admixture 
with petrol in certain specific proportions for use as a motor fuel 
compulsory. 

On the 10th August 1940, the Government also published a draft 
of the rules they proposed to make. The Government proposed to 
invite tenders for the exclusive privilege of supplying power alcohol 
to the Government for three years, the tenderer being allowed to manu- 
facture power alcohol on the terms of the required licence which he 
will have to secure if his tender is accepted. It appears the require- 
ments of the power alcohol have been calculated on the assumption 
that the prescribed mixture will contain 20 per cent of power alcohol 
and 80 per cent petrol, the total consumption of which latter is estimated 
at present at over 6 million gallons in the United Provinces. It also 
appears that the operation of the Act will in the first instance be 
confined to the Districts of Agra and Meerut Divisions and some Dis- 
tricts of Rohilkhand Division as it is expected that about 6 lakhs gallons 
of power alcohol equal to a little less than half of the total require- 
ments would be available in the area. 

On the 4th September 1940, a conference of the oil interests was 
held at Lucknow to discuss the details of the Power Alcohol Act. 



119 

Several difficulties were apprehended in the scheme in connection with 
the securing of the necessary equipment such as tankage, etc. Follow- 
ing a conference held at Nainital on the 4th October under the presi- 
dency of Mr. Pannalal, i.c.s., Adviser of the U.P. Governor, for con- 
sidering the U.P. Power Alcohol Rules, it was understood that at that 
time there was the possibility of the Meerut Distillery only manufac- 
turing power alcohol. Thus only a few districts were selected in the 
beginning for the opening of mixing depots. 

Power Alcohol Act Amended 

On the 10th November 1940, the U.P. Power Alcohol (Amendment) 
Act. 1940, (Act X of 1940) was promulgated for general information. 
In the Statement of Objects and Reasons it was stated that UP. Power 
Alcohol Act (Act VIII of 1940) required amendment in three respects. 
Firstly, it was considered desirable to exempt all military requirements 
from its operation. Secondly, the supply of power alcohol for the whole 
province was at present not possible and the power to enforce it piece- 
meal was needed. Thirdly, in the public interest it was felt necessary 
to make provision in the Act for a contingent breakdown in the supply 
of the prescribed mixture of power alcohol and petrol. The amending 
Act makes provision for the above requirement. The following 1 
amendments have been made in the Act. 

" (4) Nothing in Section 3 or Section 4 shall apply to the sale or 
use of petrol without admixture with power alcohol for the require- 
ments of His Majesty's naval, military and air forces." 

The following section empowering the Collector of a district to 
take the required steps in case supply fails has also been incorporated 
in the new Act : 

" 10-A. Notwithstanding the provisions of sub-section (1) of 
Section 3 and sub-section (1) of Section 4 when for any cause there 
is a failure in the supply of petrol with the prescribed admixture of 
power alcohol in any district, the Collector may, subject to any rules 
that may be made in this behalf, authorise the sale and use within 
his jurisdiction of petrol without such admixture for such period 
as he may deem fit, and may at any time withdraw or modify such 
authority or from time to time extend the period of such authority." 

U.P. Power Alcohol Act comes into Force 

Since the introduction of petrol rationing in August 1941 and parti- 
cularly with the outbreak of hostilities in the Far East, the problem 
of providing fuel for industrial and transport purposes has assumed 
great importance. The war in the Far East has meant a considerable 
increase in the requirements of the Imperial forces in that war theatre. 
Also, the oil producing centres in Burma and South Pacific are seriously 
threatened. It is not surprising, therefore, that there has been a 
reduction in the supply of petrol. This has resulted in a complete 

*In Section 1 of the original Act for sub-section (3) the following has been 
substituted: 

" (3) The Act or such portion or portions thereof shall come into force in such 
area or areas on such date or dates as the Governor may by notification in the official 
Gazette, specify." 



120 

dislocation of bus traffic. The alternative methods of transport are 
not quite convenient and quick while the railways are already finding 
it difficult to meet the needs of the public. It has been proved neces- 
sary to suspend booking of goods indefinitely on certain sections of 
the railways. 

It was in anticipation of these needs that the campaign for the pro- 
duction of industrial alcohol on a large scale in this country was 
started early. 

The recommendations of the Power Alcohol Committee of the U.P. 
and Bihar were given effect to only after a long time and the Power 
Alcohol Act of the U.P. came into force with effect from April 28, 1941. 
With the outbreak of war, it is impossible to get the requisite machinery 
and the operation of the Act was at first confined to the district 
of Agra. The distillery at Meerut is producing alcohol and selling 
the whole quantity to the Government of U.P. 

Orders for the enforcement of the Power Alcohol Act in the dis- 
tricts of Bareilly, Bijnor, Budaon, Pilibhit and the Chandausi and 
Amroha tehsils of the Moradabad district have also been issued. The 
proportion of alcohol to petrol will be 20 parts of the former to 80 
parts of the latter. It is understood that the Act will also be extended 
to Kathgodam and the neighbouring areas. Licences have been issued 
to the Kesar Sugar Mills and to the Oudh and Hindustan Sugar Mills 
jointly for manufacturing power alcohol from molasses. The prices 
at which they should sell alcohol to the Government has been fixed 
at 6 annas per gallon. The Bihar Government enacted in August 1942, 
a Power Alcohol Act, similar to the one in the U.P. The Bombay 
Government published draft rules for enacting a Power Alcohol Act in 
August 1942. Among the Indian States, Mysore and Travancore are 
already producing power alcohol. Bhopal also will shortly be com- 
mencing production. 

But all these efforts are nothing compared to what might have 
been done if the start had been made much earlier. Today there is 
little doubt about the desirability or the feasibility of manufacturing 
power alcohol. But the essential preliminaries have been completed 
too late. The difficulty of getting the necessary equipment stands in 
the way of increasing the production. It is urged that such equipment 
can be made in India. It is of a piece with all our national efforts 
that no serious attempt has been made so far in this direction. 

Use of Bagasse as Fuel Costly 

We must now turn to the utilisation of bagasse (or megasse) which 
is the residue of fibrous matter remaining after the cane is crushed 
and which is the other main important by-product of the sugar industry. 
The bulk of bagasse obtained by crushing cane in the factory is burnt 
as fuel for generating steam, and for boiling the juice in rab or gur 
making. As a rule, almost all the power required in factories is 
obtained from bagasse and occasionally it is supplemented by coal or 
firewood. Various sugar factories require only a small amount of 
outside fuel to supplement the use of bagasse. Mr. E. L. Squires 1 

* The International Sugar Journal of August 1929. 



121 

observes : " Apparently bagasse is a very high-priced fuel and it might 
be better to burn the sugar." The high railway rates of freight on 
coal, and the absence of a demand for bagasse for other purposes are 
probably responsible for the general practice of its use as fuel for 
sugar factories. 

But the invention of more economic ways of using bagasse has 
engaged the attention of both the sugar industry and the associated 
technical and commercial institutions. At its meeting in November 
1933, the Sugar Committee considered the question of the utilisation 
of bagasse for paper and board industry. The Forest Research Insti- 
tute was also asked to undertake more extended experiments in the 
manufacture of paper, etc. from sugarcane bagasse. In 1936, the Presi- 
dent of the Forest Research Institute put up a note stating that if the 
factories were equipped with suitable machinery, it should be possible 
to turn out packing and cheap Badami papers from bagasse pulp mixed 
with about 25 per cent bamboo pulp. Experiments were also made in 
the laboratory to produce boards from bagasse. Small samples of 
boards for insulation and structural purposes, etc. were made by hand 
and the material, he states, appears to be quite suitable for the pro- 
duction of such boards. He states, however, that the Forest Research 
Institute is not equipped for making boards on a semi-commercial scale. 

The unbleached pulp of the bagasse was also bleached in the 
laboratory of the Forest Research Institute and it was found that it 
required 9 per cent standard bleaching power and the yield of bleached 
pulp was about 41 per cent. The bleach consumption was about 50 
per cent higher than that required by such grasses as sabai. ulla, etc., 
but it compared favourably with that required on the average by 
bamboos. The average length of the fibre of the material experimented 
upon was found to be 2 mm M there being a large number of shorter 
fibres. In this respect the material compared unfavourably with 
bamboos or sarai grass, etc. Considering the above data, the material 
does not appear to be unsuitable for the manufacture of products like 
boards, packing and wrapping papers and even certain classes of writing 
and printing papers in admixture with longer fibred pulps, e.g. bamboo, 
rags, etc. The possibility, however, of utilising the material 'for such 
products depends, firstly, on the quantities available and, secondly, 
on the price at which it can be made at the manufacturing site. 
If the quantities available are only such as are surplus in the most 
efficient sugar factories, then the supply of the raw materials is likely 
to be unreliable and also the total quantity available will probably not 
be large enough to justify putting up a paper or a board factory. 
According to the Sugar Technologist of the Imperial Council the cost 
of one ton of bagasse at the sugar factory is likely to be between 
Rs. 12 and Rs. 14 on the assumption that wood for fuel will cost 
between Rs. 6 and Rs. 7 per ton. To the above cost of bagasse, the 
cost of transporting it from the sugar factory to the paper or board 
factory has to be added. As this cost may be anything from Rs. 14 to 
Rs. 18, or even more, per ton it appears doubtful whether the utilisa- 
tion of bagasse for paper or board will be more economic than using 
grasses or bamboos for the purpose. 

If, however, the price of bagasse is low, and adequate quantities 
are available, there appears to be nothing against its utilisation for 



122 

board or paper manufacture. In February 1935, the North Bengal 
Sugar Mills Co., Ltd., Gopalpur, informed the Forest Research Institute 
that about 12,000 tons of bagasse could be made available at their 
factory at about Rs. 7 per ton and that bamboos were also available 
in the vicinity. In such cases the utilisation of bagasse for paper or 
board manufacture would appear to be feasible, provided the bagasse 
is not of poor fibre-content and other manufacturing facilities are 
available. To sum up, bagasse is a raw material which can be utilised 
for paper or board manufacture. Each project should, however, be 
investigated on its own merits. 

We give on next page a table showing the quantities and values of 
packing paper and paste-board, mill-board and card-board of all kinds 
imported into India during 1934-35 to 1938-39. 

A glance at Table 2, next page, will show that there exists a market 
for wrapping paper and board in India a portion of which can be 
suitably exploited as bagasse can be utilised for the production of 
some of those qualities. 

Large quantities of board for insulation and structural purposes 
are being manufactured in Louisiana and other countries, notably by 
the Celotex Company, in Louisiana. The suitability of bagasse for 
the above purposes depends to a considerable extent on the quality 
of the fibre present in it. The experiments conducted at the Forest 
Research Institute, Dehra Dun, with Indian bagasse have been very 
encouraging in regard to the suitability of Indian bagasse for paper 
and board manufacture. The only important defect in Indian bagasse 
appears to be the shortness of its fibres. 

In a Note on the utilisation of bagasse for paper, submitted to the 
Sugar Committee in March 1938, Mr. R. C. Srivastava, Director, 
Imperial Institute of Sugar Technology, observed that bagasse at present 
was being used as fuel in factories. Some bagasse was saved by 
factories which may be used for raising power during off-season. If 
bagasse is not to be made available for other purposes, it would be 
necessary to replace it by other fuel, by wood or coal. It is clear, 
therefore, that unless a cheap and suitable fuel is found, it will not 
be possible at present to use bagasse for making card-board and packing 
papers at prices comparable to prevaling prices of such materials. But 
if the fuel efficiency of Indian factories improves, some surplus bagasse 
may be available. 

Wood as a substitute for bagasse can be burnt in bagasse furnaces 
either by itself or in admixture with bagasse. But the price for the 
same fuel value is likely to be high. The calorific value of dry bagasse 
may be taken as 8100-8350 B.T.U. whereas that of wood is 4500-5000 
B.T.U. On the basis of these fuel values therefore the selling price of 
bagasse, when wood is a substitute, may be taken at nearly twice the 
price of wood ex-factory. If the ex-factory price of wofod is Rs. 6 
to Rs. 7 per ton which is a comparatively low figure for most parts 
of the U.P. and Bihar, the price of bagasse will come to Rs. 12 to Rs, 14 
per ton. 

Coal, unless it is much cheaper than wood, is not a very desirable 
substitute for bagassfe, as it is difficult ordinarily to burn it in bagasse 



123 







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124 

boilers, even when they are filled with auxiliary coal furnaces. To 
get the maximum heat value from coal, separate boilers will have to 
be installed. This would be an expensive addition, and factories may 
not be willing to put themselves to this expenditure unless they were 
assured of their market for bagasse for a long period. 

The calorific value of bagasse is about two-thirds of that of coal 
and therefore the price of bagasse when coal is used as a substitute 
may be estimated to be about equal to the value of the coal at the 
factory in consideration of the changes in equipment that may be 
necessary. The average price of coal at the collieries in Bengal at 
present is about Rs. 3 per ton. The transport charges from the colliery 
to the factory will have to be added. Amongst other items affecting 
the price of bagasse ex-sugar factory are the costs of baling, storage, 
handling charges and the transport of bagasse. The baling of bagasse 
for transport is a very important item and for this separate equipment 
and staff will be necessary at each purchasing centre. (The Saraya 
Sugar Factory of Sardarnagar is baling its bagasse and keeping it 
properly packed up.) After allowing for these charges as also for the 
transport of bagasse, it has been computed that the cost of dry bagasse 
at the Celotex Company at Louisiana is about Rs. 9 per ton. It may 
be possible to get bagasse at this rate in the case of a board factory 
situated in Bihar and Bengal nearer to the collieries, if coal is available 
at low price. It is true that " the improved canes now grown in 
Northern India have a relatively high fibre-content/* as is observed 
by the Imperial Council of Agricultural Research. In fact, they are 
amongst the most fibrous canes in the world. Reports from several 
factories in India show, however, that at present all of them are using 
varying quantities of extra fuel. Fuel consumption and steam economy 
have not reached a sufficiently high standard of efficiency in the Indian 
factories to permit of large quantities of bagasse being spread. 
Therefore, at present bagasse can be made available for paper and 
board manufacture only by replacing it by wood or coal. Wood being 
a costly fuel as compared with coal, bagasse can only be had at a 
reasonable price from factories in Bihar which are located nearer the 
collieries. 

The quantity of cane crushed by factories in Bihar and Bengal may 
be estimated at say 1,826,300 tons and the dry bagasse production at 
about 250,000 tons per year. The minimum economic capacity of a 
fibre-board factory is 20 to 25 tons dry bagasse per day or 7,000 to 
7,500 tons per year. Therefore, even if the factories in Bihar and 
Bengal substitute only 10 per cent of their bagasse by coal, there would 
appear to be scope for running a board factory, but due investigation 
should be made for determining the consumption of insulation and 
pressed boards in India, and the cost of production of such boards. 
The number of sugar factories in Bengal being very few, there is 
little possibility of establishing a board factory in Bengal. Bihar 
appears to be a more suitable place for the location of such a factory, 
in tracts where sugar factories are sufficiently near to the collieries. 
If a board factory could be established, alongside a sugar factory, 
that would be an ideal situation from the point of view of the raw 
material. One such factory was established in 1939-40 at Meerut. 



125 

In a Note on this subject Mr. M. P. Bhargava, Officer-in-Charg0 
of the Paper Pulp Section, Forest Research Institute, at Dehra Dun> 
observed in 1937 that in view of the fact that there was an adequate 
and permanent demand for boards and packing papers which wfcs 
likely to grow considerably in the future, there appeared to be no 
ground for the fear that the demand for bagasse for manufacturing 
these products might not be a permanent one, particularly as no other 
raw material for the industry was likely to be obtained at a cheaper 
price. The sugar factories, therefore, needed to have no hesitation on 
the score of demand to incur the expenditure necessary for effecting 
a change in their boiler equipment. If a few sugar factories changed 
their entire boiler equipment with a view to supply bagasse to a 'board 
factory, it would be more economical as the supply would be more 
uniform, and baling, handling and transport charges would be minimum. 
The markets for boards and packing papers manufactured in Bihar 
would lie not only in Bihar and Bengal but throughout the country 
particularly in Bombay and Sind which import about half the total 
products. 

A technical programme of experimental work in connection with 
the utilisation of bagasse was then drawn up by the Sugar Committee 
of the Imperial Council of Agricultural Research Institute. Mr. M. P. 
Bhargava continued his experiments on the production of insulation 
boards, straw boards and wrapping papers from bagasse and submitted 
a final report to the Imperial Council of Agricultural Research in 1941. 
It is understood that insulation boards, possessing thermal conductivity, 
sound absorption and strength characteristics comparable with those 
of imported insulation boards, have been successfully prepared in 
the laboratories of the Forest Research Institute. Satisfactory qualities 
of straw-boards and wrapping papers have also been prepared from 
bagasse at the Forest Research Institute and the results of the experi- 
ments must be pronounced distinctly heartening. It is true, the demand 
for insulation and pressed boards in this country is not very large at 
present, but it has been increasing. It appears, therefore, that adequate 
supplies of surplus bagasse would be available for the manufacture of 
these boards, though we cannot be certain that the rates will be quite 
economic. 

Another development of great importance to this problem is the 
discovery that cane bagasse is a suitable raw material for plastics ; 
and plastics, as well known, is a substance suitable for moulding into 
any form and is therefore useful for making a wide variety of articles 
of daily use and for building automobiles and for electric installations. 

It remains to assess the importance of the utilisation of by-products 
to the question of costs of production. It has been seen that of the 
two main products of the sugar industry, viz. molasses and bagasse, 
neither can account for a considerable reduction in the cost of pro- 
ducing white sugar. And when it is remembered that the Tariff Board 
assumed a price of Rs. 1-8-0 per maund of molasses and that today 
the sugar mills are actually out of pocket in disposing of it, any industry 
which will pay a price for molasses must be deemed to bring appre- 
ciable relief to the industry. But it is well to bear in mind that the 
Power Alcohol Committee of the U.P. and Bihar assumed in their 
calculation of the cost of producing power alcohol, a price of only 



126 

As. 4 per maund of molasses. Likewise in the case of bagasse, the 
by-product is not wholly wasted. Though the use of bagasse as fuel 
is uneconomic, the advantage of its utilisation as raw material for 
other industries is, so far as the sugar mill is concerned, no more than 
the difference between its actual value as fuel and the price which the 
new industries would be prepared to pay for the raw material 
Obviously, the pecuniary value of bagasse as fuel varies in direct 
proportion to the distance of the sugar mill from the collieries. A mill, 
which is far away from the collieries, will have to pay a higher price 
for coal ; and to such a mill the value of bagasse as a substitute for 
fuel is to that extent higher. It may be said, therefore, that the manu- 
facturers of packing paper and the like would seek to obtain the 
supplies of bagasse from mills situated near the collieries. It would 
therefore, be well not to exaggerate the net advantage of the utilisa- 
tion of by-products to the cost of production of sugar. But from the 
national point of view, the question is indubitably of great importance. 
We have stressed the view at every point that the benefits of protection 
to industry have to be carefully gleaned and garnered by the nation. 
It is no small advantage to have an alternative source of power or to 
provide for packing material which a developing economy would 
require in greater quantities in the future. 



CHAPTER X 

ECONOMIES IN MANUFACTURE OF GUR AND SUGAR BY 
VARIOUS PROCESSES 



WE have seen in the previous chapters that the ultimate justification of 
protection to the sugar industry is in the establishment, not alone of 
the industry directly aimed at, but also of a number of ancillary pro- 
ductive activities in the agricultural as well as the industrial spheres. 
We have seen, too, that if protection must be justified solely by the 
industry surviving the need for protection through a progressive 
decrease in the costs of production, then it is far more important that 
the yield and quality of cane should : be improved and that industries 
should be established for the utilisatipn of by-products than that the 
productive processes of the industry itself should be censoriously 
scrutinised. This view, unwelcome as it is to opponents of protection, 
will be seen to be quite reasonable even on a cursory examination of 
the principal elements in the costs of production of sugar in India and 
abroad. 1 Public opinion, which often finds itself in a dilemma between 
abandoning a protected industry to its fate and continuing indefinitely 
to foot a heavy bill of costs on this account has every need to be apprised 
of the fact that the way out of the dilemma lies in the development 
of other productive activities to their utmost degree of efficiency and 
usefulness. This feature is by no means peculiar to sugar. Every 
industry in India has had to labour under the handicap of inefficiency 
in connected trades and industries. But it may be said without fear of 
exaggeration that in the case of the sugar industry this feature is 
really a salient one. 

Nevertheless, the industry cannot be absolved altogether of res- 
ponsibility for increasing the efficiency of its working. And it is neces- 
sary at this stage to clarify the position in this regard. We have haci 
occasion in the earlier chapters to note the progress achieved by the 
sugar industry in the last decade, particularly the increase in the 
recovery percentage. But the picture of the utilisation of our cane 
resources as it is today and as it can be, has to be appraised in its 
entirety. From this point of view, the most important fact to note today 
is that the factory industry utilises only about 20 per cent of our total 
cane crop (as against 1 per cent in 1920 and 6 per cent in 1932) and 
that by far the larger part of our cane crop goes to the making of 
gur and for other purposes like chewing, etc. which may not strike the 
modern mind as strictly economic. The table on the next page shows 
the various uses of cane during the past few years. 

It is notorious that in the existing indigenous processes of extrac- 
tion and conversion into both sugar and gur there is a cruel waste of 
sugar. The Industrial Commission (vide page 80) roughly estimated 
that of the sugarcane grown in India at least one-third was wasted 
owing to inefficient and primitive methods of extraction. 



B. P. Adarkar's "Indian Fiscal Policy", p. 224. 



128 

TABLE NO. 1 

Percentage o f cane used under different heads during the years 1932-33 to 1940-41 

(November-October) l 






1932- 
33 


1933- 
34 


1934- 
35 


1935- 
36 


1936- 
37 


1937- 
38 
Our 
est. 


1938- 
39 
Our 

est. 


1939- 
40 
Our 
est. 


1940- 
41 
Our 
est. 


Cane used in factories 
Cane equivalent to gur 
used in refineries 
Cane used for gur manu- 
facture 
Cane used for other pur- 
poses, including Khand- 
sari, Chewing, Sets for 
planting, etc. 


6-5 
3-0 
64*7 

25-8 


98 
2'0 
65-5 

227 


12-3 
12 
66'0 

20'5 


16-0 
1-4 
63-8 

18-8 


17-6 
0-5 
64-9 

16-9 


17-8 
0'5 
62-0 

19*7 


16-2 
0'9 
51-4 

193 


277 
0'9 
51'4 

20'0 


191 
1-4 
57-7 

21-8 


Total percentage ... 


100-0 


lOO'O 


lOO'O 


lOO'O 


lOO'O 


1000 


lOO'O 


100-0 


lOO'O 



The Indian Sugar Committee, 1920, observed in their Report 
(page 260) that 

"A thoroughly up-to-date factory can extract at least 96 per 
cent of the sugar actually present in the cane, and by an efficient 
control in the boiling house, 90 per cent of the sucrose in the juice 
can be recovered as manufactured sugar. In other words, about 
86.4 per cent of the original sucrose in cane car> be obtained as 
sugar." 

In paragraph 336 of their Report, the Indian Sugar Committee 
remarked, in regard to the low recovery of sugar in India, as follows : 

" We have assumed that cane in India contains on an average 
12 per cent of sugar. 2 If it were dealt with in a thoroughly effi- 
cient factory, it would be possible to obtain 9.5 per cent of market- 
able sugar from it. From cane with the same sugar content, factories 
in Java recover 9.75 per cent of marketable sugar against an 
average of 6.85 per cent in Indian factories, the best of which 
obtain less than 8 per cent. There is thus a difference of almost 
3 per cent between the results obtained by factories in Java and 
India." 



Improvement in Recovery Percentage in Factories 

A glance at the table below will indicate that the percentage of 
recovery of sugar in India has been steadily on the increase. From 
7.5 in 1923-24 it reached 8.89 in 1931-32, as compared with 10.46 in 
Java in that year. Since the grant of protection the average recovery 
has been well maintained and has steadily improved. The maximum 
recoveries obtained in some of the factories since 1931-32 are also given 
in the table below from which it will be seen that the maximum 

* Vide reply in the Council of State to Question No. 39, dated llth November 
1941. 

2 The Indian Tariff Board (Sugar Industry) Enquiry Report, 1931 assumed 
a sucrose content of 11.5 per cent 



129 

obtained in the year 1941-42 was 12.45. This maximum compares very 
well with Java's average recovery. India's average is much lower. 

TABLE NO. 2 

Average and Maximum Percentage of Recovery of Sugar in Factories in India 
and Java from 1931-32 to 1942-43 1 



Year 


India 
Average 


u. P. 

Average 


Bihar 
Average 


Bombay 
Average 


Java 
Average 


India 
Maximum 


1931-32 


889 


8*59 


9-06 




10-92 


10 


1932-33 


8*66 


855 


8-60 


10-00 


1156 


10 


1933-34 


8-80 


9*08 


8'32 


lo-uo 


12-84 


10 


1934-35 


8-66 


8-56 


879 


10-37 


1255 


11-10 


1935-36 


939 


960 


8-93 


10-47 


13-23 


11-34 


1936-37 


9-50 


9*65 


9-20 


IU'68 


1277 


1143 


1957-38 


9*38 


918 


958 


10-97 


11-87 


1163 


1938-39 


929 


9-14 


9-00 


11-29 


11*77 


1225 


1939-40 


9'45 


9-37 


9-29 


10-97 


12-23 


1231 


1940-41 


9-70 


9'87 


9-86 


9-94 


... 


1116 


1941-42 


9-69 


9-87 


10-35 


987 


... 


12-45 


1942-43 


10-28 


10-16 


10-93 


10-64 


... 


1335 



The recovery from Khandsari sugar is, however, remarkably low 
(being about 5.5 per cent) and if the industry has been able to maintain 
its production, it is due to the fact that it is possible for it to purchase 
its cane at a rate far lower than the rate paid by the factories, exemption 
from any cane cess which has to be paid by the factories, and non- 
payment of any commission to co-operative societies and railway freight 
on outstation cane, and saving of Us- 2-8-0 per cwt. in excise duty. 

Manufacture of Gur 

As by far the bigger of our cane production goes to the making 
of gur, let us try to examine the position in*this regard. Gur may 
perhaps be best defined as cane juice in its natural state concentrated 
to its solidifying point without undergoing any material process of 
purification save the addition of a small amount of alkali or other 
clarifying ingredient, and the removal of the scum. When cleanly made, 
it is a perfectly wholesome article of diet, and is very much in demand 
in this country, and is preferred to sugar by a large section of the 
people particularly in the village areas, and for some purposes, by all. 
Besides, gur has an attractive flavour and delicious taste. 

Gur of jaggery could be well defined, in technical language, as cane 
juice boiled to a temperature of 115 C. containing from 50 to 85 per 
cent of sucrose, 10 to 20 per cent of inverted sugar, and a smaller 
percentage of mineral salts, ash and moisture. Most nearly, it may be 
described as hardboiled massecuite, This is the form in which about 
3J to 4 million tons of gur is annually consumed by the people of this 
country. In colour, purity, hardness, flavour and shape in which it is 
marketed, gur varies greatly from tract to tract but with relatively 
unimportant exceptions. Most of the gur production is consumed 
directly, only a negligible portion being used for conversion into sugar 
in refineries. Thus gur is not a raw material for refining sugar, but 
a final product for domestic consumption. 

* Vide Trade Journal, Calcutta, 18th September 1941, and 17th September 1942. 



130 

Gur is manufactured in most sugarcane growing villages by the 
simplest process. Modern 2-roller, 3-roller and 5-roller mills driven 
by oil engines have replaced the earlier pestle-and-mortar type of mills 
made of stone or wood. Appreciable improvements have also been 
made in the furnaces and pans, but in essentials, the process is much 
the same as it was a hundred years ago, the fresh cane juice being 
boiled down to a solidifying point in an open pan. A certain amount 
of clarification takes place during this process and multiple pans are 
common in some tracts where high class gur is made. Ordinarily one 
or two pans are used for boiling but sometimes as many as 12 are 
arranged in a boiling series. 

Gur Manufacture A Cottage Industry 

Although the quantity of gur produced in India is generally 3i 
times as big as the quantity of refined sugar at present, the method 
of production of this enormous quantity, it must be admitted, is very 
primitive. Its manufacture consists of two main processes, viz. crush- 
ing of cane and subsequent boiling of the juice. It is essentially a 
cottage industry and the manufacture is in small quantities. The 
extraction of the juice from cane is about 60 per cent in the case of 
bullock-driven mills and up to 70 per cent in the case of power-driven 
mills. The best quality of gur is produced in Coimbatore, Kolhapur 
and Meerut. Much superior gur remains in good condition for about 
a year where the climate is a little dry but it deteriorates in humid 
atmosphere in about 3 months. 

The waste of sugar involved in the manufacture of gur is attributa- 
ble, as indicated above, firstly to the crudeness of the mechanism 
employed for crushing cane and the small scale on which production is 
carried on by the producers. Where bullocks are used to run the 
crushing mills, they are of the poorest kind and lack the strength and 
stamina for this laborious process. A large quantity of juice is thus 
left in the bagasse, the cane having been crushed once only.. Then 
there are the crude methods of boiling the juice in which inversion 
takes place from sucrose to glucose. 1 As a result, the recovery of the 
sucrose content of the cane works out to about 52 per cent as against 
86 per cent obtained in a modern sugar factory. 2 The loss of efficiency 
due to the crude process of manufacture of gur, thus works out to 
about 34 per cent. If we assume an average of 12 per cent sucrose 
content for this cane, as has been done by the Indian Sugar Committee, 
the total recovery of sucrose from 34,595,000 tons of cane used for the 
manufacture of gur in 1932-33, would be 41,40,000 tons, out of which 
only 21,00,000 tons could be extracted by the present crude method, as 
against a possible extraction of over 35,30,000 tons of white sugar in 
the modern factory run on efficient lines. The total loss of sucrose 
thus entailed amounts to 15,00,000 lakhs of tons, which is equivalent 
to about as large a quantity of manufactured sugar. 3 

1 This inversion is not, strictly speaking a loss of sugar, but it is a loss of 
crystallisable sugar which is of importance when the question of refining from 
gur is considered. Vide Tariff Board's Report on the Sugar Industry, 1931, p. 19. 

2 Vide Report of the Sugar Committee, 1920, p. 262. 

s The actual sucrose content of gur varies considerably but may be placed at 
between 65 and 75 per cent as compared with between 99 and 100 per cent for 
white sugar. (Vide Tariff Board's Report, 1931, p. 19.) 



131 

But the introduction of power mill in place of the bullock mill, 
which happily is increasing, has made it possible to extract more sugar 
per maund of cane, and has reduced considerably the cost of produc- 
tion which, it must be stated, however, varies from province to pro- 
vince. According to the Director of Agriculture, Bengal, the extraction 
of juice per 100 maunds of cane is 62 per cent from a bullock mill, 
and 68 per cent from a power mill. (Tariff Board Report, 1931, p. 20.) 

On this calculation, the loss of sucrose involved, as estimated in 
the preceding paragraph, by gur manufactured in power mills, would 
be slightly lower, but nevertheless considerable. 1 

Cost of Manufacture of Cur 

It is difficult to state with precision the cost of manufacture of gur 
as it varies from year to year and from district to district, but roughly 
it may be taken as Re. 1-1-0 per maund for the UP. and the Punjab 
(vide Tariff Board Report, 1938, p. 51). Taking As. 4 as the present 
cost of cane, the Tariff Board stated the c***t of production of one 
maund of gur would be Re. 1-3-9. 

It is also difficult to arrive at a correct figure of the average price 
of gur, because, it differs considerably according to the quality and 
varies from district to district and from town to town and from month 
to month. The average price of gur per maund varied from Rs. 5-5-9 
to Rs. 2-9-0 during the years 1930-31 to 1937-38. Since 1934-35, the 
price of gur was generally on the decline till 1937-38 due perhaps to 
the production of larger quantities and to a certain extent to the 
decline in the price of sugar. The price of gur, and sugar rose during 
1938-39, but it fell in 1940-41 due to apprehended overproduction. 

An idea of the size of the gur industry in India can be had from the 
table given below showing the calculated net annual production of gur 
for direct consumption in India : 

TABLE NO. 3 

Calculated Net Production of Gur in India for Direct Consumption from 

1930>31 to 1942-432 



Year 

(November-October) 


Calculated net Annual Production of Gur for 
direct consumption in tons 


1930-31 




.. 


22,41,000 


1931-32 




.. 


27,58,000 


1932-33 







32,40,000 


1933-34 




,. 


34.86,000 


1934-35 




., 


37,01,000 


1935 36 




. 


41.01.000 


1936-37 




% 


42.68,000 


1937-38 




9 


43,64,000 


1938-39 




i 


21.31,000 


1939-40 






24,41.000 


1940-41 




9 


34.14,000 


1941-42 




m 


28.29.000 


1942-43 







35,67,000 



iThe Indian Sugar Committee, on the basis of manufacture of 99 per cent 
of cane-sugar produced in India from gur or rab, as against 1 per cent produced 
direct from cane, in 1921, estimated a total loss of sucrose of 10,69,860 tons per 
year. This figure represents the theoretical limit of possible improvement. By 
1942 there has been a considerable improvement in this position, the manufacture 
of sugar direct from cane having greatly increased. 

2 Figures for net production are calculated from the figures for total yield of 
gur in the "Final General Memorandum" each year, allowing for the gur equiva- 
lent to cane used for other purposes (adopting the conversion factor of 10). 



132 

It will be seen from this that the total production of gur is roughly 
3} million tons and that it is constantly fluctuating, depending on 
various factors like cane crop, cane prices, sugar prices, etc. 

Future oj Gur 

It is tempting to speculate on the possibilities of expansion of the 
sugar industry, when our cane crop is increasingly diverted from the 
manufacture of gur to the manufacture of sugar. Doubtless, the avoid- 
ance of the waste involved in the former is a legitimate and laudable 
objective. And those who believe that the masses in India have a 
secret aspiration to the luxuries of the middle and upper classes would 
probably be quick to forecast the quick extinction of gur manufacture 
in this country. There are, however, important facts and considerations 
which argue against this line of thought and which ought not to be 
overlooked. In the first place, there are large numbers, even among 
the well-to-do, who prefer gur to sugar for certain purposes. The taste 
of gur is distinctly different from that of sugar, and there is bound to 
be a large demand for gur at all times. It is fallacious to regard gur 
as an inferior product which must necessarily be displaced with the 
increased production and cheapening of white sugar. The practical 
problem^, therefore, in this regard may be said to be one of increasing 
the efficiency of manufacture rather than of eliminating it from the 
inventory of our annual national production. If it is reasonable to 
hold that gur does not lend itself to manufacture on a large scale or 
that, on what are called broadly social grounds, it must remain a 
cottage industry, then progress lies in educating the rural gur manu- 
facturer in economic methods of production. The task then is of a 
piece with our tasks in regard to other cottage industries. A neces- 
sarily slow process of educating the rural cultivator, through the 
devious ways of co-operative credit, of power-crushing mills, improved 
boiling pans and furnaces, has to be resorted to. That is a task of 
responsible ministries who will band their energies to the focal pro- 
blems of rural reconstruction in India. From the point of view of 
the economist, what matters is not the form in which sucrose in cane 
is consumed by the people, but the elimination of waste in the utilisa- 
tion of cane. 

The efforts of the U.P. Government to ensure more economic 
manufacture of gur will be dealt with at a later stage. Other sources 
of gur production may also be noted at this stage. 

Village Industry of Palm~gur 

Unlike cane-gur which exhibits a week tendency towards large- 
scale production, p^lm-gur is essentially a genuine village industry and 
by the very nature of the business it must remain such. No factors are 
necessary as in the case of cane cultivation for planting palms, which 
are to be planted not every year but only once in 50 years or so. No 
big costly power crushers are required for extracting the juice which 
is done with the help of small instruments manufactured by the village 
smith. Palms are not only useful for gur supply, but also for manu- 
facture of tasteful sugar of all grades from the palm juice in the 
villages with the help of small hand-driven centrifugals which also 



133 



can be manufactured within the country by our own mechanics. The 
technique of sugar making can also be taught to the villagers easily. 1 

Tapping of Palm-juice Palm Jaggery as good as Cane Jaggery 

The method of obtaining juice from the palm is known as " tapping ". 
Tapping is a delicate and complicated art and men are generally found 
conversant with this art in the areas in which the palms grow. These 
men are called tappers, and are mostly engaged in toddy-drawing. The 
method of tapping the palms is not the same for toddy and gur making. 
There are certain important variations which have to be practically 
learnt. Besides the knowledge of tapping two more things are essen- 
tial : (1) to secure a license for free tapping of the palms from the 
Government, (2) to know the technique of nira drawing and gur 
making. Neither the sweet unfermented juice of any of the four palms 
is intoxicant nor the gur made from palm juice. The following chemical 
analysis shows that palm-pur is akin to cane gur: 

TABLE NO. 4 



Gur 




Cane-sugar 


Glucose 


Ash 


Moisture 


1. Sago Palm 
2. Date Palm 
3. Palmyra 
4. Cocoanut 
5. Sugar Cane 


; 


76-455 
79-45 
85-263 
74-163 
65*209 


1-642 
2281 
1-77 
2-939 
17-052 


5-995 
2-2594 
1-927 
3-815 
2-35 


1-681 
3-05 
8-467 
6-25 
7-38 



Lakhs of people are using this without any harmful effects, in 
Bengal and Madras Presidencies. Hundreds of people in Orissa, Bihar, 
C.P., Bombay and UP. have very recently used this gur to much 
advantage. 

The utility of this industry as an avenue of employment for the 
erstwhile toddy-drawers has been recognised. The Governments of 
Madras, Bihar, Orissa, UP. and CP. have provided for the free tapping 
of palms for gwr-making in the dried zones. The tappers are being 
encouraged to take up the industry. 

Wherever palm gur has been newly introduced the people are 
relishing it and palm sugar is much in demand everywhere. People 
are preferring palm gur to cane gur. Palm gur is of a light cream 
colour, is very pleasant to the sight and to the taste. It has an excel- 
lent flavour. 

1 The report of the All-India Village Industries Association for the year 1938 
states that gur was being made under their auspices in Bengal, Andhra, Travan- 
core, Cochin, Karnatak, Broach and Assam from the palmyra, and in Maharashtra, 
Bihar and Orissa from the date-palm. In Karnatak a beginning was made during 
that year in training a few toddy tappers to manufacture sugar in one centre 
and to manufacture gur from the sweet juice of cocoanut trees in another centre. 
At Wardha, the headquarters of the All-India Village Industries Association, ex- 
periments were also carried on for facilities in the manufacture of gur. The 
Association also obtained a licence from the C.P. Government in the year 1938 to 
use and sell Nira or sweet palm juice as a beverage. It is stated that it makes 
a good wholesome drink and should be popularised in villages. 



134 

Quantity of Palm-jaggery in Bengal and Madras 

The total quantity of gur produced other than that from cane is 
estimated at about 1,00,000 tons per year in Bengal. The palm juice 
gur manufacturing industry is #n industry of great importance in 
Madras where the production is estimated at about 40,000 tons during 
a season. 1 

Cocoanut Palm-jaggery 

Dr. J. S. Jatel, Ex-cocoanut Enquiry Officer of the Imperial 
Agricultural Research Council recorded that a tapper can earn 
Rs. 54-6-0 in six months from 15 cocoanut trees and 40,000 cocoanut 
palms are tapped for jaggery-making in the Madras Presidency. 

Date-Palm Jaggery 

The average annual production of gur per tree is 12.25 Ibs. 500 
trees can be grown per acre, so that the yield per acre would be 4 tons. 

Prospects oj Date Sugar 

Date-palm can be grown at a nominal cost. The yield of sugar 
is an absolute certainty and the trees once grown yield sugar for 30 
years on an average. The yield of sugar per unit area in date palm 
is much higher than in cane. 

Nutritive Value of Gur 

We cordially welcome the All-India Village Industries Association 
which was * established by the Indian National Congress under the 
guidance of Mahatma Gandhi in November 1941, particularly on account 
of the propaganda which that Association has undertaken for the 
popularisation of gur. The Association undertook^ this task not only 
on purely economic grounds of promoting a cottage industry but also 
because it was satisfied about the superior nutritive value of gur. 
Mahatma Gandhi in the course of an editorial in the " Harijan ", dated 
13th April 1935, observed: 

"Most undoubtedly people will be advised to use gur for their 
milk and tea. They will be told, as they are being told, that it is 
superstition to think that gur taken in milk or tea is injurious to 
health. One correspondent says that on his wife beginning to talce 
gur with her tea instead of sugar she lost her constipation. I am not 
surprised, because gur has a mild laxative effect which sugar certainly 
has not ". 

Gur, a Wholesome Article of Diet 

Indeed, it cannot be disputed that gur is a wholesome article of 
food. It has been on the daily menu of millions of our countrymen 
since generations. As the nutritive value of gur is being brought to 
the notice of the people, it is expected that its consumption will show 
an increase. We might give a warning, however, that the production 

i Vide Tariff Board Report, 1938, pp. 56 and 57. 



135 

of gur, as it is carried on now is wasteful in many respects, and it 
will be advantageous in the national interest if suitable improvements 
were introduced in the manufacuring process of gur, for minimising 
the waste of raw material, increasing the extraction of sucrose, for 
producing it under more hygienic conditions, etc. 

Necessity of Improvement in Village Factories Manufacturing Gur 

The importance of the gur industry which consumes 3 to 4 times, 
the quantity of cane consumed by factories approximating to about 62 
per cent of the total cane-crop, cannot be over-emphasised. Any 
improvements in and development of the gur industry will be of great 
benefit to millions of cultivators, and should therefore receive careful 
consideration of the various Provincial Governments, 

Many of the village factories are inefficient, leaving behind in the 
bagasse a considerable amount of sugar often as much as 20 per cent 
of the total quantity. The difference in efficiency between the village 
process and a good factory is visible from the fact that from a given 
weight of cane, the factory obtains as much sugar (99J per cent purity) 
as the village obtains gur (80 per cent purity). In both cases, the 
amount of the product obtained is about 10 per cent of the weight of 
the cane ; gur 10 per cent, factory sugar 9.5 per cent and Khandsari 
sugar 5.5 per cent. It would be very helpful if village factories are 
set up with efficient mills for extracting the juice, vacuum pans for 
evaporation, and arrangement for clarification by filtering through 
charcoal. Thus better quality and bigger yield can be obtained. We 
are glad to note that experiments for ijnproving the making of gur are 
being made in Bihar, Bengal, Punjab and the U.P. We are also glad to 
find that the All-India Village Industries Association is taking a keen 
interest in the matter, since the year 1937. 

Palm-jaggery Production also deserves Encouragement 

We would recommend adequate encouragement for the manufacture 
of palm-jaggery along with sugarcane jaggery. Both are important 
village industries deserving equal attention and encouragement for 
creating employment and a better diet for the masses. The manufac- 
ture of palm jaggery has become important from another point of 
view also, viz. of diverting the energy of the tappers into a better channel. 
This aspect has assumed greater importance, particularly since the 
advent of the programme of Prohibition sponsored by the Congress 
Ministries in various provinces. Nature's gift of palms can also thus 
be utilised to the greatest advantage. Chemical analysis of jaggery 
made from palm has shown that it has almost the same ingredients as 
are possessed by the jaggery made from sugarcane juice and indeed 
lakhs of people are using it with beneficient effects in the provinces 
of Bengal and Madras. No one need have any apprehension that palm 
jatgg;ery would be intoxicative. It is as useful and harmless as the 
jaggery made out of sugarcane, and, indeed, is equally delicious. Palm- 
juice gur finds a ready market owing to its flavour. 

During the year 1939, since the introduction of the Prohibition in 
several districts in Bihar, the Government of Bihar are making en- 
deavours to manufacture gur from palmyra juice. They expect that 



136 

the experiment which is showing signs of progress will succeed in 
obtaining employment to the old toddy-vendors and be profitable to 
the owners of the trees also. 



Statistics regarding Movement of Gur Scanty 

No attempt has as far been made to estimate the quantity of gur 
consumed in the various provinces of India. This is due to the fact that 
information regarding the movement of gur is very scanty. Figures 
for imports and exports of gur, by rail and river from provinces and 
States are not separately available, these being combined with those 
for molasses, etc. Large quantities of gur are transported by road 
over long distance, and the error without allowing for this fact is 
likely to be considerable. Therefore, any estimate of the quantity for 
consumption of gur in the various provinces would be difficult. For 
these reasons, such figures have not been calculated. 

There is no carry ove^ of gur as in the case of sugar. Almost all 
the provinces produce the bulk of gur needed for their requirements. 

Till very recently there was no elaborate system for the marketing 
of gur. With the efforts of the Gur Marketing Bureau it is believed 
that there could be a considerable expansion in the consumption of 
gur in the various provinces, the figures for Assam and Madras being 
9 Ibs. and U.P. as much as 72 Ibs. The wide disparity in consumption 
in the respective provinces is not in any way due to the difference 
in the purchasing capacity of the people. The plain reason is that the 
problem of distribution has received no attention. The maximum pro- 
duction is of course in the UP. and the next highest in Bengal and 
then Punjab, Madras, Bombay (including States) and Bihar. 

The following table will show the net production of gur in India 
by Provinces and States during 1938-39 and 1939-40 : 

TABLE NO. 5 



Provinces and States 




1939-40 


1938-39 


United Provinces (including States) 




9,16.000 


7.28,000 


Punjab 





2.19,000 


1.65,000 


Bihar and Orissa 


... 


82,000 


1,24.000 


Bengal 


... 


3,91,000 


3,50,000 


Madras 


... 


2,67,000 


1.87.000 


Bombay and Sind (including States) 


... 


1,90.000 


1,52,000 


North-West Frontier Provinces 


... 


67,000 


50,000 


Assam 


... 


35,000 


31.000 


Central Provinces and Berar 


... 


38,000 


41,000 


Delhi 


... 


3,000 


400 


Mysore 


... 


36,000 


20,000 


Hyderabad 


... 


54.000 


20,000 


Baroda 





5.000 


5,000 


Bhopal 


... 


3,000 


2,000 



We may now turn to other methods of manufacturing sugar. In 
the sugar industry in India, as it is today, both the indigenous method 
and the modern factory method are practised. 



137 

Methods of Manufacture of Sugar 
The indigenous method comprises : * 

(i) The Open Pan Process, 

(ii) The Manufacture of Raw Sugar, i.e. Gur and Rab, and 
(iii) The refining of raw sugar into white sugar by : 

(a) either Bel-khanchi khandsaris, or 

(b) Bel-centrifugal khandsaris, or 

(c) Open Pan Factories. 

The modern factories are engaged in either 

(a) the refining of sugar from gur or jaggery in refineries, or 

(b) the manufacture of sugar from sugarcane, direct. 

Indigenous Methods Raw Sugar, i.e. Gur and Rab 

We have already described the manufacture of gur. We will now 
describe rab or massecuite which is different from gur only in its 
being of a thinner consistency. It is obtained by boiling the juice to 
a slightly lower degree of concentration than gur. It is mainly used 
for the manufacture of crude sugar known as khand. This process of 
manufacture of rab is known as the Bel Process, and consists of boiling 
the juice obtained from the cane in bullock or small power mills in 
a series of open pans. This is prevalent largely in the Rohilkhand 
Division of the United Provinces. Rab is also prepared from gur in 
the Eastern Districts of the United Provinces. 

Rab is manufactured generally within easy reach of the cane 
supplies, 

Refining of Rab into White Sugar 1 

The Bel-khanchi khandsaris use no machinery. The cane-growers 
crush the cane in animal power crushers (which are generally taken 
on hire) and sell the juice (not the cane) to the khandsaris who con- 
vert the same into rab in direct-fired open pans. The rab is placed 
in bags, and molasses is squeezed out by applying pressure. The brown 
sugar thus obtained is then treated with moistened weeds, and after 
it becomes almost white, it is dried in the sun. 

The Bel-centrifugal khandsaris adopt the same method as is 
adopted by the Bel-khanchi khandsaris except that centrifugal machines 
which may be hand or power-driven are used for separating sugar from 
rab. In a modification of this process, the rab-boiler working in villages 
sells his rab to owners of centrifugal factories, that are generally located 
in towns. 

The process of manufacture of sugar from the rab is accompanied 
by even more waste than is found in manufacturing sugar from gur. 

The open pan factories represent a further stage in the industrial- 
isation of small-scale sugar manufacture. Such factories have general- 
ly got cane-cnTshers driven by oil or steam engines or by electric 

*Vide Tariff Board Report, 1938, p. 92. 



138. 

motors, Rab is boiled in open pans as before and power driven centri- 
fugals are used for separating sugar from rab. 

These factories differ from the modern sugar factories not only in 
size, but also in regard to the simplicity of the machinery and process 
employed. Most of these are large enough, however, to be classified 
as factories under the Indian Factories Act. 

Statistics of Production of Khandsaris 

It is a matter of great regret that the statistics of the sugar produced 
by the various types of open pan concerns which may collectively (as 
also conveniently) be called khandsaris, are not available. The Imperial 
Council of Agricultural Research sanctioned a grant of Rs. 3,000 for 
taking a census of sugar production in villages and towns in the U.P. 
by the khandsari process. The Government of the U.P. undertook to 
carry out a census of production for the year 1933-34 1 and appointed 
a special staff for carrying on a detailed enquiry in the towns. The 
Punjab Government also undertook to compile figures of production of 
sugar by Khandsaris in the Punjab. It is a matter of regret, however, 
that despite these efforts it has not been possible to obtain any definite 
and reliable statistics till now and that all the estimates of Khandsari 
production are conjectural estimates. 

A glance at the above table will show, however, that in recent 
years the khandsari production has been on the decline and that it 
was at its maximum in the. year 1932-33. The Indian Sugar Committee 
of 1920 (paragraph 278) had estimated the production of khandsari 
sugar at 2,50,000 tons per annum, while the Tariff Board's estimate for 
the year 1927-28 amounted to 2,00,000 tons. It will be interesting to 
observe, however, that 60 per cent of the total khandsari sugar produc- 
tion in India is in the U.P, alone (there is little khandsari production 
in Bihar). 

Future of Khandsari Process of Production 

Although one is naturally inclined to feel doubtful about the suc- 
cess of this form of manufacture of sugar which is very wasteful and 
uneconomic as compared with the modern factory, its importance in the 
transitional stage of the industry cannot be minimised as it can be 
undertaken in the interior parts of the country, where owing to lack 
of communications or the scattered nature of cane growing areas, it 
would not be worthwhile for modern factories to be established. 

The Indian Sugar Committee condemned the khandsari industry, 
largely on the ground of its inefficiency. Since then, as a result of 
the imposition of the protective tariff on sugar, the industry has made 
some progress as estimated above, due inter alia to the advantages it 
has in purchasing cane at a rate, which is considerably lower than the 
market rate, and the increase in the recovery percentage by improve- 
ment in methods of manufacture, and the low overhead charges, etc. 

*We understand that during the year 1933-34 according to this enquiry, 80,000 
tons of sugar were manufactured by Khandsaris in U.P. and 4,000 tons in the 
Punjab. 



139 

The Tariff Board expressed the opinion that the industry must un- 
doubtedly play an important part in providing an outlet for surplus 
cane, The Report also stated that these khandsari factories are easily 
and quickly established, and their capital cost of crushing cane is 
estimated at 6.79 annas per maund, against that of Re. 1 in case of 
central factories. The industry, as seen above, is of great magnitude, 
giving employment to thousands of people at a time when their labour 
is running to waste and holds an important position in the agricultural 
system of the United Provinces. A set-back to this industry would 
therefore be a very great hardship to the cultivators, particularly in 
Rohilkhand where the area under cane is about one-tenth of the total 
area in India, and where the cane is almost entirely sold for white 
sugar making by the Bel process. The only way of saving it or of 
producing its existence, is to increase its efficiency, by carrying on 
vigorous research, by the adoption of the improved Bel system known 
as Hadi or Bhopal method, or by the modified Rohilkhand Bel, 1 as 
was tried by the Sugar Technologist in 1932-33, and which yielded 
larger quantity of rab, by the provision of technical assistance, and 
skilled labour, and by a whole-hearted co-operation of the cultivators, 
zamindars, the khandsari and the Government. 

The Imperial Council of Agricultural Research 2 should continue 
to help this industry which gives employment to a large number of 
people and which is of great importance to the agricultural economy 
of the country, by undertaking researches for effecting economy in 
methods of manufacture, and by eliminating waste, wherever possible, 
by the assistance of efficient machinery. 

Mere sentiment alone, however, will not be of help in saving the 
industry from sinking, with which it is threatened by efficient factory 
production on a large scale. 8 

The industry, if it wishes to survive, has an up-hill task before it. 
Its future will depend considerably on its own efforts. It will have to 
make earnest endeavours for deriving a better percentage of sucrose, 
and improving the quality of sugar turned out by it. 

Standard Methods of Manufacture 

We may now pass on to a consideration of the manufacture of 
white sugar in India. We may begin with noting the standard methods 
of cane-sugar manufacture employed in modern factories. These are 
briefly known as (1) Defecation, (2) Sulphitation, (3) Carbonatation. 

DEFECATION PROCESS. According to this process sufficient time is 
added to neutralize the raw juice, which is subsequently heated under 



1 This was tried at the Nagalia Farm, Bilari, belonging to Lala Har Sahai 
Gupta in 1932-33. The Imperial Council gave a grant of Rs. 4,000 for the purpose. 
For a description of- the Bel, vide "The Open Pan System of White Sugar 
Manufacture" by R. C. Srivastava, p. 114. 

2 In November 1933, the Imperial Council sanctioned a scheme of Rs. 1,50,000 
prepared by the Sugar Technologist for establishment of a Research Station for 
making improvements in Khandsari method of sugar manufacture and indigenous 
process of making gur. 

3 Even the Tariff Board, 1932, which showed such great interest in the 
Khandsari industry, could not help observing that the Khandsari system of manu- 
facture, if the scheme of protection is successful, should to a considerable extent 
give place to a system of central factories. (Vide para 81). 



140 

pressure, further " boiled " in open pans (defecators) and then allowed 
to flow into settling tanks, or subsiders, where the separation of the 
clean and dirty juice occurs. Of late it has been found beneficial to 
send the juice through heaters before adding the lime-milk. 

SULPHITATION PROCESS. The difference in this process from the 
above method is that about double the amount of lime is added to the 
juice, whereupon the latter is treated with sulphurous acid gas. 

CARBONATATION PROCESS. In this process a considerable amount 
of lime is added following by a treatment with carbonic acid gas. 

The defecation process is used for making sugar intended for 
refining. Since carbonatation and sulphitation are the classical processes 
in the production of white sugar in factories, we may compare their 
merits. 

Carbonatation vs. Sulphitation 

The carbonatation factories generally produce 2.6 per cent more 
than that of sulphitation factories. This superiority of carbonatation is 
due to the more intensive and thorough elimination of non-sugar ingre- 
dients, so that both the purity and the colour of the clarified juice are 
strikingly better than in sulphitation. The sugar made in a carbonata- 
tion factory realizes a slightly better pride than in a sulphitation 
factory, as the sugar turned out is whiter and more sparkling and retains 
its qualities much longer. At the same time, the carbonatation process 
is somewhat more expensive, costing perhaps about 5 annas more per 
maund of sugar produced. 

The carbonatation process is not generally as profitable as the 
sulphitation process, due to the fact that the difference in price of 
sugar is not very great. 

Out of 150 factories over 90 are sulphitation factories. 

Characteristic Features in other Countries 

Let us first take Java. Java has various natural advantages over 
other cane-sugar countries. To start with, the Island is situated most 
favourably in respect of cane cultivation, lying as it does within the 
tropical belt. It has been blessed with a climate agreeable to the growth 
of rich cane of higher sugar content and of heavier yield than is found 
in India. In point of labour also Java has several advantages. 

It has a population of 35 millions and has an area of 50,000 square 
miles. Labour is abundant, cheap and readily available. 

There is intensive cultivation of cane combined with the application 
of a well-devised scheme of economic manuring due largely to the 
fact that only a small portion of the land can be allbtted to sugarcane, 
as the bulk of the land is required for growing food for the population. 1 
In regard to cultivation of cane, the universal practice in Java is to 
grow exclusively "plant cane"; ratooning as is done in some other 

1 Vide Economic Aspects of Cane-sugar Production by Maxwell, p. 52, where 
he observes "more than 90 per cent of the total cane-grown area in Java is under 
irrigation, and in the Hawaiian Islands, 50 per cent." 



141 

countries, is not done in Java. Owing to the necessity of growing rice 
for the people, Java is forced to adopt a system of rotation of crops, 
which .also implies that the planting of cane is done on irrigated land. 
The most important feature, however, is that the cultivation of cane 
and the manufacture of sugar are done by one and the same administra- 
tion. As a matter of fact, it can be said that the cultivation of cane 
as practised in Java may well be regarded as the most scientific and 
efficient system of cane cultivation in the tropics. 

Milling Results in Hawaii superior to Java 

In regard to extraction results by the milling installations, how- 
ever, Java has not yet reached the high level of Hawaii, which ranks 
the highest amongst other cane countries. 

Features in Hawaiian Islands 

These islands lie on the northern fringe of the tropical belt, just 
within the Tropic of Cancer. The sugar industry here is noted for its 
extraordinary degree of efficiency and systematic thoroughness. The 
relation of applied science to sugar manufacture is most intimate and 
complete. Over 50 per cent of the total area under cane is irrigated. 
In respect of extraction results, Hawaii ranks highest amongst cane 
countries. 

In Hawaii, ratooning is practised and the cane requires about 18 
months to mature. 1 

Features in Cuba 

The chief reasons for Cuba's pre-eminence as a sugar manufacturing 
country are the quality and quantity of its soil. The extraordinary 
fertility of the natural cane lands in Cuba is well-known. Cane, once 
planted, appears, as it were, to thrive like a weed. 

Cuba is similar to Java in some respects. Both are long and 
narrow lands of roughly the same area (about the size of England). 
Both of them are within the tropics, north and south of the Equator 
respectively, and have more or less comparable climatic conditions. 
It is remarkable, however, that the population of Java is over ten 
times that of Cuba, although both the islands are of about the same 
size. On the other hand, the area of cane cultivation in Java is restrict- 
ed by Government due to the necessity of growing food for the people. 
Therefore, while land in Cuba is abundant and cheap, and labour com- 
paratively scarce and dear, in Java the land is limited and labour is 
abundant and cheap. As a result we find that cultivation of cane in 
Java is intensive and in Cuba extensive. The average yield of cane 
per acre is less than 20 tons, and of sugar, about 2 tons per acre. 2 
Transport of cane in Cuba is not up to date, being largely done by 
bullock carts. 

In India, though the main sugar belt lies in North India, superior 
qualities are grown in the Deccan and in South India. It is important 

*Vide Economic Aspects of Cane-sugar Production by Maxwell, p. 51. 
2 ibid., p. 55. 



142 

that a wide variety of agricultural conditions have to be borne in mind 
when dealing with the problem of conditions of cultivation of cane and 
manufacture of sugar. For the purpose of examining the methods of 
manufacture, it should suffice if attention is confined to agricultural 
-conditions in the U.P. and Bihar. 

Nowhere is agricultural conditions impinge on manufacturing 
conditions more than in the matter of the duration of the crushing season. 
The following table giving the crushing seasons for the various sugar- 
producing countries brings out the disadvantages which the Indian 
industry suffers when compared to others : 

TABLE NO. 6 
Period of Crushing or Harvesting Seasons for Cane in various Countries 



Cuba 






JanuaryJune 


Hawaii 






DecemberSeptember 


Java 






May November 


Mauritius 






August December 


Natal 






May December 


Queensland 






June November 


Egypt 




. 


December A pr il 


India 







November A pril 



Generally speaking, actual crushing period extends from 4 to 6 
months, although in districts where exceptional conditions climatic and 
otherwise prevail, e.g. in Hawaii, it extends almost throughout the 
year* The duration of crushing season depends upon a number of 
factors, the most important of which is maturity of the cane, and the 
availability of cane, by more than one crop per year. 1 

The tables below give the average duration of the cane-crushing 
season in India from 1933-34 to 1942-43 : 



TABLE NO. 7 

Capacity of Factories and duration of Crushing Season in India 2 



Yea 


r 


Average cane-crushing capacity 
of Factory (calculated on the basis 
of tons of cane crushed per day of 
actual working in India) 


Maximum cane-crushing 
capacity of factories per 
day in India 






Tons 


Tons 


1934-35 




517 


2,012 


1935-36 




568 


1,807 


L936-37 




630 


1,960 


L937-38 




660 


2,000 


1938-39 




630 


1,850 


1939-40 




710 


1,960 


1940-41 




690 


1,980 


941-42 




640 


1,800 


942-43 




690 


1,920 



Economic Aspects of Cane-sugar Production by Maxwell, p. 22. 
2 Vide Indian Trade Journal, Calcutta, 17th September 1942, and previous issues. 



143 
TABLE NO. 8 



Duration of cane-crushing 


1933- 
34 


1934- 
35 


1935- 
36 


1936- 
37 


1937- 
38 


1938- 
39 


1939- 
40 


1940- 
41 


1941- 
42 


1942- 
43 


season 
(October-May) 


No. of 
Days 


No. of 
Days 


No. of 
Days 


Mo. of 
Days 


No. of 
Days 


No. of 
Days 


No. of 
Days 


No. of 
Days 


No. of 
Days 


No. of 
Days 












| 










Mean duration of cane 






















crushing season in all- 






















India 


106 


104 


126 


138 


112 


83 


129 


113 


85 


101 


Maximum duration of cane 






















crushing season in all- 






















India 


208 


172 


179 


203 


181 


184 


203 


264 


313 


278 


Mean duration of cane 






















crushing season in U. P. ... 


112 


107 


134 


140 


124 


77 


133 


100 


78 


112 


Mean duration of cane 






















crushing season in Bihar... 


105 


109 


124 


150 


99 


79 


136 


100 


34 


% 


Mean duration of cane 






















crushing season in "all 






















other provinces". 


84 


90 


112 


138 


103 


97 


119 


144 


117 


89 



As pointed out by us elsewhere, and by the Tariff Board 1938 
(page 62) , the duration of the cane-crushing season is dependent on the 
availability of cane and its economic operating purity. The Tariff Board 
also reported (vide page 66) on the basis of the average for three years, 
that the duration of the season in the sub-tropical region was 128, for 
the tropical region, 132, and for the whole of India, 130 days. Taking 
26 working days in a month in a crushing season of 5 months, the Tariff 
Board thought 130 days as a fair average to adopt as an economic period 
of working in the present conditions. 1 



Age of Crop 

The time taken to grow a crop of cane depends largely on climatic 
conditions and the quality of cane grown which varies from country to 
country. This point has an important bearing on the subject of yield 
of sugar per acre, when comparisons are drawn between districts. 

JAVA. In Java, cane takes 11 to 15 months from planting to harvest- 
ing, thus practically constituting one year's crop. "Plant Cane" is 
exclusively grown ; ratooning is not practised. This is due mainly to the 
system of land tenure in Java, whereby land, although leased for long 
periods, is actually occupied by the factory during the period of cane 
growing, i.e. from 14 to 18 months. 

CUBA. In Cuba, though ratooning over long periods is practised, 
crops are usually harvested after an average growth of 12 to 15 months. 

HAWAII. In Hawaii, two seasons are required for producing a crop 
of cane. Though what is locally termed " short ratoons " are harvested 
after 12 months' growth, the bulk of the crop matures in 18 to 24 months. 
The common practice is to have 3 crops in the ground at the same time : 

Ht is well known that one or two factories in the Bombay Deccan worked as 
many as 180 days in a season, and the factory in the Mysore State worked for 
264 days. The length of the crushing season can be extended by encouraging the 
growth of the most suitable early and late ripening varieties of cane. 



144 

as one crop is being cut, another is being planted or cultivated for ratoons, 
while a third is growing, to be harvested six months later. 1 

Supply of Cane 

In Queensland and Natal the entire crop of cane is grown by inde- 
pendent European Planters, who supply their cane to the neighbouring 
mills, while in Mauritius a considerable part of the crop, about 45 per 
cent, is grown by small Indian Planters. The bulk of the cane in Cuba 
is produced by outside planters and sold to mills. 

In Java the whole crop is produced by the mills and in Hawaii about 
90 per cent of it. 

In India owing to the smallness of the holdings, large contiguous 
plots of land cannot be put under cane by factories without great diffi- 
culty. Small individual cultivators grow cane on their small plots of 
land and sell their produce to mills as also to the Khandsaries and gur 
manufacturers. More than 70 per cent of the crop is sold to gur and 
other manufacturers, whereas only about 20 per cent of the crop is sold 
to mills for manufacture of sugar direct therefrom. A tendency is, how- 
ever, noticeable for factories to purchase their land, in close vicinity, for 
cultivation under their own management. 

Sucrose Content 

The crop averages in the different countries indicate practically a 
uniform percentage of sugar in the cane, i.e. round about 13 per cent. 
Fibre content is roughly 12 per cent to 13 per cent and the purity of 
juice is about 87 per cent. 

Yield of Cane and Sugar per acre 

The yields of cane and sugar per acre are necessary in comparing 
the yield of sugar in one country with that of another. Some confusion 
is sometimes caused by mixing up Long and Short tons with metric tons 2 
and other factors also are ignored, e.g. whether the figure is based on a 
one-year or two-year crop, whether based on white or raw sugar, whether 
based on plant cane or ratoons, whether on irrigated or non-irrigated 
land, etc. 

IN JAVA. The average extraction of sugar in Java is about 11.9 per 
cent. It must be borne in mind, however, in comparing these figures, 
that in Java the crop consists of plant cane exclusively and is a one-year 
crop. 

IN HAWAII. In Hawaiian Islands, the extraction of sugar percentage 
of white cane is 12 per cent but it must be borne in mind that ratooning 
is practised and the cane requires about 18 months to mature. For the 
sake of a fair comparison, the figure of the tonnage of cane harvested 
per acre should be based upon the same unit of time as well as area, i.e. 
tons of cane per acre per annum. The tonnage of cane harvested per 
acre per annum in Java is about 45 (2,000 Ibs.) as compared with about 
53 (2,000 Ibs.) of Hawaii. Both these countries, however, have one 

1 Vide Economic Aspects of Cane-sugar Production by Maxwell, p. 22. 

2 Long ton 2,240 Ibs. Short ton 2,000 Ibs. Metric ton 2,205 Ibs. 



145 



factor in common, viz. of intensive cultivation combined with irrigation 
on an imparallelled scale. In Java more than 90 per cent of the total 
cane growing area is under irrigation, while in Hawaiian Island, over 
50 per cent of the area is under irrigation. 

IN MAURITIUS. In Mauritius the average yield of cane is about 23 
to 24 tons per acre on European estates. In Indian plantations, however, 
the average is only about 14 tons per acre. Consequently the average 
for the whole is 17.5 tons. This is equivalent to less than 2 tons of sugar 
per acre. This is due to primitive methods of cultivation of the Indian 
planters who occupy about half of the total area under cane. 1 

IN INDIA. In India the average yield of cane is about 15.6 tons per 
acre as compared with 12.3 tons in 1931-32 (vide page 19, Tariff Board 
Report of 1938). Higher yields, however, have been recorded e.g. a 
maximum yield of 100 tons was obtained in the Deccan in 1938. The 
yield for improved varieties is between 20 to 30 tons per acre. The 
production of sugar per acre in India works out between 1.25 to 
1.50 tons. 2 

IN CUBA. As regards Cuba, no reliable statistics are available in 
respect of yields of cane and sugar. But from occasional statements it 
may be taken that the average yield of cane per acre over the whole 
island is less than 20 tons and 2 tons of sugar per acre. 

IN QUEENSLAND. In Queensland the average yield of cane per acre 
is about 16 tons and 2 tons of sugar per acre. 

IN PHILIPPINES. No data is available. From an attempt made hi 
1924 to compile a representative record of the yield of sugar per acre, it 
was found that 1.28 tons of sugar was yielded by plant cane, 1.38 by 
ratoons and the total average was 1.1 tons of sugar. 

The following table gives particulars of average yields of cane and 
of sugar (raw) in terms of short tons per acre in different countries : 

TABLE NO. 93 

Broad average of Yields of Cane and of Sugar (Raw) in terms of Short Tons 
per acre for Different Countries 



Countries 


Cane 
Tons per acre 


Sugar 
Tons per acre 


Approximate period 
of growth of cane 


Java 
Hawaiian Islands 
Queensland 

Cuba 
Mauritius 
Philippines 
South Africa 
India 


Approx. 45 
45 
Less than 20 

H * 20 
20 
M 20 

M M 20 

Approx. 12 


Approx. 5*5 
5'5 
About 2 

Less than 2 

H M 2 

2 
2 

M ., 1-1/2 


11-15 months 
18-24 
Practically 2 years' 
crop 
12-15 months 
14-20 
11-14 
2 years' crop 
1 year's crop 



1 For a detailed study, vide Economic Aspects of Cane-sugar Production by 
Maxwell, p. 51. 

2 Vide Tariff Board's Report, 1938, p. 67. It states this yield of 100 tons of 
cane should give a yield of sugar of 11 tons per acre. 

8 This table is not, however, up to date (the figures having been compiled in 
1927 by Mr. Maxwell) and many improvements have been made since then as 
observed by us elsewhere in this thesis, in the matter of increase in the yield 
per acre due to improved canes and the higher yield of sugar due to better recovery. 
In Java the sugar produced per acre is about 6.72 tons during 1938-39 (vide Review 
of Sugar Industry in India for the year ending 31st October 1940, in the Indian Trade 
Journal, 7th May 1942). 

10 



146 

Labour supply is another point on which it is necessary to note how 
the different sugar producing countries are placed. 

MAURITIUS. Although the island consists of some 700 square miles 
and has a population of 3,80,000 people of which 2,70,000 are Indians, 
Mauritius is not well situated in respect of labour. The labour shortage 
affects the welfare of the industry. 

JAVA. Java is one of the most densely populated countries in the 
world, and the result is that labour question is greatly simplified. 

INDIA. In India also there is plenty of labour available and at cheap 
rates too. The factories alone are estimated 'to be employing about 
1,20,000 labourers during the crushing season, apart from the Khandsaris 
and gur manufacturers. The total labour force dependent upon cane- 
cultivation may be estimated at about 20 millions, on average of one 
acre of cane per family of about 4 to 5 members, in addition to others 
employed for weeding, harvesting and allied operations. 

Output of Sugar Factories 

The following table gives the average annual output of sugar per 

mill in different countires : 



TABLE NO. 10 
Average Annual Output per Mill in Various Countries in 1927 1 



Countries 



Average annual output per mill 



Cuba 
Hawaii 






26,000 tons of sugar 
18,000 


Philippines 
Porto Rico 






17,000 
15,000 






Australia 






14,000 






Java 






12,500 






South Africa 






9,500 






Mauritius 






; 5,500 






India 






7,500 







Labour Supply 

It must be observed that Cuba stands out prominently amongst 
the various countries for large outputs and large milling capacities. 
In Cuba there are very few factories which produce less than 5,000 
tons per year, and there are a large number of factories which produce 
50,000 tons per year. There are three or four factories which produce 
more than one lac tons. The factories in India were mostly of a small 
size till 1931, but since the grant of protection this has been altered 
and the average production of sugar per season after 1940 may be 
taken at about 7.500 tons per year. 

Size of " Economic Unit " Factories in India 

The Tariff Board (1932) recommended (page 64) the establish- 
ment of factories with a crushing capacity of 13 'lacs maunds of cane 

1 Vide Economic Aspects of Cane-sugar Production by Maxwell, p. 104 pub- 
lished in 1927. 



147 

per year i.e., about 4,000 tons of sugar as an " economic unit " in the 
then conditions in view of the vastly scattered and small holdings 
of cane. The capital cost of such a factory was estimated at about 
Rs. 13 lacs, or roughly one rupee per maund of cane crushed. It is 
gratifying, however, to find that the size of the factories in India is 
increasing with the growth and availability of cane in the vicinity 
of factories, and consequently the cost of manufacture is also decreas- 
ing. The " economic unit " adopted by the Tariff Board of 1937 was 
500 tons crushing capacity per day (page 61) as compared with 
the crushing capacity of 400 tons adopted by the previous Tariff Board. 
As 'pointed out, however, this expectation has been more than 
realised and the size has been increasing still fuiither due to the 
availability of cane and the desire of the factories to reduce the cost 
of production. The capacity of a sugar factory is governed by a 
number of factors which vary from country to country, the main 
consideration being the amount of cane available, the yield of cane, 
the duration of the milling season and the quality of the cane. 

Crushing Capacities 

By crushing or grinding capacity of a factory is meant the 
amount of cane that goes through the milling plant per unit of time 
with good extraction and is usually expressed in terms of so many 
tons of cane per hour or per day. Of course, it would certainly be 
more rational and desirable to define the capacity as the quantity 
of cane which can be crushed by the mill with the highest extraction 
results, for after all, the fundamental object of a milling plant is not 
the mere crushing through of huge quantities of cane, but extraction 
of the maximum sugar from the cane. The cane crushing capacity 
varies considerably in different countries. In Cuba there are over 
50 factories which crush more than 75 tons of cane per hour. It 
appears, however, that the object of Cuban mills is capacity and 
not extraction. While the Hawaiian industrialists regard the milling 
plant as a means of extraction of sugar, the Cuban industrialists 
consider the plant as a means of grinding cane, we find that the 
highest extraction results are in Hawaiian Islands. 

Factories in Java very widely in milling capacity, the majority 
ranging from 30 to 55 tons of cane per hour. 

In India the average cane-crushing capacity may be said to be 
about 690 tons of cane per day of 22 hours (between 1940 and 1944) and 
it is gratifying to note that this is on the increase. The maximum 
capacity is 1,900 tons per day. 

Over-all Efficiency 

The " over-all " efficiency of a factory by which is meant the per- 
centage of sucrose recovered from the total sucrose contained in the 
cane in the form of commercial sugar varies on account of different 
conditions. Of primary importance are the richness of the cane, 
purity of the juice, the fibres in the cane, and method of manufacture. 
The over-all efficiency combines the extraction of milling efficiency 
with the recovery of manufacturing efficiency. The following table 
from Maxwell's Economic Aspects of Cane-sugar Production (page 
118) shows the tons of cane required to make a ton of sugar in differ- 
ent countries. 



148 



TABLE NO. 11 
Tons of Cane Required to make one ton of Sugar 



Countries 


Tons cane to 
one ton sugar 


No. of factories 
averaged 


Season 


Observations 


Cuba 


8-50 


70 


1924 


Raw sugar 


Hawaii 
Java 


8-20 
8-80* 


Practically all 
> > 


ti 


Computed on the 
basis of raw su- 










gar (Standard 










Muscovado) 


Queensland 
Mauritius 
South Africa 


7'80 
10-66 
1090 


*> 
20 
12 


1919 
1925 


Raw sugar 
White 
White and partly 










raw sugar 


India 


11-50 


130 


1940 


White sugar 



The favourable position of Queensland is mainly attributed to 
the rich canes there. In other countries, also notable improvements 
have been made during the last few years. 

We have seen that in the comparison between the Indian sugar 
industry with that of other countries, there is hardly a single aspect 
in which the comparison is in India's favour. Only in the matter of 
labour supply would India seem to be favourably placed ; otherwise 
in the yield of cane per acre, in the sucrose content of the cane, in 
the duration of the crushing season, the average milling capacity of 
factories. India's competitors possess notable advantages. That is 
why, as we have never wearied of pointing out, the success of pro- 
tection depends more on what is achieved in the farm than what is 
attempted in the factory. Nevertheless, when one looks only at the 
manufacturing process, the efficiency of the milling operation, con- 
ditioned no doubt by the quality and state of the cane, is a factor of 
the utmost importance. 

And the Indian industry can claim that the steady increase in 
the recovery percentage is a point in its favour which needs all the 
greater emphasis, since protection to sugar often meets with scorn. 
The Tariff Board (1938) observed (page 74) that from an analysis 
made by the Sugar Technologist of the increase in recovery (vide 
Appendix ' B ' of the report) , they found that the greater part of the 
improvement was due to the increased efficiency, rather than the 
better quality of cane. The Tariff Board also observed in the same 
context (page 74) that the quality of cane had not improved to the 
extent that might have been expected and had actually declined in 
Bombay, North Bihar and South Bihar, and that this adverse factor 
had to a great extent been offset by increased efficiency in milling. 
The Tariff Board also pointed out (page 72) that the recovery of 
sugar from cane and the cost of manufacture were largely influenced 
by the Quality of cane over which the factories could exercise no 
control, unless they were in a position to cultivate cane in their own 
land or land under their control, an ideal arrangement, which, except 



* In 1925 this figure was 8.1. 



149 

in Bombay, was exceptional in India. They also pointed out further 
that in this respect factories in India were at a grave disadvantage 
in comparison with factories in Java which were in a position to 
control the cultivation of all the cane they required and could arrange 
for harvesting at the time cane reached maturity and was in the best 
condition for crushing. 

The following table gives the average and maximum recovery 
percentage in the various provinces and for India as a whole (and 
for Java for facility of comparison) from 1931-32 to 1943-44 : 

TABLE NO. 12 

Average and Maximum Percentage of Recovery of Sugar in Factories in India 

and Java since 1931-32 1 



Voo- 


India 1 U. P. 


Bihar 


Bombay 


Java 


India 


i ear 


Average j Average 


Average 


Average 


Average 


Maximum 


1931-32 


8-89 i 8'59 


9'06 




10'46 10 


1932-33 


8-66 8'55 


8'60 


1000 


11-15 


10 


1933-34 


8'80 ! 9-08 


8-32 


10-00 


12-64 


10 


1934-35 


8-66 8-56 


8'79 


1037 


12-35 


11-10 


1935-36 


9'29 960 


8'93 


10-47 


13-21 


11-34 


1936-37 


9-50 9-65 


9'20 


10-68 


11-72 


11-43 


1937-38 


938 i 9-18 


9'58 


1097 


11-40 


11-63 


1938-39 


i 9-29 914 


9-00 


11-29 






12-25 


1939-40 


9-45 9-37 


9-29 


10-97 i 


.. 


12'31 


194U-41 


9-70 9-87 


9-86 


9-94 






11-16 


1941-42 


9'69 , 9-87 


1035 


9-87 




12*45 


1942-43 


1 10'28 10*16 


10-93 


10-64 




13-35 


1943-44 


10-02 i 9'92 


10-53 


10-98 | 


- 


12-84 



It is interesting, however, to note the contention in some quar- 
ters that the credit for this progress in the recovery percentage goes 
to the cultivator, rather than the industrialist ; and this view draws 
some strength from the fact that the best percentage is in Bombay, 
the province in which the best quality canes are produced. Without 
seeking to refute this contention, it may be pointed out here that the 
higher percentage in Java is likewise due to the better quality of 
cane which the mills there are able to procure, and their ability to 
crush when cane is in an optimum condition. What matters is 
whether or not the best results are achieved, given the kind of cane 
which it is possible at the time to grow. The success of the sugar 
industry rests as much in the lap of agriculture as of industry. When 
one considers the achievement from the point of view of justification 
of protection, one has only to reassure oneself that the rate of pro- 
gress looked for and expected by the Tariff Board has been main- 
tained. Though Mr, B. P. Adarkar points out that mills have been 
wasting sugarcane and getting a low percentage of sugar recovery 
by employing obsolete machinery and old methods, the expectations 
of the Tariff Board of 1931 in this regard have been more than ful- 
filled. It was expected that at the end of 15 years this country 
should achieve a recovery of 9.4 per cent. 

The average for all-India in 1940-41 was indeed 9.7 per cent and 
in 1941-43, 9.69 per cent, and it looks as if there will be a further 



I Vide Trade Journal, Calcutta, 18th Septsm!?er 1941 and J7th September 1942, 



150 

improvement in the recovery percentage. 1 Quoting the estimate of 
the loss in sucrose due to insect pests and disease relating to 10 
factories, the Tariff Board observed that the loss per month was 
estimated at about Rs. 3,56,000 taking sugar at Rs. 6 per maund. For 
a season of 5 months the loss would be estimated at Rs. 17,80,000. The 
Tariff Board (1938) estimated an average recovery rate of 9.5 for the 
whole of India. Fortunately, its expectation has been more than 
realised in spite of the fact that adequate research has not been under- 
taken to prevent insect pests and diseases in the cane. 

Allowing for the lower sucrose content of the cane in India, the per- 
formance of sugar mills in India is equal to the best in Java. For 
ensuring satisfactory results in recovery of sucrose, the cultivator and the 
industrialist must both join hands. This is absolutely essential because 
roughly 78 per cent of the total cost of sugar is represented by raw 
material and manufacturing charges. The Tariff Board (1938) observed 
(page 78). that in the " economic unit " they adopted, the cost of the raw 
material comes to 52.58 per cent and the manufacturing charges 25.49 per 
cent. 

The sucrose recovery in the process of manufacture in India as 
compared with other sugar producing countries is given on page 71 of 
the Tariff Board Report of 1938. A reference to that will indicate that 
while Java recovered 86.57 per cent sucrose in 1933, the sucrose recovery 
in 1936-37 was 79.35 per cent in the Punjab, 80.24 per cent in the U.P., 
79.69 per cent in Bihar, 78.99 per cent in Bengal, 76.17 per cent in Madras 
and 81.05 per cent in Bombay. On the basis of these figures, the Tariff 
Board concluded that some mills had an efficiency equal to Java as judged 
by their recovery figures, but their loss percentage of sucrose was higher 
as compared with that of Java, which was 1.0 to 1.5 (Tariff Board's 
Report, page 72). 

Charge of obsolete Machinery Leading to Efficiency 

The charge levelled against the industry of the employment of 
obsolete machinery and old methods is perhaps true of the older mills. 
The charge that Indian mills have been technically inefficient is not gene- 
rally correct and must be refuted. The Second Tariff Board has itself 
pointed out that the progress achieved in recovery of sugar has been 
mainly due to the increase in technical efficiency and that further im- 
provement in the recovery percentage cannot take place without increase 
in the sucrose content of cane. But for the employment of inefficient and 
temporary technical staff the increase in the rate of recovery would 
perhaps have been more pronounced. Even at the present moment most 
of the mills engage their technical staff only for a particular season and 
do not employ most of them beyond the season, thus driving them into 
periods of unemployment of 4 to 5 months per year. It is also true that 
when the next season begins there is new recruitment of staff. The 
insecurity of the jobs of the chemists and engineers, and the lack of 
employment for 5 months in the offseason every year cannot bring forth 



1 It should be realised, however, that if higher recovery is to be achieved, 
damage by diseases and insect pests should be controlled by research (vide telling 
figures quoted by the Tariff Board (1938) wherein they point out (p. 68) that no 
great improvement in the recovery rate can be expected unless the loss of about 
42 per cent of the sucrose content is prevented by intensive research work. 



151 

the best of their work. It is regrettable that the importance of this 
aspect of the problem is not properly recognised by the industrialists. 1 
The Sugar Technologists Association, Cawnpore, has also made several 
appeals to the industrialists in this respect at their annual meetings. No 
tangible improvement has, however, been seen so far. The Tariff Board 
in their Report of 1937 (page 76) also observed that a fair treatment in 
the matter of employment of technical staff would lead to better effi- 
ciency and recommended that if it was not possible to keep the whole 
staff on a permanent basis, a reasonable retaining fee should be paid to 
the technical employees whose services are not required after the season. 
They also observed that " an annual hunt for staff and unseemly haggle 
for salaries every season reflects little credit on the organised industry." 
We entirely endorse this view of the Tariff Board. But it is fair to add 
that such an attitude may have been due to the factory-owners' notion 
(mistaken, of course) of reducing costs, which is wholly unjustified. 
Owing to the short working season, however, there is always the tendency 
to reduce overhead charges, unmindful of the advantages that would flow 
from the sincere efforts of a contented staff. It will be seen, however, 
that the manufacturing side leaves comparatively little scope for the kind 
of economies which matter in bringing the cost of production to the level 
of effective competition. 

The general adoption of the sulphitation process instead of the rival 
process of carbonatation which produces better quality of sugar of course, 
at a slightly higher cost, and the appointment of not fully qualified techni- 
cal staff and their employment for short periods are the counts on which 
the industry may be exposed to criticism. But in all these matters, the 
question of costs would form a highly extenuating factor, even if it cannot, 
as we believe it will not, altogether exonerate the industry. The sulphi- 
tation process, we have seen, is really the more economic since the higher 
quality of sugar secured by the other method does not provide adequate 
compensation for the higher capital and operating costs involved, parti- 
cularly in this country, where such sugar fails to fetch an adequately 
higher price. 

India, A Price-Market 

.As is well known, India is mainly a price-market due to the low 
earnings of the people who cannot afford to make a higher initial outlay 
on their purchases, although such higher outlay may be compensated by 
the more lasting qualities or superior quality of the article purchased, 
e.g. cloth, sugar, glassware. This phenomenon of India being a " price- 
market " will also explain why various kinds of cheap Japanese manu- 
factures which have the advantage of a low initial price have replaced 
superior articles made by various countries like U. S. A., U. K., Germany, 
Czechoslovakia, etc. 

Likewise, in regard to the employment of staff, sugar manufacture 
is so much of a seasonal operation that the industry cannot afford to 
satisfy at the same time the criterion of expertness and fixity of tenure. 
But for various considerations, it is imperative that the industry should 

i The Bihar Government Labour Enquiry Committee of 1937 (of which the 
writer had the honour to be a member) emphasised this point in their report, 
and appealed for a more liberal treatment in the interest of the technical staff 
as also of the industry as a whole. 



152 

show a greater regard for the personnel, technical as well as non-techni- 
cal, and its general welfare. 1 One might, however, reasonably utter a 
word of warning against the canker of nepotism to which Indian indus- 
tries as a rule .are said to be prone in the matter of employment of their 
staff. To this reproach may also be added a plea for increasing the size 
of the manufacturing unit from the present small size where it exists, to 
a more " economic " one, e.g. of about 600 tons cane crushing capacity, 
and balancing the plant as soon as it is found feasible to do so. 

But, taking the picture as a whole, it is far from disheartening to 
find that the expectations of the Tariff Board regarding the technical 
efficiency have been more than fulfilled. Further progress depends on 
the all-round progress and general development of science and technology 
in the country to the point at which all the points of comparison of one 
sugar producing country with another, will be in India's favour. That, 
however, is a task which devolves on other shoulders besides those of 
the sugar industrialists. 



1 In this connection vide the observation of Sir George Schuster, ex-Finance 
Member, Government of India in " India and Democracy ", 1941, p. 307 : " Above 
all, employers of labour must realise that an industry is doing no good to a 
country unless it provides a good life for the masses who are employed in it, and, 
accordingly, that good working conditions and a reasonable standard of living for 
the wage-earners must be a first charge on industrial income/' 



CHAPTER XI 
PROBLEMS OF MARKETING 



THE need for a strong selling organisation for the Indian Sugar Industry 
was widely felt at quite an early stage of its career since the grant of 
substantive protection. And it is no wonder than an industry which 
achieved such break-neck progress in a period of no more than half-a- 
decade should find special problems arising from its phenomenal rate of 
growth. Even apart from this, it is well to remember that the days when 
the industrialist could confine his attention to production and leave sales 
and marketing to natural forces have been far left behind. When the 
world as a whole is becoming in point of economic intelligence and sus- 
ceptibility to political and other stocks but a small unit, the sensitivity 
of markets increases hundredfold and the range of fluctuations of prices 
is too wide for industry to stand up to. Industry has perforce to devise 
its shelters when inclement weather becomes all too common. And this 
explains why central selling organisations and various methods of 
internal control and regulation with or without aid of one or more 
governments have become such a dreary commonplace of the economic 
history of our time. The Indian Sugar Industry, however, has in addition 
to these world factors, special circumstances of its own, which argue 
loudly for a common selling organisation, even if they have not been 
powerful enough till now to force its hands in this matter. The all 
important fact to remember in this connection is that a series of radical 
changes in the nature and structure of sugar trade were compressed into 
an almost incredibly short period ; and the adaptation to these altered 
conditions hardly kept pace with the changes as they worked themselves 
out. India changed within a few years from a large importer of white 
sugar to one of the largest producers of it. As the imports were seaborne, 
the movement of sugar was from the ports to the interior ; while India's 
new role as producer called for sugar moving from the interior to the 
ports which are the biggest consuming and distributing centres in the 
country. So long as the port areas were the battle ground of imported 
and indigenous sugar, the interests of the latter in these areas required 
special care and protection, and in the early thirties at any rate, the plea 
for a common selling organisation was based on this ground. Competi- 
tion from foreign sugar has never quite ceased ; but the question of the 
selling organisation has of late had to be viewed from the other angle of 
evening out the differences of production and consumption among the 
different provinces and states. 

As is well-known, more than 80 per cent of the sugar produced in 
India, is produced in the U. P. and Bihar, and this production is far in 
excess of the consumption of these provinces which may be estimated at 
only Jabout 20 per cent and this situation necessitates scientific marketing 
of sugar in the various parts of the country in a manner which would 
avoid over-lapping, which would eliminate unrestrained internal com- 
petition, minimize freight charges with a well ordered system of distri- 
bution from various production centres and the nearest consuming 



154 

markets and check the encroachments of foreign sugar in the vulnerable 
areas in and around the ports. 

Such an organisation could also arrange for marketing of sugar in 
territories adjacent to India, viz., Tibet, Afghanistan, Nepal, Ceylon, so 
that a portion of the production may find outlet in such areas and relieve 
the internal pressure to some extent. 

As mentioned earlier, the special requirements of the port areas first 
pressed this problem to the attention of the sugar industry. But it was 
not long before it became clear to the sugar mills that the sugar market 
in India, as a whole and not merely the port areas called for an orga- 
nisation which could regulate prices, the movement of stocks and the 
like. There was also the fact that, while production was confined to 
about five months during the year, consumption was evenly spread over 
all the twelve months. So long as Indian sugar represented a small part 
of the total consumption, its sale was quickly effected and there was no 
problem of storage and standards to face. But when the importer was 
virtually driven out of the market and merchants were willing to stock 
indigenous sugar, storage became important ; and, obviously storage is 
not easy when the keeping quality of sugar is at best dubious. The 
question of standards also cropped up. The market was slowly adapting 
itself to the changed conditions ; but only in the sense that Cawnpore, 
instead of the ports, became the focal centre of the sugar trade, and 
merchants slowly abandoned the idea of dealing with Indian sugar in the 
same way as they had been dealing with foreign sugar. The price 
differential between the two was more than was warranted by the differ- 
ence in quality : 

It was a very weak structure of the sugar trade that had to face 
the frequent upsets which started with the outbreak of the Italo- 
Abyssinian war. The increase in indigenous production, welcome as it 
was from other points of view, only emphasised the Icp-sidedness of the 
growth of the Indian Sugar Industry. In 1932-33 the output of the Indian 
mills for the first time exceeded the quantity imported from abroad and 
in the following year Indian sugar began to compete with foreign sugar 
in the port areas. The outbreak of the Abyssinian war was the occasion 
for the rise of speculative buying of sugar as of other commodities. The 
reaction doubtless caused losses ; though it is not so certain how far the 
subsequent difficulties may be attributed to such losses. But the after- 
math of this speculative buying was the starting point of the difficulties 
of sugar marketing. One direct result of it was that for the first time 
since the advent of the Indian sugar industry, the available stocks of 
sugar were distinctly in excess of the possible demand. The increase in 
Indian production was not offset by a corresponding decrease in imports. 
Not only the visible supply had increased, but the Indian sugar industry 
had no control over its production programme, and was certain to have 
a larger output in the next year. 

Conditions were ideal for that landslide in prices which spreads 
consternation among producers and dealers alike. On top of these, in 
February 1937 came the increase in excise duty in anticipation of which 
the mills had moved sugar out of the factories to dump it on an already 
glutted market. The U. P. and Bihar factories decided at the same time 
;to prolong the crushing season as the price of cane had been reduced. 
The markets were flattened out by the dead weight of so many adverse 



155 

circumstances. By the end of June, 1937, the price of Indian sugar 
reached the low level of Rs. 6-1-6 per maund for Cawnpore crystal sugar 
No. 1. Such was the chain of events leading to the formation of a selling 
syndicate by producers who had little or no tradition of corporate 
action. The events proved more powerful- than the dispositions and 
inclinations of personalities. The fortunes of the Indian Sugar Syndi- 
cate, which was formed, will be recounted and examined at a later stage. 
The events leading up to it have been sketched with a view to show how 
the problems of marketing were forced on the attention of the industry. 1 
To the extent that the interests of the cultivators were bound up with 
it, the U. P. and Bihar Governments had to take interest in the marketing 
of sugar and its price. The Excise Duty was the Government of India's 
finger in the pie: And once the problem of marketing came up in this 
formidable form, every aspect of it calls for examination. 

The nature of the common organisation is of course, the most im- 
portant aspect ; and we shall begin our consideration of it with an 
examination of the origin and growth of the most successful of such an 
organisation abroad, the Nivas, in Java. 

The Single Selling Organisation in Java 

It will be of interest to review here briefly the development of the 
present Single Selling Organisation of sugar in Java. Before the war, 
factories in Java sold their sugar as Indian factories did till 1936 before 
the Sugar Syndicate was formed. As a rule, forward sales were made 
through brokers. During the early stages of the war of 1914-18 large 
purchases of Java sugar were made by the British Royal Commission on 
Sugar Supply and the old system of sales was thus continued. A change 
however came in 1917 when Great Britain arranged for most of her 
supplies from other sources and when, by a coincidence, other important 
buyers also withdrew from the Java market. The manufacturers of 
Java, instead of selling in advance, as hitherto, were left with large 
unsold stocks. Prices went down considerably and a complete demora- 
lisation of the market was threatened owing to anxiety of the weak 
holders to sell. To meet this danger, the sugar manufacturers of 
Java established the Java Sugar Association as a Single Seller and 
almost every holder of a factory joined it. This organisation however 
failed to produce any substantial improvement as the dislocation of ship- 
ping owing to war had brought export business almost to a standstill. 
By 1918 practically the whole of that year's crop as well as a large part 
of that of 1917 was awaiting sales. 

At this juncture a new sales organisation, called the United Java 
Sugar Producers' Association (V. I. S. P.) was formed in August 1918 
covering about 90 per cent, of the industry. As most of the factory 
owners belonged to Holland and as mail and cable communications 
were uncertain at that time on account of war, the headquarters of the 
new Association were transferred from Java to Amsterdam. Although 
the original object in forming this Association was to dispose of the old 
stock without undue internal competition as also the unsold stocks of the 



1 For detailed reference to the formation of the Indian Sugar Syndicate, Ltd., 
attention is invited to Mr. M. P. Gandhi's Sugar Industry Annual for 1937, 1938, 
1939 and 1940. 



156 

1917 and 1918 crops, the Association proved so very useful that it was 
continued from year to year till 1932. 

Difficulties, however, arose in 1930, when this Sales Organisation 
experienced trouble in marketing the sugar produced by its members 
due to the fall in prices. Prices were steadily falling till they ceased to 
be remunerative. Discontent set in amongst the members, and during 
the end of 1931 eight members left the organisation thus weakening its 
position. On account of the decreased sales, the competition against 17 
outside mills had also become increasingly difficult. This organisation 
was therefore on the verge of collapse and in the absence of any 
organisation to take its place and with the accumulation of large unsold 
stocks, the entire industry in Java was faced with an unprecedented crisis. 
Notwithstanding a hint thrown by the Netherlands Government to the 
effect that a dissolution of the V. I. S. P. under prevailing circumstances 
would not be countenanced, the dissolution of the V. I. S. P. became by 
1932 a practical certainty as the members could arrive at no agreement 
among themselves. 

These advantages furnished an occasion for the Government to 
investigate to what extent it would be necessary to take active measures. 
Even before the producers themselves called the Government to come 
to their aid so as to prevent, by a general ruling, the rise of ruinous 
competition, the Government itself arrived at the conclusion that in the 
general interest, it would have to step in to save the situation. 

Upon a closer consideration of the problem it was found that the 
Government's intervention would have to take the shape of a temporary 
measure only and would have to be limited to the minimum require- 
ments necessary to attain the end in view. It was also found that 
Government would have to assume full responsibility for the working 
of the organisation. Four suggestions were made to the Government 
in regard to the manner of such intervention : (I) The Covisp Plan, 
submitted jointly by the Ned. Ind. Handelsbank ?nd the Ned. Ind. 
Landbous Mij., which involved a complete change in the existing 
property relations and the current industrial methods, and under which 
Government intervention would have to be a protracted one and last 
many years and would also mean definite financial responsibility for 
Government. 

(2) The Segregation Plan, submitted by the President-Director of 
the Java Bank proposing the pooling of supplies in a Central Sales 
Organisation combined with a restriction to 50 per cent of the new 
harvest. 

(3) The Minimum Price Regulation Plan, submitted by the Head 
of the Section of Agriculture, which was closely allied to the previous 
plan ; and 

(4) The 100 per cent Single Seller Plan, submitted by the Chair- 
man and Vice-Chairman of the Boniso, proposing that all sugars be 
disposed of by one Central Sales Organisation. 

Before making a final decision, the Government held Conferences 
on 21st September 1932 with a great number of producers and repre- 
sentatives of the sugar trade and it was felt that the Government 
intervention was indispensable. The majority of the producers, as also 



157 

the exporters, declared themselves to be in favour of bringing all sugar 
into one strong hand. A minority of the producers seemed to fear that 
a ' Single Seller ' would prove to be a continuation of the V. I. S. P. 
and would, on this occasion, exercise coercion. 

These expressions of opinion, as also the difficulties which were 
steadily increasing with the development of political and economic con- 
ditions prevailing in British India and in China convinced the Govern- 
ment that a strong organisation was essential to tide over the crisis. 
After having studied two different projects devising the technical details 
for establishing a ' Single Seller ', the Advisers to Government prepared 
a memorandum which was submitted on the 16th November to a Work- 
ing Committee consisting of representatives of producers for their 
opinion. Representatives of some 40 factories believed that the Govern- 
ment's memorandum contained too much that savoured of the old 
V. I. S. P. After considerable discussions and after projected ordinance 
had been considered by the Council of State and by the Minister for 
Colonies, it was presented for discussion in the People's Council, which 
body adopted the Associated Sugar Ordinance on 23rd December 1932. 

Finding that there were several modifications which totally marred 
the principle that had been the main consideration of the Government, 
the project could not be accepted. A few alterations were therefore 
made in the original draft increasing the Government's influence, etc., 
after which the Governor-General promulgated the Associated Sugar 
Ordinance to become effective from 1st January 1933. 

Thus on the 31st December 1932 was founded in Batavia the 
Netherlands Indian Association for the sale of sugar (Nivas) with head- 
quarters at Sourabaya. Its constitution was also approved by the 
Governor-General on the same date. He also appointed this Association 
to sell the sugar produced in accordance with Article I of the Associated 
Sugar Ordinance. 

With this Act the transfer of new sugar, except such as was 
prepared in the native manner, became subject, from 1st January 1933 
to 1st April 1936, to restrictive regulations, the Nivas for the period 
named, obtaining a sales monopoly for sugar. 

The Nivas admits as its members any owners or exploiters of 
one or more factories in Netherlands India that prepare sugar in a 
manner different from the methods of the native. 

Every year the members from among themselves appoint, for the 
period of one year at least 15 members who, together with the President 
of the Association (to be appointed by the Governor-General) without 
his necessarily having to be a member of the Association, and the Java 
Bank, jointly constitute the Board of Directors. To be a member of the 
Board of Directors, the candidate requires at least l-25th of the total 
number of votes that can be cast at any members' meeting, and this is 
based on each one's share in the total normal production. 

The members of the Board of Directors each year appoint six 
members who together with the President and the Java Bank jointly 
form the Diurnal Board with 3 members of the Board of Directors that 
may be appointed by the Governor-General. 



158 

The executive body of the Association has its headquarters at 
Sourabaya, which represents the Association both juridically and other- 
wise, in relation to acts, whether of property or management. 

The constitution further contains provisions for establishing a sales 
office in Holland to be located at Amsterdam, as also a Supervisory and 
Advisory Council in Holland which is to be composed of members of the 
Association domiciled in Holland. Through such procedure the neces- 
sary contact with the European markets remains constant and the 
Association is able to utilise the large experience of owners of sugar 
factories domiciled in Holland. 

The Directorate and the Manager of the Sales Establishment in 
Holland are responsible for their management to the Diurnal Board. 

The powers of the Government, in addition to those already men- 
tioned, provide that the Governor-General can annul and prohibit 
decisions and notions of the organs of the Association. He can also order 
certain actions to be performed by the various organs of the Association. 
He appoints a Governmental commission consisting of two members, to 
which he issues instructions. 

One of the members of this Commission will exclusively occupy 
himself with the sale and commercial aspects, while the other member 
will look after the interests of the Industry as such and its relation to 
the country as a whole and to the population. 

As regards the cessation of the Association, the constitution and the 
Bye-laws determine that, as long as the Associated Sugar Ordinance 
remains in force, the Association itself cannot be dissolved. As soon as 
the ordinance ceases to be effective each member has the right to resign 
his membership at the end of a certain term which automatically dissolves 
the Association. 

The constitution finally contains an Article providing for the creation 
of a Sugar Crisis Fund which aims at raising a subvention for such 
personnel of members of the Association as can reasonably be consi- 
dered in this connection and have become unemployed since 1st 
January 1931. 

The share of each member in the sugar sold is to be determined by 
the sugar he must supply, as settled for each member annually, a 
fraction whose numerator represents the export quantity assigned to 
him and whose denominator is the total of the export quantities deter- 
mined for all members conjointly. 

In calling for sugar to be delivered to purchasers in the course of 
any Association year the Directorate, in so far as is possible, will aim 
at calling upon each member in proportion to his share of delivery. As 
regards the call it has also been decided that, always observing the 
proportionate quantities to be delivered the amounts to be called for 
export and local sales will be divided amongst the members as equitably 
as possible. 

Furthermore the possibility is included of transferring the delivery 
share or a part thereof. Through this measure a member may be able 
to obtain a disproportionate share in the call for any Association year, 
provided he can, find another member willing to transfer his delivery 
share or a part thereof. 



159 

As regards the delivery of sugar, it is laid down that the members 
shall take care to deliver sugar in good time at the usual shipping ports 
and that each of them will be responsible for the accurate delivery of 
his own quota. Costs of transport and delivery, including storage and 
insurance prior to delivery, are to be borne by the member concerned. 
Special provisions coyer delivery at unusual ports. A ruling 
is also made to the effect that at a members' meeting it may 
be decided, in case a reduction has been made on the purchase price in 
favour of any buyer by reason of delivery at a port inconvenient to him, 
that such reduction is to be charged to the member concerned. This 
last provision allows the trade in many cases to remain indifferent as 
regards the port of delivery of the sugars purchased, thus meeting 
an old grievance on this score. 

To guard against levelling the quality of the sugars down to the 
average, the Board of Management shall make such proposals to the 
members in Assembly as can secure an improvement of the quality 
produced. 

Payment of sugar sold, barring certain exceptions, will be made by- 
purchasers directly to the member having made delivery. 

The Directorate will keep a '* General Sugar Account " on which 
the members will be debited for the prices received by them from 
buyers (including possible bonuses for over-polarization), increased 
by any allowances made and deducting whatever may be due or has 
been paid out for brokerage, and where necessary, further settlements. 
The members are to be credited with sugar actually delivered, with a 
reasonable allowance already or still to be determined, in reference to 
which provision is made in a combination of regulation. 

Settlement is made on the basis of crystal. All sugars therefore, 
will be reduced to crystal value for which certain forms have been 
adopted, such as, superior head sugar and superior molasses on a basis 
of 99.4 per cent crystal, canal molasses and sugar No. 16 and higher 
at 97.15 per cent and Muscovado or so called " new assortment " at 
95.45 per cent. 

The arrangements regarding pre-sales prior to the 8th November 

1932, and of which delivery was to be made on or after 1st January 

1933, were as follows: 

Such pre-sales, in so far as they relate to sugars ex-harvest 1933, 
if in the judgment of the Director of Agriculture, Industry and Com- 
merce they were concluded in good faith, and in the manner customary 
in the sugar trade, are left entirely for the account of sellers under 
certain conditions. 

The quantity of such sugar will be regarded as having been called 
from the party concerned on the share to which he will prove to be 
entitled in the total sales made by the Association from the period 
covering 1st April 1933, to 31st March 1934 ; should it become evident 
that this share has been called against his share in the total sales 
effected by the -Association in the directly subsequent period. 

The members so concerned will share proportionately in the dis- 
advantages to which the Association may be subject, as arising from 



160 

the sale of sugars to markets that can be reached only at the sacrifices 
of price, that is to say, such markets as are situated outside the so-called 
natural markets of Java. 

With the coming into existence of the combination of arrangements, 
stated above, the Java Sugar Industry entered upon a period in which 
all producers whilst setting aside their special group interests, com- 
bined, under the supervision and with the co-'bperation of the Nether- 
lands Government, by means of a prudent sales policy to avert the 
crisis then prevailing, with the minimum sacrifices and losses, in the 
interests of the industry and people as a whole. 

Such, indeed, are the history and constitution of the Nivas, the 
common selling organisation of the Sugar Industry of the Netherlands 
East Indies. But the example and experience of the Nivas have had 
little influence on the Indian Sugar Industry. It would, indeed, be 
interesting to apply the former to the conditions of the latter and to 
determine what changes are called for in the Nivas to adopt it to the 
conditions of this country. But the origin and development of the 
Indian Sugar Syndicate have been shaped more by the uncontrolled 
flow of events than by the deliberation and choice of the industrialists. 
The origin of the Syndicate has been referred to at an earlier stage as 
the anxiety of the sugar mills not to lose the battle against foreign sugar 
in the weak spots of the Indian market, namely the port areas. Con- 
sultations among the industrialists for the purpose of establishing a 
common selling organisation, therefore, started earlier than the land- 
slide in prices in 1936-37. 

The first effort was made in this connection in the year 1934 and 
the preliminaries and the nucleus of a central sugar marketing board 
were also contemplated, but due to absence of the requisite support from 
factories and the initial difficulties in launching such a new and big 
venture, no headway could be made then. Meantime, individual sales 
by factories resulted in such suicidal competition that factories began 
to all sugar at prices which left no profit for them. At a Conference 
of the Sugar Millowners held in Calcutta in August 1936, and March 
1937, this question was brought up for consideration once again and 
proposals were made to bring into existence a central marketing_bpard. 
As a result of the crisis which commenced IrTlSlovember 1936 and 
lasted till June 1937, and panic created in the minds of the manufac- 
turers by the continuous drop in sugar prices, the efforts were redoubled. 

Voluntary Sugar Syndicate 

As a result, the Indian Sugar Syndicate Limited was established 
in July 1937 on a voluntary basis with a membership of 92 sugar 
factories. This Syndicate undertook to effect sales of sugar on behalf 
of various factories which were enrolled as its members. 1 The Syndi- 
cate had about 60 per cent of the unsold stock of sugar in the country 
within its membership when it commenced operations and it was able 
to prevent the demoralisation of the market and to bring in a steadying 
effect on the prices. Of the 92 member factories, 2 were from Bengal, 
2 from the Punjab and 4 from Bombay, the rest being from the U. P. 
and Bihar. 



1 No actual payment was made by the Syndicate. The factories get credit in 
the books for the amount due to them. 



161 
Method of Sale by Issuing Quota and Fixing Prices 

The Syndicate had its immediate task cut out for it. It refused to 
be distracted by other problems connected with a common selling 
organisation and addressed itself to the task of orderly disposal of 
overgrown stocks. It pooled together a stock of 52,45,828 maunds. 
The sale of this stock was made by the Syndicate through a system 
of quotas which were issued in definite percentages covering definite 
periods, and the factories sold their sugar themselves at the rates fixed 
by the Syndicate during each period."} The period between July and 
30th November was divided into 6 quota periods and by the end of 
November 1937, more than half the stock of sugar was sold and there 
was a balance of 23,98,641 maunds left in the hands of the Syndicate, 
unsold. 

After 30th November 1937, the Syndicate had to dispose of the 
sugar in the best manner and cases where urgent relief was necessary 
on account of heavy stocks were first tackled and about 8 lakhs of 
maunds of sugar of members were sold off at a rebate of annas 0-2-0 to 
0-4-0 under the then Syndicate's selling rates. This left a balance of 
about 15,95,000 maunds, part of which was damaged sugar which 
members wished to reprocess rather than sell. So by a Circular dated 
20th November 1937, the Syndicate gave the members option to pur- 
chase their sugar at a uniform rate of 0-6-0 under the Syndicate's selling 
rates. All the members except two exercised this option and the entire 
quantity was disposed of by the Syndicate by the 31st of December 
1937. By its successful operation, the Syndicate was able to save a 
large sum of money to the industry. 



Fixation of Basic Prices 

The basic prices of sugar belonging to members were fixed for the 
stocks pooled, with reference to average prices at which the members' 
sugars were sold in the month of February 1937, i.e., before the addi- 
tional excise duty came into force. This appeared to be the nearest 
approach to correct prices, but these were in some measure found to be 
faulty. But as the Board had powers to reduce or increase the basic rates, 
the rates that stood in the way of quick sales were duly reconsidered 
and suitably reduced. This was inevitable in view of the fact that 
prices were fixed by a rough and ready method with reference to average 
prices at which sugars were sold in the month of February and March, 
1937. 

The selling rates which were fixed at so many annas above the 
basic rates were gradually raised from one quota period to another so 
that on the 30th of November 1937, the difference between the basic 
and selling rates was annas 0-12-0 per maund. Tha basic rate repre- 
sents the price at which the Syndicate purchases the sugar of members. 
Therefore, this difference between basic rate and selling rate accrued 
at a rate earning of the Syndicate, and was distributed pro rata at a 
later date, among the members, according to the quantity of sugar pooled 
by them with the Syndicate. 
11 



162 

The Syndicate Established With 17. P. and Bihar Governments 

Assistance in 1938 

With the commencement of the 1937-38 crushing season, the 
question arose as to whether the Syndicate should continue its opera- 
tions for the next season. There was a measure of agreement and 
satisfaction at the excellent work done by the Syndicate, a voluntary 
organisation established in July 1937, but there was a section of opinion 
which felt sceptical about the possibility of its working successfully 
during the next season. It was also felt that the Syndicate could not 
function successfully if all factories in the U. P. and Bihar did not join. 
As a matter of fact, several factories which had joined the Syndicate 
in July, 1937, resigned in November, as they were eager to secure the 
privilege and advantages of effecting forward sales, which had been 
prohibited by the Syndicate. These defections did not prevent the 
general recognition that the formation of the Syndicate in July 1937 saved 
the morale of the industry, prevented a complete breakdown, imme- 
diately toned up the market and benefitted the industry as a whole, 
including those who sat on the fence and watched others taking the 
risk and the trouble. The price of sugar had been raised about Re. 
1 per maund which saved the industry large sums of money it would 
have lost. 

But these facts did not obviate the need for Government help for 
the continuance of the life of the Syndicate. Although there was a 
section of members who felt that Government interference with the 
industry would be detrimental, the majority who were inclined towards 
the continuance of the Syndicate thought fit to invite Government's 
intervention, at least for the sake of bringing unity in the ranks of 
the members. Much as members liked the Syndicate to be established 
on a voluntary basis, it was felt that there was little chance of that 
desire being fulfilled and therefore the co-operation of the Government 
had to be invited. Fortunately, however, for the industry, the Gov- 
ernments of the U. P. and Bihar passed the Sugar Factories Control 
Act 1 which recognised the Syndicate as the common sales organisation 
of the sugar industry, for according to the rules under the Act, no 
factory could obtain the license for crushing unless it was a member 
of the Syndicate. At the suggestion of the U. P. and Bihar Govern- 
ments an extraordinary general meeting of the Sugar Syndicate Ltd. 
was held on 29th June 1938, at which the reconstitution was duly 
effected. 

Government Recognition of Syndicate 

With the accordance of Government recognition to the Indian 
Sugar Syndicate, the common selling organisation of the sugar industry 
in India may be said to enter a new phase. We have seen that when 
the Syndicate was first established in July 1937, it was on a voluntary 
basis with a membership of 92 factories of which 13 were from outside 
the U. P. and Bihar. Once the crisis of 1936-37 was tided over, it was 
found impossible to continue the life of the Syndicate. And on this 
threat to voluntary co-operation coincided with the passing of the Sugar 

* For text of these Acts, vide M. P. Gandhi's Sugar Industry Annual for 1938, 
1939 and 1940. 



163 

Factories Control Acts of the U. P. and Bihar, the Indian Sugar Syn- 
dicate was promptly reconstituted as a body practically exclusive to the 
U. P. and Bihar and enjoying or suffering the privilege or privations 
of official recognition. The membership of the Syndicate during the 
crushing season 1938-39 comprised 108 members of which 71 were from 
the U. P., 34 from Bihar and 3 from Bengal ; and the last mentioned 
left the Syndicate at the close of the season. The work of the Syndi- 
cate during this season may now be briefly noticed. 

The sale of this season's stock of sugar, the amount earmarked by 
the sugar factories at the commencement of the season for the require- 
ments of the manufacture of confectionery, etc. was made by the 
Syndicate during the year, just as was done in the previous year 
through a system of quotas which were issued in definite percentages 
covering definite periods, and the factories sold their sugar at the rates 
fixed by the Syndicate, or higher if such prices were available during 
each period. 

Fixation of Basic Prices of Sugar by the Syndicate 

Adopting the same basis and the same method of calculation as 
was followed in 1937-38, selling orders were released from 16th Decem- 
ber, 1938, onwards. A meeting of the members of the Syndicate was 
held on 13th November 1938, in order to fix the dates of starting of 
crushing. Although no effectual decision could be arrived at so as 
to bind all the factories, yet voluntary agreements were arranged 
between factories in groups not to start crushing before definite dates 
which were agreed upon and these were very useful in preventing 
crushing of immature cane and inter-factory competition in the purchase 
of cane in free areas. 

As the members had started crushing at various dates, it was found 
on 16th December 1938, that only a few factories had sugar available 
for sales, and a quantity equal to 50 per cent of the first 10 days' pro- 
duction of each factory was released as the First Selling Order, but 
very soon release of further quantities for sale was found necessary, 
and on 31st December 1938, a further quantity to make up 31 lacs of 
maunds were released. This was distributed amongst members in 
proportion to their capacity. This quantity was to be sold strictly on 
Ready Sale Basis and not in anticipation of production, As in the case 
of many factories, basic prices had not been fixed, interim basic prices 
were fixed for Standard Grades by adding Rs, 2-4-6 to the last season's 
price of that grade and this interim price held good, until the fixation 
of new basic prices. To ensure the new season's sugar being imme- 
diately put into the market, it was decided that all despatches should 
be completed by the 15th of January 1939, on pain of undespatched 
quantities being considered as cancelled and unsold. Later, this con- 
dition was relaxed to this extent, that instead of despatches being 
actually effected, it was required that despatching instructions must 
be received within the time prescribed by the contracts. It was made 
necessary that the conditions of the contract should be strictly enforced. 

This method of apportionment of quantities between the members 
was later changed to a proportion of actual manufacture, and in the 
Second Selling Order issued on the 21st January 1939, it was decided 
to .release 70 per cent of the new season's manufacture up to 15th 



164 

January 1939, inclusive of the quantities already released, and adjust- 
ments were made to bring all factories to the same parity. By this time, 
the prospects of the season's crops were more visible and it was feared 
that a considerable quantity of sugar would have to be imported for 
the country's requirements and that this quantity would naturally 
increase unless prices of Indian sugars were kept at a low level. Accord- 
ingly in the 3rd Selling Order issued on the 6th February 1939, it was 
decided to release the entire manufacture of new season up to 31st 
January 1939, including the quantities already released. Even this 
was not found sufficient to bring down prices and finally on 7th March 
1939, the 4th Selling Order of the entire unsold balance of the 1938-39 
season's production, whether manufactured or programmed to be 
manufactured, were released for sale. As a necessary corollary, sales 
were permitted on a forward basis upon the conditions of the terms of 
the Standard Contract Form being strictly followed with regard to the 
receipt of despatching instructions. The members were only permitted 
to bind themselves for deliveries up to 31st of August at the latest, any 
deliveries made after that date being considered unauthorised. 

Throughout the season, stress was laid on the strict enforcement 
of the Contract in order to promote actual consumption of sugar. The 
exact position with regard to imports of foreign sugar and of the provin- 
cial distribution of Indian sugars was circulated to members from time 
to time in order to guide them in their sales. Very soon it was clear 
that an overbought position existed with regard to foreign sugars and 
the consumption and sale of Indian sugars was being retarded. On the 
14th of July 1939, it was found necessary to extend the period for sale 
of the 4th Selling Order from 31st August 1939, to 15th September 1939, 
with the condition that all despatches under these scales had to be 
completed on or before the 30th October and strictly in accordance 
with the terms of the Standard Contract Form. It was found that 
owing to an overbought position, merchants who had purchased Indian 
sugars were, in many cases, unable to give despatching instructions 
within the time provided in the contract, and in order to assist the trade, 
it was decided to permit members to extend the time till the end of 
the month in such cases as they considered fit. This was of some help, 
but the position again became difficult, and ultimately on the 29th July 
1939, it was decided that the time for giving despatching instructions 
against all existing contracts \ipto July delivery may be extended to 
15th August 1939, and those for August delivery may be extended to 
31st August 1939, Fresh sales were suspended upto 15th August 1939, 
and members were to sell their unsold quantity between 16th August 
and 7th October 1939, ready or forward, subject to the conditions of 
the Standard Contract Form that all deliveries are to be completed by 
31st October 1939. It was decided that in case of buyer's default, 
members should not cancel their sales but should only make releases 
on buyer's account. It was expected that the entire quantity produced 
in the season would have been cleared off before 31st October. The 
physical stock of sugar as on 31st October 1939, with member factories 
of the Syndicate was 60,30,418 maunds, approximating to 22,300 tons. 

We give below a chart showing the particulars of selling orders 
released during the season 1938-39 by the Indian Sugar Syndicate :-r 



165 

TABLE NO. 1 

Particulars of Selling Orders Released during Season 1938-39 by the Indian 

Sugar Syndicate 



Serial 
Order 
No. 


Date of Release 


Basis of Calculation 


Quantity 
released 


Selling 
Rates 








(Maunds) 


Rs. a. p. 


1. 
1A. 

2. 


16th December 1938 
21st December 1938 

21st January 1939 


50% of first 10 days' production ... 

70% of last year's 1st February to 
24th February production; 
Less quantity adjusted while 
releasing next Selling Order ... 

70% of manufacturing upto 14th 
January 1939 less Selling Orders 
1& 1A 


31,37,705 
1,93,360 


010 
above 
basic 
rates 

do. 
do. 


29,44,345 


14,04,108 


3. 


6th February 1939 


Balance of total manufacture upto 
31st January 1939 ... 


46,51,624 


do. 




9th March 1939 


Balance of season's entire produc- 
tion 


42,37,497 


do. 


1,32,37,574 



The Syndicate effects its sales since its inception in 1937, by fixation 
of quotas and prices from time to time, through the members. The 
Syndicate had aftvays under contemplation a scheme of taking DIRECT 
sales of sugar in its own hands, using as far as possible the present 
agency of its members for the sale of their sugar. 

As the Syndicate acquires more data and more experience, it 
should be possible for it to undertake direct sales of sugar which will 
enable it to save freight charges by an orderly distribution of sugar 
in the adjacent markets eliminating cross-haulage of traffic in sugar. 
At present all sales are ready sales which mean delivery within seven 
days. The Syndicate does not normally permit forward sales at all 
but in 1938-39 it did so with a view to put larger quantities of sugar 
in the market and to arrest the increase in prices, brought about as 
a result of the activity of speculators. 

While the ownership of the sugar produced by the factories within 
the membership of the Syndicate rests in the Syndicate, the factories 
remain as trustees for the safe custody and storage of the sugar manu- 
factured by them. The Syndicate does not make any payment to the 
members for the sugar produced or sold by the factories. The factories 
realise the money direct from the buyers as and when sales are made 
in accordance with the permission given by the Syndicate, The Syndi- 
cate also permits factories to hypothecate their stocks to banks or 
bankers and take advances on them for their convenience. 

To facilitate the conduct of the routine work of the Syndicate there 
were two Standing Committees appointed by the Board, one, the Basic 
Price Fixation Committee for new samples, and the other, the Advisory 



166 

Committee to assist the Chairman. The procedure adopted for new 
samples was that their rates were fixed by the Directors and the mem- 
bers concerned were duly informed immediately. But these rates were 
only tentative, until the rates fixed were confirmed formally at the next 
Board Meeting. 

The close contact between the Syndicate and Governments enabled 
them to have effective consultations on the question of extensions of 
plants and establishing of new mills in the U. P. and Bihar. The Syn- 
dicate stuck to the view that increase in the present capacity of the 
factories in the U. P. and Bihar should be prevented. The Board of 
the Sugar Syndicate also appointed a Technical Committee to deal with 
the applications submitted by the factories to the Government for 
extensions and to make recommendations to Government in regard to 
them. The point of view of the Government of the U. P. appeared 
to be that factories might be permitted to add machinery to their plant 
which might help them to increase their efficiency, but a condition 
should be imposed that they should not increase their crushing bv more 
thpn 5 per cent of the existing capacity. There was a considerable 
difference between the point of view of the industry and the Govern- 
ment. TThe industry was anxious to protect itself against undue and 
unnecessary expansion. The difficuHv is increased owing to the fact 
that certain factories who are small units claim that they should be 
permitted to extend in order to make economic units of their mills. This 
has been conceded by Government in cases where sufficient cane is 
available for the enhanced capacity. Permission was also given to 
shift one plant of 1,000 tons hitherto not working from Bihar to the 
U. P. and a license was given to two plants of 1,000 tons each which 
were claimed to be under construction when the Act came into force. 
Extensions to make economic units have also been granted to a number 
of factories. 

Towards the close of the 1938-39 season the Governments of the 
U. P. and Bihar had joint consultations with the representatives of the 
Indian Sugar Syndicate for the purpose of determining the conditions 
for the grant of licenses for extensions to factories. 

A sub-committee formed for the purpose fixed the basis of the 
basic rates in the following way : 

1. Factories were first divided into groups each of which included 
all those factories on one Railway system with a common junction to 
the nearest market. The most distant factory from the junction was 
then taken as a datum for freight adjustment. 

2. One factory in each group was found whose quality was 
unchanged since the last season, and this quality was made a datum for 
quality adjustments. 

3. To the basic prices of the quality datum factories as adjusted 
upto 30th November 1937, a sum of Re, 1-3-0 per maund was added to 
arrive at the basic prices for 1937-38. The quantity of sugar placed 
in the pool by factories in July was largely manufactured between 
March 1937 and end of that season. The cane price during that period 
had varied form annas 0-4-3 to annas 0-3-0 per maund in the U. P. and 
from annas 0-4-0 to annas 0-3-0 in Bihar. The average cost of cane, 
therefore, during 4he period was at least annas 0-1-6 per maund less 



167 

than prices fixed by the U. P. and Bihar Governments for cane in 
1937-38, and this difference of annas 0-1-6 per maund in the cost of 
cane represents an additional cost of at least Re. 1 per maund of sugar 
in the 1937-38 season ; and the balance of annas 0-3-0 per maund is 
accounted for by a general decrease in basic prices on 18th August 
1937, which was made so that the Syndicate could have funds available 
to meet contingencies. The actual increase in the basic prices of sugar 
fixed in February 1938 as compared with selling rate last year was only 
annas 0-7-0 per maund. 

4. All the samples of the factories in each group were classified 
according to Sugar Standards, and a chart was prepared to show differ- 
ences in price between each grade. It was thus possible to arrive at 
graded price for each factory's sugar as if freight paid by all factories 
in the group was the same as that of the freight datum factory. 

5. The advantage in Railway freight of each factory in the group 
over the freight datum factory, in respect of its market, was added to 
the graded prices fixed to arrive at the basic prices. 

And it is worthy of note that a committee appointed in 1939 came to 
the conclusion that this could hardly be improved upon. 

Difference of Opinion Between Government and Industry 

The close contact between the Sugar Industry and the Government 
of the U. P. and Bihar was, however, soon to lead to a serious cleavage 
of opinion and antagonism. It has been seen already that there were 
differences of opinion both on the question of productive capacity and 
on that of the price to be paid for cane. When a new sliding scale of 
cane and sugar prices was adopted by the Government, the differences 
came to a head. In June 1940 the Government of India convened an All- 
India Sugar Conference to consider the urgent problems of the Sugar 
Industry and suggest the best course of solving them. The constitution 
and functions of the Syndicate also came in for review on the occasion. 
While opening the conference, the Hon'ble Commerce Member to the 
Government of India explained the views of the Central Government on 
the subject, and expressed his doubts about the utility of an organisation 
like the Syndicate, especially in the case of a protected industry. That 
showed how the wind was blowing. 

Official Recognition to Syndicate Withdrawn and Restored 

In the midst of these circumstances came the announcement of the 
Provincial Governments *bf the U. P. and Bihar rescinding the rule 
under which they had made it obligatory for all factories in the two 
provinces to remain members of the Syndicate. Such withdrawal of 
recognition added to the problems of the industry, which was already 
finding it difficult to keep its head above water. The expectation of a 
carry-over of 4 lacs tons and of a bumper crop during the next season 
had already wrought havoc in the market. The withdrawal of 
Government recognition, coming as it did at a very inopportune 
moment, made confusion worse confounded. Sugar prices dropped to 
an uneconomic level and the members tried to clear away their stocks 
unmindful of the Syndicate's rules and regulations. The Syndicate, 
however, decided to continue itself on a voluntary basis, .But because 



168 

of numerous difficulties standing in its way, Government help was 
sought once again. A deputation of the Syndicate waited on His 
Excellency the Governor of the U. P. on July 28, 1940, at Allahabad, 
and a similar deputation also waited on His Excellency the Governor 
of Bihar on August 2, 1940, at Ranchi. Their efforts met with success 
and the Governments agreed to restore recognition to the Syndicate 
subject to certain conditions. 

United Provinces and Bihar Government Communique 

In the communique which they jointly issued, the Governments 
of the U. P. and Bihar pointed out : 

" In the month of June, 1940, the Governments of Bihar and the 
United Provinces had withdrawn the rule under which it was obligatory 
for a sugar factory to be a member of the Indian Sugar Syndicate 
Limited. This was because the Syndicate was following a policy of 
maintaining a very high price of sugar, which was against the express 
purpose for which the Syndicate was originally recognised by the two 
Governments . . . With the inflated price the sugar would not move, but 
the Syndicate showed no inclination to bring down the price by cutting 
the profits. The large carry-over and the consequent crippling of the 
finances of the factories, who had taken large advances from the banks 
against their stocks, meant considerable curtailment of the next crush- 
ing season with its serious consequences on the cane-growers. The 
Governments of Bihar and the United Provinces had, therefore, no 
other alternative but to withdraw the recognition of the Syndicate . . . 

" While the withdrawal has brought down the prices to a certain 
extent, it has set loose the forces of disorder ... As a result of this 
confusion, a large number of factories in Bihar and the United Pro- 
vinces are in danger of complete breakdown, bringing out the urgency 
of stricter Government control in the interests of the industry and the 
cane-grower. The Board of Directors of the Indian Sugar Syndicate 
in their last meeting held on July, 26, 1940, realised their helplessness 
and the mistake of their past policy, and decided to approach the 
Governments of Bihar and the United Provinces to come to their rescue 
and, for this purpose, to restore the recognition of the Syndicate and 
to take over such control of the production and price of sugar as they 
may consider necessary. A deputation of the Indian Sugar Syndicate 
accordingly waited on Their Excellencies the Governors of the United 
Provinces and Bihar. The deputation urged the two Governments to 
restore the statutory recognition of the Syndicate which has been with- 
drawn, and thereby strengthen its hands and restore confidence, to stop 
all forward sales, to set up an emergent board of control to regulate 
the production and sale of sugar both as regards quantity and prices, 
and to take such other measures as may be necessary to save the 
industry. 

" The Governments of Bihar and the United Provinces have given 
their most anxious and careful consideration to the very serious situa- 
tion that had developed in the Sugar Industry, and after discussion with 
the representatives of the Syndicate at which the representatives of 
the Government of India and the Imperial Bank were also present, have 
come to the following conclusions : 



169 

" In order that the market may be stabilised and sugar may move 
freely, it is necessary that the present prices must be brought down 
and correlated with the probable prices of the next crushing season. It 
is by this means that the factories be relieved of their stocks as much as 
possible so that they may be able to crush cane during the next crush- 
ing season up to their full crushing capacity and thereby give the 
maximum relief to the cane-growers who have already planted their 
cane. If the present cut-throat competition and speculation be allowed 
to continue, some of the weaker factories will completely break down, 
while the others may find it difficult to continue crushing during the 
next season after paying an economic price for cane. These contin- 
gencies must, therefore, be avoided in the interest of the cane-grower. 

" Any surplus stock which cannot be sold during 1940-41 at the 
minimum ecoriomic price may be carried over to 1941-42 and the 
production of that year may be regulated according to demand by 
regulating the cultivation in time. 

" In order that the above measures may be given effect to, it is 
necessary that a marketing organisation should be set up under the 
full control of Government in respect of policy regarding price, quota 
and production, so that it may not lapse into a monopolistic organisa- 
tion. As the Syndicate is now willing to work in accordance with the 
above scheme, the Governments of Bihar and the United Provinces 
have decided to restore the statutory recognition of the Syndicate, 
subject to the condition that it will forthwith amend its Articles of 
Association on the following lines : 

(1) The Syndicate, which will have its headquarters at Cawnpore, 
would be a selling organisation only for the purpose of regu- 
lating sales within the limits of prices and quotas fixed by 
Government and will confine its activities exclusively to the 
marketing of sugar. 

(2) The Chairman of the Syndicate will be elected by its Board 
of Directors, but his election will be subject to Government 
approval. The Executive Officer of the Syndicate will be 
nominated by the Governments of the United Provinces and 
Bihar. 

(3) A Sugar Commission would be set up by the two Govern- 
ments which would be the final authority, subject to Govern- 
ment control, on all matters connected with the production 
and sale of sugar, as well as other matters regarding cane 
prices, etc., whch are referred to it by these Governments, 
provided that the Syndicate will have the right at all times 
to approach the Governments direct. The Chairman and 
members of the Commission will be Ex-Officio members of the 
Board of Directors of the Syndicate. 

(4) The basic prices and quotas for individual mills are to be fixed 
by the Syndicate but will be subject to the approval of the 
Commission, 

(5) All information relating to prices, quotas, etc. will be con- 
fidential till it is released for publication by the Commission. 

(6) The Syndicate will furnish all the necessary information to 
the Commission. 



170 

"It is hoped that with the restoration of the recognition of the 
Syndicate and its re-organisation on the above lines, the sugar market 
will speedily return to its normal working conditions." 

The Sugar Syndicate accepted Che proposals contained in the 
communique with evident satisfaction, but felt it necessary to append 
a few provisos : (1) that the mills should not be required to produce in 
1940-41 a quantity which might leave a carry-over of more than 4 lacs 
tons ; (2) that the prices fixed by the Sugar Commission shall not be 
below the cost of production, the estimate of which was specified ; and 
(3) that the Governments may not insist on the Chairman of the 
Syndicate being subject to approval of the Governments. 

The Governments of Bihar and the United Provinces then 
announced that they have heard with pleasure of the acceptance by 
the Sugar Syndicate at its meeting held at Cawnpore on 15th August 
of the proposals made by the Governments in their communique of 
3rd August for re-organisation of the Syndicate as a condition of 
recognition. 

The communiaue continued that in the furtherance of those 
proposals the two Governments have decided to appoint a Sugar Com- 
mission at once which will consist of Mr. J. E. Podley, C.I.E., M.C., 
l.c.s., as Chairman, and the C?ne Commissioners of the two provinces 
as members. The Commission, as already announced, will be the final 
authority, subject to Government control, on all matters regarding cane 
prices etc., which are referred to it by the Governments of Bihar and 
the United Provinces. The selection of an Executive Officer for the 
Syndicate, in accordance with the proposals contained in the com- 
munique, is under consideration, 

" In view of the heavy carry-over of unsold stocks, it is imperative 
that a large proportion of these stocks should be cleared before the 
commencement of the next crushing season. 

" Owing to the high cost at which these stocks were produced, an 
adequate clearance is not possible without financial assistance to the 
industry to bring down the selling price to a price which can be related 
to the probable selling price of next season's production- 

" The Governments of Bihar and the United Provinces have 
accordingly decided that the consent and help of the Government of 
India to assist the industry by assuming immediate responsibility for 
payment to the Government of India of Re. 1 of the excise duty payable 
on each maund of sugar manufactured during the last season and at 
present unsold. This will take effect from August 25, 1940. 

"The method by which the Governments concerned will recover 
this subsidy from the industry in future has already been discussed with 
representatives of the Syndicate and is being considered by the Local 
Governments concerned. The final decision will be announced as soon 
as practicable. 

" Future prices of sugar will be fixed in accordance with the 
decision of the Commission and after consultation with the Sugar 
Control Board, but it is expected that the prices of cane for the next 
crushing season will be in the neighbourhood of 0-4-9 per maund. 



171 

" As has been made clear from time to time, however, in view of 
the unusually heavy stocks, the quantity of cane, likely to be crushed 
in the season 1940-41, will be substantially less than in the season 
1939-40. Taking all relevant factors into consideration, including the 
fact of a shorter crushing season next year, it appears probable that 
next season's sugar price will be in the region of Rs. 9 per maund. 

"The difficulties of the industry caused by the existence of 
unusually heavy stocks, are not likely to be solved until the end of the 
crushing season 1941-42. In consequence, arrangements must be made 
for 1940-41 for converting into Gnr, Rnb or Khandsari sugar a con- 
siderably greater proportion of the cane crop than was so converted 
in previous seasons. 

" Further, a scheme for restricting areas under cane in the 
neighbourhood of sugar factories will have to be formulated for the 1941 
sowing season." 

The Directors of the Syndicate noted with satisfaction Government's 
willingness to give temporary assistance to the industry at a critical stage 
of its existence, and, in response to their wishes, reduced the selling 
rates then in force by annas 14 pe** maund with immediate effect. At 
this meeting, they also decided that from November 1, 1940, price of 
sugar would be fixed at Rs. 8-12-0 per maund, at which figure it would 
rule till such time as all the sugar produced during 1939-40 season is 
sold out. As regards the price of the next season sugar, they announced 
that it would not be less than Rs. 9-2-0 per maund. 

Membership and Sale by Quotas 

During the crushing season 1939-40, the Syndicate had 107 factories 
as its members, of which only 100 operated during the season, 68 in the 
U. P., and 32 in Bih^r. The total manufacture of su^ar bv members 
came to about 2,67,00,000 maunds as compared to 1,33,00,000 maunds 
for 1938-39. The total stock of sugar pooled by members was the same 
as the total quantity manufactured less the amount earmarked for the 
requirements of manufacture of confectionery etc. Till April 30, 1940, 
the sale of sugar was made as in previous years in accordance with the 
system of quotas covering definite periods. Factories sold their sugar 
themselves at rates fixed by the Syndicate. Breaches of rules were not 
wanting, as a number of factories during the season sold at rates below 
the Syndicate's selling rates, but effective steps were taken from time 
to time. 

The balance of stocks with the member factories at the end of the 
season 1938-39 totalled about 6,500 tons and members were given the 
option of repurchasing their share of unsold quantity at the Syndicate's 
selling price, namely, 6 pies above the basic prices. As it was felt that 
stocks of Indian sugar in the market were very meagre, the Syndicate 
decided as early as December 4, 1939, to put as much sugar in the market 
as possible. Accordingly, the Directors decided to release all sugar 
manufactured till the 15th January 1940, as the First Selling Order. 
Basic prices, as a temporary measure, were fixed at Rs. 2-8-0 above the 
basic prices of the similar quality of sugar produced in the last season, 



172 

the rise being due to the abnormal increase in cane prices, 1 and increase 
in the cost of production due to war. 

At an extra-ordinary general meeting of the Syndicate held on 
November 23, 1939, to fix the basis for computing the prices to be 
charged to the Syndicate for sugar to be sold to it by the members 
during the season, the Board of the Syndicate was authorised to fix 
the basis for the fixation of basic prices. Subsequently on December 4, 
the Syndicate decided to fix sugar prices on the basis of Nawabganj D 24 
for the season, the price for which was fixed at Rs. 12 per maund. The 
selling prices were to be one anna above the basic prices. The period 
earmarked for disposing of the quantities issued as the First Selling 
Order, which came to about 70,60,000 maunds, had to be extended from 
time to time as this amount could not be easily absorbed in the market. 
Even as late as August 1940, there were certain factories which were 
not able to dispose of their share of the First Selling Order. The 
Second Selling Order was released on May 20, 1940, and was 20 per cent 
of the balance of manufacture from January 16 to April 12, amounting 
to 33 lacs maunds. The sales, unfortunately were very slow, stocks 
sold by the middle of August being only 92 lacs maunds. 

The first two Selling Orders comprised 45 per cent of the total 
manufacture of the factories till April 12. After the price reduction 
announced on August 25, the tone of the market improved and there 
was greater demand for sugar. The recognition of the Syndicate had 
imparted a steady influence in the market. The Syndicate released 
the Third Selling Order on September 7, which consisted of 15 per cent 
of the production till April 12. The quota came to 33,39,000 maunds. 
The conditions for sale effected were similar to those of the first two 
quotas. 

The table on next page shows the details of the quotas released 
by the Syndicate till 22nd January 1941. 

On February 29, 1940, when the budget proposals of the Govern- 
ment of India were announced, it was found that the excise duty on 
sugar had been increased by Re. 1 per cwt. or 11.9 per maund from 1st 
March 1940. In the usual course, this should have been followed by an 
increase in sugar prices. But the Syndicate did not have recourse to 
such increase. On the other hand, it decided that the industry should 
bear the loss involved. The Provincial Governments also agreed to 
amend the sliding scale by reducing cane prices by nine pies per maund 
and this gave a certain amount of relief to the mills. Side by side, 
efforts "were also made to persuade the Government of India to exempt 
the stocks produced before March 1, 1940, from the operation of the 
excise duty. The Syndicate's efforts in that direction met with success 
and the industry got relief to the extent of Rs. 70,00,000, the share of 
the U. P. and Bihar mills being Rs. 63,00,000. 

On the occasion of the Third Annual General Meeting of the 
Syndicate held at Lucknow on April 3, 1940, several decisions of a 
far-reaching nature were taken. By that time, it was evident that 
while sugar production during the season was much in excess of the 

1 Cane prices till the first week of December 1939, ruled at 0-8-9 per maund, 
excluding co-operative societies' commission and the cane cess, 



Table 



173 

TABLE NO. 2 

Showing the Quotas released by the Syndicate during 1939-40 and 1940-41 
(in respect of sugar manufactured during season 1939-40) 



Serial 
No. 


Date of Release 


Quantity Released 


Conditions 


i. 


4-12-39 


Production from the start of season to 
15th January 1940, totalling 70,60,000 
maunds. 


Ready sales. Selling 
0-1-0 above basic 
rates. 


2. 


20- 5-40 


20% of the balance of production from 
16-1-40 to 12-4-40 totalling 33,00,000 
maunds. 


Do. 


3. 


7- 9-40 


15% of the production upto 12-4-40 total- 
ling 35,39,000 maunds. 


Do. 


4. 


5-10-40 


1% of the production upto 12-4-40 total- 
ling 2,36,000 maunds. 


Do. 


5. 


12-10-40 


5% of the production upto 12-4-40 total- 
ling 11,83,000 maunds. 


Do. 

i 



6. 
7. 

8. 
9. 



22-10-40 
38-10-40 

7- 1-41 
*22- 1-41 



Do. 
Do. 

Do. 

Do. 



do. 
do. 

do. 

do. 



Do- 
Ready sales. Selling 
rate 0-2-0 above 
current selling rates 
from 1st Nov. 1940. 

Do. 

Do. 



* Quota released by orders of Sugar Commission, UP. and Bihar. 

normal requirements of the country, and that a bumper crop was lying 
ahead of it. It was at one stage even considered necessary to stop 
crushing and thus avoid losses. But as this course involved unbearable 
losses to the growers the Syndicate gave up the proposal. The Syndi- 
cate, therefore, considered it essential so to regulate the production as 
to minimise the losses to factories. It was decided to fix the basic prices 
of sugar to be manufactured after April 10, (ultimately the date was 
changed to April 12) at Rs. 3-6-0 per maund below the original prices ; 
and the Provincial Governments were requested to bring down the 
prices of cane to be purchased after that date. The sugar to be produced 
out of this low-priced cane was to be treated separately and was only 
to be released after all the sugar manufactured before that date had 
gone into the market. A satisfactory arrangement was reached with 
the two Governments, and, the Syndicate on its part, gave an assurance 
to crush as much cane as available. 

As the year advanced, conditions in the industry deteriorated. 
Withdrawal of Government recognition and failure of the contemplated 
export deal 1 had added to its difficulties. The banks who had given 
loans to the factories on the security of their sugar were not willing to 



i Negotiations were afoot for exporting about one lac tons of sugar to the 
United Kingdom, but ultimately they broke down over the question of a fair 
price, and over difficulties in shipment. 



174 

advance further loans for financing their off-season needs. On the 
other hand, they even threatened to have recourse to forced selling 
to realise their dues. In accordance with their wishes, the Syndicate 
on July 22, 1940, decided to reduce the basic prices by Rs. 2-8-0 per 
maund. This, it was contemplated, would lead to the movement of 
sugar and reduce the stocks with the factories. 

Further reduction by As. 14 per maund was made on August 25, 
after the local Government's decision to take immediate responsibility 
for the payment to the Government of India of Re. 1 per maund excise 
duty on the unsold stocks of the Syndicate sugar as on August 25, was 
announced. This reduction was in response to the willingness on the 
part of the Government of India to defer realisation of excise duty to 
the extent of Re. 1 per maund. It was contemplated that such a course 
would enable the Syndicate mills to sell sugar at a cheaper price than 
the one then prevailing and thereby reduce the stocks in their hands. 

In addition to these reductions, the Syndicate also allowed in the 
middle of the season a rebate on sales for despatch to port areas, where 
severe competition from Java was felt. The rebate allowed on despatches 
to Bombay, Karachi, Madras, Cochin and Calicut was fixed at As. 10 
per maund on the current selling rates, and at As. 6 per maund on 
stocks despatched to Calcutta and Chittagong. This came into force 
from April 24, remaining in force till May 18, 1940. 

New Method of effecting Sales of Sugar Adopted 

By far the most important decision taken at the Annual General 
Meeting related to direct selling. It had for a long time been felt 
that the future of the industry to a great extent depended on the setting 
up of a suitable organisation for marketing sugar an organisation 
which would control the proper distribution and despatch of the com- 
modity to the various parts of the country according to market require- 
ments at different times. Direct sales not only stop the waste involved 
in cross haulage on account of the defective system of distribution, but 
are also calculated to minimise the activities of speculators, and, in 
a season of over-production, serve to reduce the chances of the indivi- 
dual members resorting to malpractices. It was also felt at that time 
that direct selling would be of immense help to the industry in the crisis 
through which it was then passing. It was intended that the scheme 
of direct selling would be brought into operation from April 10, 1940, 
but its commencement had to be postponed till May 1, 1940, as the 
necessary arrangements could not be effected by that date. The 
sales committee was empowered to dispose of the unsold quantity of 
sugar with Syndicate members by directly calling for offers from 
selling agents and accepting them on their behalf. As regards the 
working of the scheme, the existing selling organisations of the members 
were utilised as far as possible. The acceptance of the offers was 
communicated to the selling agents, who were responsible for the ful- 
filment of the contract, payment of all charges in that connection and 
t -settlement of claims arising from them. The terms of agency between 
the selling agents and the factories remained absolutely unchanged 
excepting that the Syndicate, instead of the factories, accepted both 
the * options ' and * firm offers ' made by the selling agents. The 
Syndicate also advised the agents regarding selling rates for all qualities 



175 

of sugar produced by the factories concerned. The selling rates 
included agents' commission or brokerage, but were not subject to any 
reduction, discount or commission of any description whatsoever. Sell- 
ing rates announced remained in force until cancelled or substituted by 
others and alterations could be made at any time without warning. 
It is gratifying to note that the scheme was worked out efficiently and 
proved its merit. 

Proportionate Sales of Members' Sugar 

Throughout the season, the Syndicate laid considerable stress on 
ensuring that the sales of all factories were made in definite proportion 
to their production. The First Selling Order, which consisted of all 
the sugar manufactured till January 15, had brought about considerable 
disparity in the sales of different factories, those starting earlier having 
a definite advantage over those who commenced crushing later in the 
season. It was noticed that while some factories had sold as much as 
52 per cent of their total manufactures till April 12, there were others 
who had not even sold about 10 per cent of their production till April 
12, 1940. In order to bring the sales of all the backward factories to 
the parity of those who had made larger sales, the factories were divided 
into various geographical groups and in each group the factories which 
had made highest sales were asked to stop until other factories had 
come to their level. The factories were divided into 6 groups, namely, 
South Bihar, North Bihar, Gorakhpur, Basti Gonda, Meerut and Mid- 
western U.P. and R.K.R. The limit of 33 per cent was fixed in the 
case of factories in North Bihar, Gorakhpur and Basti Gonda groups 
and of 45 per cent in the case of factories belonging to South Bihar, 
Mid- western U.P. and R.K.R. groups. To avoid delay, sales were 
effected through local offices at Bombay, Cawnpore and Muzaffarnagar 
under the direction of local committees, which were specially set up 
for the purpose and were empowered -to accept offers regarding sugar 
of the factories, the sale of which they were required to direct in 
accordance with instructions issued from the Head Office. In cases 
of necessity, offers made by selling agents in respect of sugars of 
factories to which they did not belong, were also accepted. 

This scheme worked successfully and the heavy stocks v/ith the 
backward factories were cleared away by the end of August 1940. 
Therefore when on September 7, the Third Selling Order was allotted, 
no provision of this type was made and all factories were given a 
uniform quota of 15 per cent of their production upto April 12, 1940. 

Export of Sugar 

Another matter which occupied the attention of the Syndicate 
and the Indian Sugar Mills Association, a body comprising sugar 
factories all over the country, during 1940, related to the export of 
sugar. The heavy surplus stocks of this season and the expected bumper 
crop of the next, pressed for effective solution. In order to relieve 
the pressure of heavy carry-over it was decided at the Syndicate's 
Annual General Meeting to offer 2 lacs tons of sugar to His Majesty's 
Government at Rs. 5 per maund ex port. The Government of India 
was also asked to lift the ban imposed by the International Sugar Agree- 
ment on exports of Indian sugar by sea. While Government did not 



176 

think it proper to remove the export ban 1 they succeeded in persuading 
His Majesty's Government to agree to the purchase of Indian sugar. 
The ;price offered for this sugar was, however, very low, namely, 
Rs. 4-4-0 per maund ex port. The Syndicate, even then decided to 
clear away 30 lacs maunds of sugar at this price. It was also expected 
that the railway would give some concession on this sugar sent to the 
ports and the loss of the industry would thus be reduced. However, 
fresh difficulties soon cropped up. The banks with whom sugar was 
mortgaged did not permit its sale at the reduced price without further 
margins which the mills were not in a position to provide. Ultimately, 
the scheme had to be postponed for the time being. For this failure, 
there was, however, the consolation that the Government of the N. E. I. 
volunteered to restrict the import of sugar into India to 35,000 tons 
In the next year, due to shortage of shipping, Java could not export 
to the Middle East, which therefore became a market for Indian sugar. 

The season 1940-41, so far as the Syndicate was concerned, was in 
the first place taken up with implementing the terms of the above- 
mentioned agreement. Early in September 1940 the Provincial Govern- 
ments nominated an executive officer of the Syndicate and Mr. K. G. 
Ambegaonkar, i.c.s., was nominated to the post. 

Early in 1941, the Head Office of the Syndicate was shifted to 
Cawnpore, which is at present the main sugar market of the industry. 
Thus remaining in close contact with the market and at ^the same time in 
close touch with the Joint Sugar Commission, whose office is also 
located in Cawnpore, the Syndicate has been able to act more effectively 
than before. 

Government Control over Prices and Selling Quotas 

The most important change which has taken place on the marketing 
side of the sugar industry since the recognition granted to the Syndi- 
cate in August 1940, is that control over the sugar prices and the 
sales quotas have been formally taken over by the Sugar Commission. 
To this extent the Syndicate's Board has lost the initiative although 
the Syndicate works in close collaboration with the Government. The 
minimum selling price of the standard sugar is fixed by the Government 
and selling prices of all other sugars are practically determined by the 
Syndicate by the application of a chart of prices, though they are, 
of course, subject to the formal approval of the Commission. The basic 
price of the standard sugar produced in 1940-41 which, by the way is 
Nawabganj D 24, was last year fixed at Rs. 9-2-0 and the price of all 
other sugars was fixed on this basis. The release of sales quotas is also 
under the control of the Sugar Commission. Chances of conflict have 
been greatly minimised by closer collaboration between the Sugar 
Commission and the Syndicate in all matters. 

Standardisation 

Before assessing the experiences of the Sugar Syndicate, reference 
must be made to the technical requirements of an efficient selling 



1 This ban was not lifted. But with the expiry of the International Sugar 
Agreement in August 1942, India has not been a signatory to a fresh agreement, 
and with effect frpm September 1942 she is free to export sugar. 



177 

organisation, which, as we noted at the beginning, the Indian Sugar 
Industry was sadly lacking in. In the course of its working the Syndi- 
cate was meeting these needs. We have referred to the fixation of 
basic prices, the method of issuing selling orders, the evolution of 
direct sales and the means by which proportionate sales of members' 
output were secured. It remains now to note the progress achieved 
in respect of the standardisation of Indian sugar. The Bureau of Sugar 
Standards which was tackling this problem became from April 1940 
an integral part of the Imperial Institute of Sugar Technology. The 
Bureau continues to : 

1. Prepare and supply the Indian Sugar Standards. 

2. Publish an annual review dealing with the quality of Indian 

sugars and giving comparative figures for competitive foreign 
sugars. 

3. Maintain a museum of samples of sugar and sugar products. 

The standard sets are available for sale each year from July 1st. 
The standards come into force from November 1st and remain valid 
till October 31st of the following year. 

Review of Quality of Sugar produced in India during the Season 1939-40 

A ' Review of the quality of sugar produced by Central Sugar 
Factories and Refineries in India during the year 1939-40 ' was publish- 
ed by the Director, Imperial Institute of Sugar Technology, Cawnpore, 
on 4th July 1940, in the Indian Trade Journal. 

The total number of samples analysed for quality during the year 
was 252 as against 231 last year. As in previous years the samples 
continued to bear a very large number of different quality designations 
even for the same class of sugars, a practice which must be discouraged 
by Indian Sugar Factories for effecting uniformity in the quality of 
Indian Sugars. Eight factories as against one of last year denoted 
their quality in terms of I.S.S. numbers. The different grades of sugars 
produced by Indian factories during the season 1939-40 with com- 
parative figures for the last season are given in the following table : 

TABLE 3 



Serial 
number 


Particulars 


No. of 
Factories 


Percentage 


1939-40 


1938-39 


1 


Factories making one grade only 


30 


27.27 


26.26 


2 


two grades 


41 


37.27 


34.34 


3 


three I 30 


27.27 


2626 


4 


., four 


7 


6.37 


7.08 


5 


> five 


2 


1.82 


6.06 




Total 


110 


100.00 


100.00 



From the above table it will be observed that, while there has 

been no reduction in the number of grades of sugars, the percentage 

of factories producing one, two and three grades has increased during 

the season of 1939-40. The majority of samples received this year were 

12 



178 

also mixtures of varying grain sizes. The big and medium grain sugar's 
lacked brilliance and contained twin, joint and mixed crystals. The 
figures in the review also show that the quality in respect of first 
crystal sugars has improved over the previous year but the general 
grain size has been slightly smaller than the previous year's. A fairly 
good number of superior Indian sugars compares favourably with the 
Java Whites. 

Evolution o/ Central Sales Organisation and its Future 

We have traced, in somewhat wearisome detail, the fortunes of the 
Indian Sugar Syndicate and the evolution of its methods of work. It 
is no comforting thought that at the end of a decade the Indian sugar 
industry as a whole has no common selling organisation and that the 
existence of such an institution for the provinces of UP. and Bihar 
is to be attributed only to a fortuitous circumstance. But it is perhaps 
significant that what was first started as a voluntary selling organisation 
for factories all over India should be changed somewhat abruptly into 
a compulsory association under Government control and restricted to 
the provinces of the UP. and Bihar. Within the limits set by its 
position, the Indian Sugar Syndicate has, indeed, done much for the 
sugar industry. It has proved itself equal to tackling every crisis as 
it arose. It has evolved its own technique of operation and though it 
was often oHlgecT to look to Government intervention which it secured 
at a stiff price, it has revealed a substantial body of opinion within the 
industry which has a firm recognition of the advantages of a common 
selling organisation and the dangers of being without one. In the 
years after the war it may well prove that the control which the Gov- 
ernments exercise over the Syndicate will be the means of effecting 
a satisfactory conciliation of the conflicting interests of the cane growers, 
the industrialists and the consuming public. If one confines one's 
attention to the UP. and Bihar, the history of the Indian Sugar Syndi- 
cate has an obvious parallelism to that of the Nivas. But it can 
hardly be pretended that the Syndicate is a common selling organisa- 
tion for the Indian Sugar Industry as such. 

A similar trend for the whole of India can be expected only with 
the rise of a similar compactness in the sugar industry in India. At 
the present stage, one can only regard the Sugar Syndicate as a striking 
proof of the uniqueness of the position of the UP. and Bihar. That 
uniqueness gives rise to a special set of problems to which we have 
now to turn our attention. 

The Indian Sugar Syndicate goes in Cold Storage in 1942 

As a result of the Sugar Control Act brought into effect by the 
Government of India from the, 14th April 1942 (later amended and 
passed as the Sugar and Sugar Products Control Order in July 1943 
for texts vide The Indian Sugar Industry Annual, 1943) the Sugar 
Syndicate was obliged to curtail its activities. It gave up the practice 
of releasing sales quotas which had been so far its main function. Its 
present activities are curtailed to watching the general interests of its 
members and making representations to the authorities concerned on 
numerous aspects of control. It hopes to revive itself after the Govern- 
ment control on sugar is removed, after the war is over. 



CHAPTER XII 
LOCALISATION OF THE INDIAN SUGAR INDUSTRY 

Territorial Distribution of Sugar Industry and 
Sugarcane Production 

WE saw in the last chapter how the Sugar Syndicate which started 
as a voluntary all-India organisation of the sugar mills was transformed 
in a short time into a compulsory association of the sugar mills of the 
U. P. and Bihar with more or less complete official control. Such a 
development is demonstrably due to the uniqueness of the position 
occupied by the U. P* and Bihar among the various sugar-producing 
provinces in India. The simple fact that between them the two provinces 
account for about 80 per cent of the total sugar production in the 
country suffices not only to bring them together in close co-operation 
but to mark them off from the rest of the provinces. The result is that 
sugar mills in the other provinces are none too eager to join the U. P. 
and Bihar mills who are obliged by virtue of their large export surplus 
to market their output in other provinces, including the most distant 
among them. It is obvious that such disparity between the U. P. and 
Bihar on the one hand and the rest of the provinces on the other must 
make itself felt in other directions besides that of the marketing of 
sugar. At present the Indian mills are able to produce a little more 
than the present total demand of the home market. 1 And it is natural 
that when the expansion of the Indian Sugar Industry has been so 
rapid, the benefits of protection should be appropriated so largely and 
in such a large measure by the two provinces which were in the best 
position to profit by it. It is a question, however, whether these dis- 
parties in sugar protection as among the various provinces are bound 
to last. That obviously is different from the problems which such dis- 
parities give rise to, so long as they continue to exist. It is different, 
too, though it is allied, from the aspirations of other provinces to in- 
crease their sugar production. Inter-provincial jealousies in this regard 
are of little importance so long as objective conditions are unfavourable 
to the increase of production in these areas. And no action in the 
nature of barriers to trade need be apprehended, as such trade barriers 
depend in the first place on the separateness of the political entities and 
in the second place on some encouragement being afforded by the 
objective conditions referred to earlier. Nevertheless, inter-provincial 
jealousies have often made themselves felt in the Indian Sugar Industry, 
particularly when conferences of all-India scope were convened to 
discuss matters connected with the Indian Sugar Industry. One concrete 
result of these jealousies is that the U. P. and Bihar have not till now 
been able to secure the consent of other provinces to the principle of 
prohibiting the establishment of new sugar mills in India till domestic 



1 If the existing sugar mills work to their full capacity and for the full length 
of the season, they are capable of producing about 15 lacs tons of sugar per year. 
(Vide Indian Sugar Industry Annual 1940-41 and Mr. M. P. Gandhi's speech at 
the Rotary Club of Bombay on 13th October 1942, published in the Journal of the 
Indian Merchants' Chamber, Bombay, for November 1942. Also vide his speech 
before the Rotary Club of Ahmedabad on 3rd December 1943, printed in the Sugay 
Industry Annual of 1943* 



180 

consumption increases, or the prospect of export markets become 
clearly visible. And to the extent that popular ministries have in the 
past attempted or given thought to the economic development of their 
respective provinces, they have treated the expansion of sugar produc- 
tion as no different from other channels of productive activity. 
Doubtless, when the time comes for autonomous provincial ministries to 
show their mettle to the electorate, plans for increasing production will 
be formed and pursued, and the position of the sugar industry will be 
found to offer a few conundrums. It may be supposed, too, that even 
if the provinces were willing to avoid embarassments for the sugar 
mills of the U. P. and Bihar, the provincial governments will find it 
necessary to encourage the manufacture of sugar or at least gur as part 
of the programme of insuring sufficiency of nutritive food for the millions 
entrusted to their care. That an expansion of demand will enable the 
other provinces to increase their production without causing any diffi- 
culties to the U. P. and Bihar mills is clear. But it is rarely that 
economic adjustments are so smoothly adjusted. It is necessary, there- 
fore, to enquire into the position of the various provinces as producers 
of sugarcane and of sugar. 

Such enquiries were, no doubt, conducted in the past. The two 
Tariff Boards which examined the position of the sugar industry com- 
piled the cost of production of cane in the various provinces 1 and though 
it was obvious that the U. P. and Bihar had definite advantage over 
others, it is doubtful if the present position was foreseen with any 
degree of clarity. Inasmuch as it developed within a few years, which 
are hardly sufficient for any significant development in the other pro- 
vinces, it is well to examine the position. 

We shall begin by noting from the following tables the present 
acreage under sugarcane, the estimated production of sugarcane, and 

TABLE NO. 1 

under Sugarcane, Yield of Gur or Jaggery and the estimated 
Production of Sugarcane in India 



Year 


i Area under 
sugarcane 


Gross production 
expressed as Gur 
or Jaggery 


Calculated total pro- 
duction of sugarcane 




Areas 


Tons | Tons 


1929-30 


26,24,000 


28,85,000 3,09,61,000 


1930-31 ...| 29,05,000 


33,59,000 3,57,89,000 


1931-32 ... 30,77,000 


41,16,000 4,33,16,000 


1932-33 ...i 34,25,000 


48,59,000 5,11,29,000 


1933-34 ...i 34,22,000 


50,55,000 5,24,55,000 


1934-35 
1935-36 


36,02,000 
41,54,000 


52,92,000 5,43,46,000 
61,02,000 6.12.02.000 


1936-37 
1937-38 
1938 39 


45,82,000 
38,69,000 
31,30,000 


69,32,000 
55,79,000 
35,72,000 


6,73,22,000 
5,56,37,000 
3,58,51,000 


1939-40 . * 
1940-41 
1941-42 
1942-43 


36,40,000 
45,98,000 
35,15,000 
36,00,000 


47,48,000 
57,94,000 
43,71,000 
50,76,000 


4,76,72,000 
5,90,90,000 
4,60,30,000 


1943-44 


41,13,000 


56,96,000 





.. j erial , Council of Agricultural Research also undertook this investi- 

gation in 1934 and published its estimates of costs of cultivation in various pro- 



181 

TABLE NO. 2 

Distribution of the average Sugarcane Area and Yield of Cur or Jaggery 
for 5 years ending 1939-40 



Average 


Percentage 


Average Gur 


Percentage 


Province or State ; Area 


of total 


Production 


of total Gur 


; (5 years) 


area 


(5 years) 


Production 


U. P. (including Rampur) 


2089.600 


53.10 2940.000 


53.36 


Punjab 


462.600 


11.76 : 337.200 


6.12 


Bihar 


413.000 


10.44 499.000 


9.06 


Bengal ,, ,, 


317.000 


8.05 532.400 


9.64 


Madras ,, ,, 


113.600 


2.89 310.800 


565 


Bombay (Exc. States except Baroda) 


120.400 


306 318.000 


5.77 


N.W.F.P. 


tt 


65.000 


1.65 70.800 


1.29 


Assam 


ft 


37.600 


0.96 38.400 


0.70 


CP.&Berar 


tt 


30.200 


0.76 47.800 


0.86 


Orissa 




32.000 


0.81 


58.000 


1.05 


Delhi 




t 


3.200 


0.08 


2.000 


0.04 


Sind 




f 


5.600 


0.14 


12.000 


0.22 


Mysore 




f 


49.200 


1.25 


60.200 


1.09 


Hyderabad 




t 


42.400 


1.07 


84.400 1.53 


Bhopal 




t 


5.800 


0.15 


5.400 i 0.10 


Baroda 




t 


2.600 


0.07 


4.800 ! 0.09 


Other Areas 




> 


148.000 


3.76 


186.000 3.38 



the present production of sugar (including Khandsari sugar and sugar 
refined from gur) for several years : 

Dearth of Reliable Statistics Deplored 

It is a matter of regret that there is great dearth of reliable official 
statistics in regard to such an important and vital matter. It should be 
noted clearly that official statistics relating to the sugarcane crop give 
only the area under carie, arid the yield of c;ur, no figures of the tonnage 
of cane being available. Even in respect of acreage of cane, the figures 
of such Provinces and States where land revenue system makes it 
essential to undertake a survey and record of the crop raised annually, 
may be fairly accurate, but in such parts of India where the Permanent 
Settlement of land revenue is found, their figures are no better than 
guesses. Thus, for instance, the statistics in relation to U. P., Bombay, 
Madras and the Punjab are likely to be more accurate, but this cannot 
be said of Bihar 1 and Bengal. While this is the position in respect of 
statistics of acreage, the position in regard to yield is still worse. At 
present all crop-cutting experiments on which official returns of yield 
are based and in the weighment of gur and not of cane. Even these 
unsatisfactory experiments have now been given up. With the available 
statistics, therefore, it is hardly possible to calculate the exact figures of 
the production of cane each year, as the weight of cane produced per acre 
varies with the locality as well as with the variety of the cane grown. 
Similarly, the weight of cane required for manufacturing a unit of gur 
also varies with the variety of cane. Thus neither of the two official 
figures of acreage and yield of gur can, therefore, by themselves be used 



>te in the Statement of Objects and Reasons to the Sugar Factories 
7, given in the "Indian Sugar Industry at a Glance", where it is 



1 Vide footnote 

Control Bill, 1937, g.,~ .-_ ____ 

stated that in the absence of an up-to-date survey, it is almost impossible to 
obtain reliable estimates of cane areas. 



182 



for making an accurate calculation of the total yield of cane. The only 
recourse, therefore, for calculating the production of sugarcane is to use 
the forecast figures of gur as the basis. 1 

The next table shows the production of sugar from cane and Khand- 
j?ari together in the different Provinces from 1935-36 to 1939-40 : 

TABLE NO. 32 



Province 


1935-36 


1936-37 

#> 


1937-38 


1938-39 


1939-40 




Tons 


Tons 


Tons 


Tons 


Tons 


United Provinces 




. 6,45,600 


6,92,800 


6,28 400 


3,94,200 


7,60,300 


Bihar 




. 2,57,900 


3,35,000 


2,31,700 


1,66,600 


3,28 800 


Punjab 




29,000 


26.100 


23,100 


15,100 


24200 


Madras 




33,700 


33,700 


34,600 


36.000 


47,000 


Bombay 




35,900 


43.200 


46,900 


57,300 


75.500 


Bengal 




31.200 ! 29,400 


26,000 


14,900 


45.800 


Other Provinces 




71.000 


76,800 


82,200 


81,400 


1,11,600 


Total for India .. 


. 11,05,000 


12,37,000 


10,72,000 


7,65,500 


13,93,200 



It will be seen from the above tables that the U. P., a sub-tropical 
region, has more than half the total acreage under cane, and more than 
half of the total production of sugar in India. 

The position in 1942-43 and 1943-44 is almost similar to that in 
1939-40. 

Sugarcane in the United Provinces 

The United Provinces of Agra and Oudh lie between 23 52' and 
3118' N. and thus fall entirely outside the tropics. The acreage under 
cane is more than half of the total acreage under cane in India. 

The province has made remarkable progress in extending the culti- 
vation of improved varieties of cane. The United Provinces which 
possess more than half the acreage under cane in India and 
about three-fourths of that acreage under improved varieties, holds an 
important position in the manufacture of sugar. The province is 
fortunate in that hitherto the attention of the Coimbatore Research 
Station has been focussed, as is natural, upon producing improved canes 
suitable for conditions in the main sugar belt of India, i.e., in the United 
Provinces and Bihar and Orissa. The results of such research have been 
utilised by the U. P. with great avidity. The United Provinces Govern- 
ment stated before the Tariff Board that while indigenous varieties may 
be expected to yield 350 maunds of cane per acre, Coimbatore varieties 
cultivated in the same system yield 600 maunds and cultivated exten- 
sively on the Java system, would yield up to 1,000 maunds per acre. 
The United Provinces are also endeavouring to cultivate special kinds 
of cane, e.g., Co. 214, which ripens sharply, and cane which ripens late, 
to enable the factories to extend the crushing season. 

The Department of Agriculture of the United Provinces stated in 
one of its reports that Co. 213 was the most widely grown of the newer 



1 This question was discussed at a meeting of the Sugar Committee of the 
Imperial Council of Agricultural Research, but no decision was arrived at for 
remedying the present position, till July 1937. 

2 Vide Supplement to the Indian Trade Journal, 7th May 1942, p. 18. 



183 

canes. It is high yielding and capable of doing well under normal crop 
conditions but has shown itself unduly susceptible to monnic disease. 
Co. 200 and Co. 244, it is observed, have considerable vogue in the west 
of the province. The former appears to yield better in the west than 
elsewhere and the latter does well on less highly manured lands. 

The total area under improved and ordinary varieties of cane in the 
United Provinces during 1939-40 was 19,14,000 acres out of which 
17,06,000 were under improved varieties and the balance under ordinary 
varieties. The cost of growing cane, the Tariff Board observed in 1931, 
was estimated at between 4 and 5 annas a maund. The Tariff Board of 
1938 estimated the cost of cullivation at 3 annas and 7 pies per maund. 

Bihar and Orissa 

The Provinces of Bihar and Orissa He between 193' and 2731' N. 
Orissa occupies the most southerly position in the province and is thus 
entirely within the tropics, whereas Bihar is entirely sub-tropical. 

The special features of Bihar are that its climatic conditions are 
transitional between the tropical and the sub-tropical, that much of its 
cane is grown without irrigation, and that it was till lately (before the 
advent of protection) the chief centre for the manufacture of sugar direct 
from cane in India. 

Orissa, however, is essentially a rice-tract and offers hardly any 
prospect of cane. 

The spread of Coimbatore varieties of sugarcane has been pheno- 
menal during the last 5 years. Out of a total of nearly 4,41,000 acres 
under improved canes in 1939-40, nearly 4,25,600 acres are in Bihar 
proper. The spread is increasing so rapidly that it is felt that local 
varieties will completely be ousted before long. 

The total acreage under sugarcane in Bihar was about 3,02,000 in 
1932-33 and 4,41,000 in 1939-40, 

The yield from indigenous canes in Bihar was about 13 tons per 
acre, while the yield from Coimbatore variety is about 18 to 20 tons. 

The Tariff Board (1931) remarked that the cost of cultivation of 
cane worked out at between 4 and 5 annas a maund ; another Tariff 
Board (1938) estimated the cost at 3 annas 4 pies per maund. 

The Punjab lies between 2739' and 342' N. It is well outside the 
tropics, but comes closely behind Bihar, the U. P. being the first. Although 
the Punjab grows about 4 lacs of sugarcane, the prospects of manufac- 
ture of white sugar are limited to a small proportion of that acreage, due 
to the short monsoon period and the extremes of temperature which are 
serious handicaps. The short duration of the crushing season and the 
danger of frost are the limiting factors. The possibility of establishment 
of sugar factories, therefore, is confined to the south of the Punjab 
where conditions are similar to those of the United Provinces. 

The yield of cane in the Punjab from indigenous varieties is about 
13 tons per acre, while from Coimbatore varieties it is about 15 tons. 

The Tariff Board (1931) remarked that the cost of cultivation of 
cane was estimated at about 5 annas 6 pies per maund. The Tariff 



184 

Board (1938) estimated the cost at 5 annas per maund in the areas 
where factories are situated. 

Improvements in Madras 

The Madras Presidency lies between 804' and 2060' N. and is 
entirely within the tropics. Although nowhere in India are the climatic 
conditions more favourable for the successful cultivation of cane, the 
area under sugarcane in Madras is both small and scattered. The 
acreage under cane in 1932-33 was a little over one lac and 1,32,000 in 
1939-40. In spite of its tropical situation Madras offers limited prospects 
for cane, due largely to the widespread preference for rice wherever 
supplies of irrigation water are assured, and to the very scattered area 
on which cane is grown, Madras has not benefited from the Coimbatore 
Research Station, as the experiments conducted there have so far been 
directed to production of cane suitable for sub-tropical conditions. The 
average size of a holding in Madras is extremely small and the difficulties 
in the way of sugar factories obtaining control over a sufficiently large 
area for cultivation of cane are very great. But these difficulties are 
slowly being overcome. The yield of cane has improved to 35 tons per 
acre, and the cost of cultivation of cane has now come down to about 

4 to 6 annas per maund, due to fall in prices, chiefly of manures, fall 
in wages, etc. The area under cane in Madras was 1.32.000 acres in 
1939-40. 

The cost of production of cane, according to the Tariff Board of 1931, 
was estimated at from 7 to 12 annas per maund. The 1938 Tariff Board 
estimated the cost at 5 annas 5 pies per maund. 

Improvements in Bombay 

The Bombay Presidency proper lies between 13 53' and 2443' N. 
and is thus almost entirely within the tropics. The area under cane 
was 1,05,000 acres in 1932-33 and 1,29,000 in 1939-40. 

The Deccan lands and their projected extension afford the brightest 
prospects for the extension of cane in Bombay, Bombay is also capable 
of producing a higher yield of cane per acre perhaps than any other 
part of India. The Tariff Board were informed that in certain fields 
at the Belapur Estate a yield of 40 tons or more of cane had actually 
been realised. This represents about 1,080 maunds per acre and com- 
pares well with Java production. The actual average for the Belapur 
estate was about 24.69 tons, i.e. 679 maunds in 1929-30, and indeed on 
one plot of land in the Deccan the yield was over 100 tons in 1936-37. 1 

The cost of cane was estimated to be about 12 annas per maund by 
the 1931 Tariff Board. The 1938 Tariff Board estimated it at 5 annas 

5 pies per maund. 

Improvements in Bengal 

The Presidency of Bengal lies between 2035' and 2713' N. and is 
almost entirely sub-tropical. In point of acreage in India, Bengal stands 
fourth now, although in the early years of the 20th century, it was 



Tariff Board Report, 1938, pp. 2 and 67. 



185 

second. Cane is grown in every district of the province, but the crop 
is of small importance. The total area under sugarcane in Bengal was 
2,33,000 acres in 1932-33 and 3,10,000 acres in 1939-40. 

The province appears to afford suitable facilities for the develop- 
ment of cane-manufacturing industry, particularly in view of the decline 
in the demand and price of Jute, which is the crop of greatest impor- 
tance to this province. 

The cost of cultivation per rnaund of cane, the Tariff Board (1931) 
were informed, was about 7 annas. The Bengal Government now 
believe that the cost has come down to about 3 annas per mauncl. The 
1938 Tariff Board estimated the cost at 3 annas 7 pies per maund. 1 



Provincial Distribution of Factories 

Having seen the developments in the cultivation of cane, and the 
possibilities thereof, let us now turn our attention to the progress of the 
cane-manufacturing industry, and see its relative position and develop- 
ment in the various provinces. We will compare the production of 
sugar in the chief provinces during the last few years, the recovery 
percentage of sugar, the duration of the crushing season, etc., and 
consider the possibilities of the development of the industry in various 
provinces : 

TABLE NO. 4 

Comparative growth oj Sugar Industry in the various Provinces since 1931-32 
i Number of cane factories working 



Province 


1931- 
32 

14 
12 

2 
2 


1932- 1933- 
33 34 


1934- 
35 


1935- 
36 


1936- 
37 


1937- 1938- 1939- 1940- 1941- 
38 39 40 41 42 


U.P. 
Bihar 
Punjab & Sind 
Madras 
Bombay 
Bengal 


33 
19 
1 
2 

1 


59 
33 
5 

4 
4 

2 


65 
34 
6 

8 

5 


67 

35 
4 
8 
6 
6 


68 
33 
5 
11 
6 
6 


68 
33 

8 
7 
6 

Q 


f>9 
32 
3 

7 
7 

8 
2 
11 


70 
32 

o 

10 

7 

9 
2 

11 


70 70 
32 32 
4 5 
11 11 
8 8 
9 9 
2 2 
12 13 


Indian States 

Total for 
INDIA ... 

Burma 


4 


5 


9 


8 


32 
1 


57 


112 


130 


; 137 


137 


136 


139 


145 


148 150 


1 


1 2 


i 2 


i 3 


2 


2 


3 


3 i un- 
known 



Burma excluded from 1936-37 onwards from the total for India. 
Even in 1943-44, the position is very nearly the same. 

The number of factories in the U. P. in 1941-42 (also in 1943-44) is 
more than double the factories in Bihar and only a little less than half the 
number of total factories in India. Bihar stands a good second, Madras, 
Bombay, Bengal and the Punjab are third, fourth, fifth and sixth res- 
pectively. More than 125 factories have been established after the grant 
of protection, and plants of several old factories have been considerably 



1 The 1938 Tariff Board estimated that 3J annas per maund may be taken as 
a reasonable estimate of the cost of cultivation for the whole of India (page 36). 



extended. Let us now see the figures of production of sugar in these 
provinces. 

Production of Sugar in the Various Provinces 

The production of sugar year by year, since 1932 in the United 
Provinces and Bihar, and in all-India, can be seen from the following 
table. The table also gives statistics of the quantity of cane crushed : 

TABLE NO. 5 
Cane Factory Production of Sugar in V. P., Bihar and All-India (in tons) 









i 




Season 


U.P. 


Bihar 


All-India 

i 


Total quantity of cane 
crushed in all factories 


1931-32 


66,312 


75,091 


i 1,56,581 


17,83,000 


1932-33 


1,40,344 


1,26,610 


j 2.90,177 33,50,000 


1933-34 


2,73,774 


1,39,957 


! 4,53,965 


51,57,000 


1934-35 


3,15,600 


1,84,038 


; 5,78,115 


66,72,000 


1935-36 


5,30.000 2.50.200 


! 9,32,100 


98,01,000 


1936-37 


6,08,600 3.29,300 


1 11,11,400 


1,10,87,000 


1937-38 


5,31,300 2,25,300 


9,30,700 


99,16,400 


1938-39 


3,20,300 61,600 


6,50,800 : 70,04,800 


1939-40 


6,59,500 3,22,100 


12,41,700 1,31,31,700 


1940-41 


5,13,300 2,46,100 


10,95,400 1,12,90,000 


1941-42 


3,82,900 1,17,300 


7,78,100 80,26,300 


1942-43 


6,12,500 2,37,400 


10,70,700 1,04,18,500 


1943-44 


7,27,100 


2,12,400 


12,16,400 i 1,21,37,800 



The following table gives similar production of the various provin- 
ces, along with recovery percentages for 1939-40 and 1940-41 : 

TABLE NO. 6 

Number of Sugar Factories in various Provinces working in 1940-41. Estimated 
Quantity of Cane Crushed, Sugar Produced and Recovery Percentage 

obtained, etc. 

(Official estimates of the Director, Imperial Institute of Sugar Technology, Cawn- 
pore, published on 18th September 1941) 



Province 



: No. of Mills 
working 



Cane Crushed 
Tons 



Sugar 



Recovery Sugar 
I percent cane (a) 



1940-41 



1939-40 







i 






i 


United Provinces... 


70 


51,99,800 


i 5,13,300 


9.87 


9.37 


Bihar 


32 


24,94,300 


! 2,46,100 


9.86 


9.29 


Punjab & Sind ... 


4 


2,42,700 


i 21,360 


8.93 


8.39 


Madras 


11 


! 4,82,000 


44,100 


9.15 


9.11 


Bombay 


i 8 


8,52,400 


84,600 


9.94 


10.97 


Bengal & Assam 


9 


6,11,300 


52,000 


8.50 


9.23 


Orissa 


; 2 


34,200 


3,000 


8.77 


8.39 


Indian States 


12 


- 13,74,200 


1, 30,300 


9.47 


10.03 


Total (India) 


148 


i 1,12,90,900 


10,95,400 


9.70 


9.45 


Burma 


i 3 


3,99,300 


39,300 


9.84 


10.04 



(a) The All-India- average recovery in 1941-42, 1942-43 and 1943-44 was 9,69, 
10.28 and 10,02 respectively. 



187 

From the previous tables it would be clear that though the other 
provinces are backward in point of acreage under cane and cost of 
production, in point of recovery percentage some of them are quite ahead 
of the U. P, and Bihar. The differences in the cost of production are 
there ; but these did not prevent the provinces from voicing their dis- 
satisfaction with the rate of progress in the industry, so far as they were 
concerned, in the year 1933. 

All-India Sugar Conference, 1933 

The question of the development of the industry in the various 
provinces was discussed thoroughly at the Sugar Conference held by 
the Government of India at Simla on the 10th, llth and 12th July, 1933. 
The discussion gave rise to a sharp conflict of opinions, and gave an 
interesting spectacle of provincial jealousies. 

Madras Says "No" 

The representatives from Madras, Punjab, Bombay, Mysore and 
Hyderabad felt that their provinces were yet lagging behind in the 
development of the industry, while the United Provinces and Bihar had 
forged ahead, having the advantage of an earlier start. 1 They declined, 
therefore, to accept the Resolution moved by the Hon'ble Khan Bahadur 
Sayiyid Muhamad Hussain, Minister-in-charge of Education and Deve- 
lopment Departments, Bihar and Orissa, which appeared to suggest that 
there should be no more factories than what existed then. In fact, it 
was pointed out that Madras consumed sugar to the extent of 1,00,000 
tons a year, out of which 55,000 tons was imported by sea in 1932-33. 
Madras, therefore, need of more factories unless it desired to remain 
dependent upon Java or Northern India. It was also pointed out that 
the Tariff Board had emphasised that the strongest aspect of the case 
for protection of the industry was that based upon the national impor- 
tance of promoting the cultivation of sugarcane, and that from that point 
of view there was need of promoting sugar factories in Madras. 

It was further stated that hitherto it was thought that canes pro- 
duced in Coimbatore had been suitable only for the Northern Pro- 
vinces. But recently in one of the Government farms Co. 213 had been 
raised and it had been found very suitable with a yield of about 35 to 40 
tons and the cost of cultivation of one ton came down to only Rs. 2-8-0. 
The Minister for the Punjab also supported the Minister for Madras, 
and observed that while the Punjab had increased its cane cultivation 
from 3 to 5 lacs acres, they had only two factories. The Director of 
Industries from Bombay also expressed himself in opposition to the 
Resolution moved by the Minister from Bihar. He pointed out that 
conditions in Bombay were somewhat different from those prevailing 
in the United Provinces and Bihar. In the Bombay Presidency factories 
were established on the basis that they must grow their own cane ; they 
could not easily buy cane. The acreage in Bombay under cane was 
1,00,000, but they were distributed. They had only one factory work- 
ing up to 1931-32. The Bombay Government were considering how 



iAs pointed out by B. N. Adarkar in "The Indian Tariff Policy", p. 128, 
" Each Province has its own reason why an expansion of the sugar industry within 
its borders is imperatively necessary." 



188 

best facilities could be given to capitalists to enable them to obtain 
suitable lands on lease so that they might be able to start factories. 

Bombay was fortunate in regard to the yield of cane. The Belapur 
factory had its own farm which yielded 37 tons per acre, and the per- 
centage of recovery of sugar was II, the highest for the whole of India. 

It was also pointed out that the Bombay Government had invested 
about 10 crores of rupees on irrigation in Deccan, and it was felt that 
it would be difficult to make those canals financially successful unless 
the white sugar industry was established in that area. The Govern- 
ment of Bombay were therefore keen on promoting the development of 
more factories, and they therefore could not agree to the Resolution 
proposed by the Minister from Bihar. 

The Resolution moved by the Minister from Bihar was, however, 
accepted by a majority of votes (18 to 11), at the Sugar Conference. 
The Resolution reads as under : 

" Whereas the recent development of the sugar industry in 
India has been rapid, although it cannot be said to have been 
excessive, and whereas, owing to the general fall in prices of 
agricultural produce there has been a natural tendency towards 
an increase in the area under sugarcane, the Conference is of 
opinion 

(1) that when the modern factories now under construction are 
working at full capacity, it is likely that these and existing 
factories will produce sufficient white sugar to meet the exist- 
ing demand for white sugar ; 

(2) that in view of the consideration that whilst the potential supply 
of raw material is very large, the demand for sugar in India 
is limited, further extensions, should be carefully watched in 
the interests of the establishment of a sound industry ; and 

(3) that if the production of sugarcane expands beyond the actual 
requirements it would be extremely difficult, and indeed most 
impossible, for any reasonable level of prices for gur to be 
maintained." 

Bengal's Niggardly Development and Apprehensions against 

Restriction 

The Hon'ble Nawab K. G. M. Faroqui, Minister for Bengal, pointed 
out his apprehension that if the Resolution were passed by the Confer- 
ence, the United Provinces, and Bihar Governments might approach the 
Government of India with definite proposals for restricting the starting 
of new factories elsewhere by legislation. He was, however, assured by 
the Chairman of the Conference, Sir Fazl-i-Hussain, Member of the 
Executive Council of the Governor-General-in-charge of the Department 
of Education, Health and Lands, that the passing of the Resolution would 
in no way help any of the provinces to come to the Government of India 
and ask for any particular- legislation. 

A representative of the Indian Sugar Mills Association took up the 
brief on behalf of Bengal. He pointed out his firm conviction that in 
order that India may prosper, it is desirable that each province should, 
as far as possible, prosper along parallel lines. 



189 

It need hardly be said that the expression of such a view struck a 
responsive chord in the hearts of the representatives of other provinces. 
But it is a far cry from aspiration to achievement. And though there 
has, doubtless, been a slow increase in the number of sugar factories in 
provinces like Madras, the assertion of a major trend, such as above 
would undermine the pre-eminence of the U. P. and Bihar in the Indian 
Sugar Industry. In the case of Bengal it may be readily conceded that 
not only is she most anxious to secure the expansion of her sugar in- 
dustry, but she has also the advantage that in her case, the cost of pro- 
ducing cane is less than that of Madras and Bombay. A detailed con- 
sideration may, therefore, be attempted of Bengal's position in relation 
to sugar manufacture. 

Bengal's Position 

Bengal has always grown a certain amount of sugarcane and was 
once a sugar producing country. In point of area under cultivation of 
cane Bengal now stands fourth in India, but it is well known that in the 
early years of the 20th century Bengal took the second place. This 
decline in the cultivation of the cane crop in this province has been due 
largely to the spread of the jute crop in which Bengal enjoys a monopoly 
in the whole world. The question of the development of the sugar 
industry assumed groat importance whenever the decline in the demand 
for jute, and the consequent need to restrict the acreage under jute 
suggested the need for an alternative cash crop. If the deterioration in 
the economic life of the province was to be arrested, some alternative 
crop had to be found and sugarcane would seem to answer this purpose 
best. 

Quality oj Cane Available in "Bengal 

It is well to note here that cane cultivation had not been ignored 
by the Department of Agriculture in Bengal. A variety of cane called 
" Yellow Taanna " was introduced as early as 1931. This is a very hardly 
and drought-resisting cane. And though its juice and gur produced 
from it leave much to be desired, its other good qualities and heavy yield 
led to a great expansion of its cultivation throughout the province. 
Some ten years ago the Department of Agriculture introduced new 
Coimbatore varieties of cane. These were very hardly canes and were 
heavy yielders with very rich juice. Of these Co. 213 has proved the 
best, and is now spreading very rapidly in most parts of the province. 
It is a matter of satisfaction that experiments are being continually 
made for finding out a quality of cane even better than Co. 213. The 
present position is that the area under Coimbatore cane is spreading 
rapidly, but so far in only a few localities there is sufficient crop to 
supply large factories. 

The total area under cane is over 3 lacs acres. Of this about more 
than 2 lacs are under improved variety and it is gratifying to find that 
the recent crop-cutting experiments indicate that the normal yield of 
gur which was 37 maunds per acre has now increased to over 50 maunds 
per acre, due largely to the introduction of the improved varieties of 
cane by the Agricultural Department. Taking even the lower figure of 
37 maunds of gur per acre the total production of cane gur comes to 



190 

above 1,17,00,000 rnaunds. In addition to this date-palm juice yields gur 
estimated at about 27,50,000 maunds. 

It is in consideration of these circumstances that His Excellency Sir 
Stanley Jackson, Governor of Bengal, also observed in the course of a 
speech delivered at the Annual Meeting of the Associated Chambers of 
Commerce in Calcutta on the 14th December, 1931, as follows : 

" Large areas in four out of five divisions in Bengal are 
eminently suited for growing sugarcane. It is reasonable to 
expect that the rapid adoption of the Bengal Agricultural 
Departments high yielding strains of jute must not only limit 
the expansion of the area under jute but, even in normal times, 
may bring about a reduction of that area. The Agricultural 
Department envisages an eventful reduction from this " cause 
by as much as 25 per cent of the area normally under jute, or 
about 5,00,000 acres. If even half of the area thus liberated 
could be put under sugarcane and if that sugarcane could be 
locally converted into gur for transportation to a refinery, we 
should not need to import a single ton of the 3,25,000 tons which 
we are now importing annually into Calcutta alone. We have 
the market, we have suitable land, we have the cane, the hybrid 
known as Co. 213 from the Government of India breeding 
nursery at Coimbatore which has been found admirably suited 
to Bengal, although I am informed that the Agricultural De- 
partment is confident of producing an even better cane in the 
near future." 

The possibilities of the establishment of sugar factories in Bengal 
were also discussed by the Tariff Board in their report to the Govern- 
ment of India, and the Annual Reports of the Agricultural Department 
also show that there are several places where the surplus of canes 
remaining after fully meeting the demands of Gur can feed a number 
of factories. The Government of Bengal felt a natural diffidence about 
encouraging the establishment of large scale sugar mills, while they 
believed that conditions would soon be ripe for such a development. 
In the meantime, the policy of the Government of Bengal was to advocate 
establishment of small ten-ton factories for the manufacture of sugar 
from gur in order to enable the cultivators to dispose of their cane pro- 
fitably. The Government of Bengal further observed that this system 
was suitable for small capitalists and co-operative associations to adopt. 

The public mind was exhilarated at the thought of establishing a new 
industry ; and it would be useful to summarise the main points which 
emerged out of the frequent discussions on the question of the develop- 
ment of the sugar industry in Bengal. 

14 Points in Favour of Bengal 

1. Climatic conditions in Bengal quite favourable for the growth 
of sugarcane. 

2. The grey-silt areas, too, usually consist of fairly rich soil which 
makes it possible to produce a heavier yielding crop than any 
other province. 



191 

3. Irrigation, too, usually an expensive proposition, is generally not 
required over the major part of the province, as rainfall, both 
in incidence and amount, is sufficient for the needs of the crop. 

4. It should also be noted that Co. 213 variety of sugarcane is 
capable of standing water-logging : in fact it has been found to 
grow in a foot of water, for one or two months during the 
monsoon without any serious deterioration. 

5. The Bengal Government are of opinion that the sugar factories 
should be more profitable in Bengal than any other province 
as the cost of production of cane is comparatively low (vide 
" Sugar in Bengal/' page , . .) 

6. Increase in area near some places makes it possible to establish 
sugar factories on a large scale. 

7. Ryots will also be benefited by the establishment of sugar 
factories, for while they will undoubtedly still continue to make 
gur, it would almost certainly be not more than the quantity 
required for themselves and their immediate neighbours, and 
their excess cane can thus be sold to factories. They will thus 
free their bullocks at a time when they require them for land 
preparation for Kharif crops and will relieve them from the 
exacting work of cane-crushing. 

8. The establishment of the cane-sugar factories in Bengal will be 
blessing in another way, viz., effective competition, which the 
factories in Bengal will be able to offer, with the imported 
sugar at the port of Calcutta and the neighbouring places, owing 
to the great reduction in the cost of transport, as compared with 
factories situated, for instance, in Bihar, selling sugar to Bengal 
after paying high freight charges. 

9. The advantage in freight, which the mills in Bengal will have 
over the mills in other provinces in supplying the large demand 
of sugar in Bengal, as also in the provinces of Burma and Assam, 
will be a compensating factor, which would counteract the dis- 
advantage which Bengal may have as compared to other pro- 
vinces in regard to higher cost of production (vide Tariff Board's 
Report) due to the inferior quality of cane, shorter duration of 
the working season, etc. 

10. The Bhadralog class will find an excellent avenue for employ- 
ment in large-scale cane factories. 

11. The development of the cane factories will also be instrumental 
in preventing the wastage of cane in refining sugar from gur 
and this will be a national advantage. 

12. The realisation of some price for molasses required for con- 
sumption in Bengal will be another compensating factor in 
favour of mills situated in Bengal. 

13. Another incidental advantage of the establishment of sugar 
factories in Bengal will be a better distribution of the profits 
arising from the protected industry in the various provinces and 
the elimination of any feeling about disproportionate burden of 
protection being felt by consuming provinces for the sake of 
manufacturing provinces. 



192 

14. The efficiency of the Bengali cane-grower is on the whole fairly 
high (vide Indian Sugar Committee's Report) 1 

It should be easy to detect that in the points listed above, the 
benefits to be derived from the establishment of the sugar industry are 
somewhat sedulously mixed up with the advantages which argue for 
and afford encouragement to its establishment. It need hardly be said, 
therefore, that of the two, the former, however much it may figure in 
popular discussion, is of little or no importance in determining the 
localisation of the industry. 

Position of Industry in U. P. and Bihar, as Compared 
with other Provinces 



The one simple fact which arrests attention in this context is that 
the U. P. and Bihar have an overwhelming advantage over other pro- 
vinces in the matter of the cost of production of cane as also the ready 
availability of cane within a short distance from the factories. As 
already shown elsewhere, about 65 per cent of the total cane require- 
ments of the factories in U. P. and Bihar is obtained from within a 
radius of 16 miles usually transported by cart. Cane so delivered is 
commonly known as u gate " cane. The advantages of u gate " cane are 
several, i.e., it requires less handling, arrives in fresh condition and a 
uniform supply can be regulated for feeding the factory. The balance 
of the cane is brought by rail being transported from a distance of as 
long as 125 miles, the average distance being about 40 miles. In certain 
areas the cane is also transported by tramways as, indeed, also by water- 
ways, and in one case by an aerial ropeway (in Bihar) . The fact that 
the cost of production of carie in U. P. and Bihar is lower than in other 
areas seems to offer an advantage to the factories in these two pro- 
vinces, but the factories are at present subjected to various other 
handicaps as compared with other provinces. The table on the next page 
gives a comparative position to the sugar factories in the U. P. and Bihar 
as far as compared with Indian States and the rest of British India. 

A special committee appointed by the Governments of the U. P. 
and Bihar in 1938 for investigation into the question of working of 
sugar factories in the U. P. reported that the U. P. and Bihar factories 
suffered a handicap to the extent of Rs. 2-8-0 per maund of sugar as 
compared with factories outside. This advantage of cheaper cane culti- 
vation of the U. P. and Bihar has been nullified by the U. P. and Bihar 
Governments, who have been fixing high minimum prices of cane from 
year to year, as stated elsewhere (and other Provinces and States have 
no such minimum prices) by the cess on cane, etc. And these two pro- 
vinces, therefore, have at the present time hardly any advantage left to 
them on this score. 

We have also pointed out that the price of cane represents more 
than half the cost of producing sugar, and in view of this, no province 
can economically engage in the production of sugar, however much it 
likes to do so, unless it can bring down the cost of production of cane. 
Provinces other than the U. P. and Bihar at the present time can only 



1 Vide Indian Sugar Industry Its Past, Present and Future, by M. P. Gandhi, 
1934. Also vide Report of the Industrial Survey Committee of Bengal, 1941. 



193 

TABLE NO. 7 
Comparative Position of Sugar Factories in Different Parts of India 



U. P. and Bihar 


Indian States 


Provinces outside U.P. 
and Bihar in Br. India 


1. High prices of cane fixed by law 
2. High wages fixed by law (0-6-0 minimum) 
3. Cess : originally anna and now 3 anna 
per maund on cane or As. 11 per 
maund on sugar 
4. Co-operative Society charges: about 
As. 2 per maund of sugar 
5. Short season 


Free market 
No law 
No cess 

No charges 


Free market 
No law 
No cess 

No charges 
Very much longer 



5. Short season 


... 


Very much longer 






season in the West 






and the South 


6. Recovery 9./3% ' 


10% to 12% in the 






West and the South 


7. Income-tax, Super-tax and Excess 


No tax 


[ncome-tax, Super- 


Profits tax 




tax and Excess 






Profits tax 


8. No concessions 


Concessions of land 


No concessions 




and/or refund of 






Excise Duty in part 






or in whole in one 






form or another 




9. No such relief 


Import duties on out- 


No such relief 




side sugar and free- 






dom from taxes 




10. Not so 


In most cases big 


... 


1 farms are owned; 






and very little tax 






is paid due to the 






bulk of the income 






being considered as 






derived from farms 




11. No exemption 


No Excise Duty in 


In the South no 




case of Palmyra 


Excise Duty on 




sugar 


Palmyra sugar 


12. Competition with the Khandsari which 


No competition 


No competition 


is free from all the abovementioned 






charges 






13. Freight disadvantage computed at over 


Smaller disadvantage 


tactically no dis- 


Re. I/- in marketing 75| of sugar to 




advantage 


other distant provinces 






14. Storage cost and interest charges as 


No costs. Sold im- 


No costs. Sold im- 


sugar can only be sold by quotas, 


mediately 


mediately 


having to be carried forward for 






more than 10 months 






15. Restriction of production by quotas 


No disadvantage 


No disadvantage 


leading to higher manufacturing 






charges 






16. Molasses return from low 


Higher 


ligher 


17. Municipal tolls on transport of cane- 


No disadvantage 


No disadvantage 


cane carts 






IS. Implicit obedience to Rules, Regulations 


Complete freedom 


Complete freedom 


and Returns of various sorts, made 


( 


under Control Act, on paid of heavy 






penalties 






19. No. 


No. ] 


ligh irrigation 






charges in Bombay 



Vide Gandhi & Co.'s Indian Sugar Industry Annual, 1940 and 1941. 



194 

produce cane at higher cost, (this is partly compensated by the better 
quality of cane with higher sucrose) but it should not be forgotten that 
these distant provinces will have an advantage over U. P. and Bihar 
in that these provinces have to incur a charge in transporting sugar 
to distant markets in Bombay, Madras, and to a less extent Bengal. It 
is necessary to have a precise idea of the freight advantage that is 
enjoyed by the provinces, which are now to a large extent the markets 
of the sugar industry in the U. P. and Bihar. It works to about 
Rs. 1-2-0 per maund of sugar on an average and this may be regarded 
as the margin between the costs of production in the U. P. and Bihar 
and the costs in the other provinces. The following table on p. 195 
illustrates the position. 

In view of the above position, it is easy to see that nothing can 
deter the other provinces, where the industry is not adequately 
developed at present, from effecting an expansion of their sugar pro- 
duction, although it would be necessarily at the expense of the sugar 
industry in the U. P. and Bihar in the present state of the country's 
sugar consumption, which is smaller than the productive capacity of the 
factories already established. 

An analysis of the cost of cultivation will also show that the differ- 
ences between the Northern and the Southern provinces are accounted 
for in a large cost by the irrigation charges. In so far as these irriga- 
tion charges 1 are bound up with the larger problem of help to agricul- 
ture, one cannot be quite sure that the first step of agrarian reform in 
the regime of a popular ministry will not include substantial reduction 
therein, and if it should coincide with the evolution of a better type of 
cane suited to the tropical areas, there might well be very far-reaching 
changes in the territorial distribution of sugar production in India, just 
as there have been over the wider sphere of the world's sugar industry. 
Such speculation, however, is fruitless to indulge in at the present time. 

Principles of Localization and Position of Sugar Industry 
in Relation thereto 

At this stage, let us examine generally how far the " concentration " 
of the sugar industry in the U. P. and Bihar is scientific, well-planned 
and how far it satisfies the theory that industries generally, and pro- 
tected industries particularly, should be suitably located with refer- 
ence primarily to geographical and economic factors.* An examination 
of the location of the industry in the various provinces at present, as 
also the sites on which factories have been established will reveal at 
once that the industry has not been ideally spread over the various 
provinces looking to the needs of " transport relations," and that there 



1 The Director of Industries, Bombay, speaking at the All-India Sugar Con- 
ference in Simla in 1933, stated, " The Government of Bombay' have invested 
between 9 and 10 crores of rupees for irrigation in the Deccan and every Com- 
mittee and Conference that has sat on the subject has held that unless the white 
sugar industry is established in the Deccan, it will be very difficult to make these 
canals financially successful. Therefore, the Government of Bombay have been 
very anxious to see that new factories are established." (Also see report of the 
Deccan Canals Financial Inquiry Committee, 1932.) 

2 Fide "Theory of Industrial Location" by Mr. Alfred Weber, "Inter-regional 
and International Trade" by Mr. B. Chlim and "The Structure of Competitive 
Industry' 1 by Mr. E. D. G. Robinson. 



195 






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196 

has been verily a drift in this important matter, sites for location of 
factories having been haphazardly selected, and even two factories 
having been located at one site (Fipraich in the Gorakhpur District) 
in the U. P. The " modern " tendency of the world appears to be 
against excessive concentration of the industry in any one particular 
place, and in view of rapid improvements in connection with " transport 
relations " available in respect of raw materials and manufactured 
articles, the phenomenon of a more even spread of the industry is 
becoming common all over the world. That the development of the 
sugar industry has not been uniform 1 will be seen from the fact that 
out of the 150 mills operating in the country, as many as 102 have been 
located in the U. P. and Bihar, Madras having 11, Bombay 10 and 
Bengal, only 9. Elsewhere, we have given a table showing the growth 
of factories over all the provinces from 1931-32 till 1941-42. 

Factors which Determine Locations 

Localisation of the industry depends to a large extent upon the 
" transport relations " with reference to natural resources, like power, 
fuel, and consuming markets. In the case of sugar, however, the 
question of location of the industry is dominated by the f acto W; of easy 
accessibility to raw material inasmuch as cane should be fresn when it 
arrives because its sugar content deteriorates rapidly within a few hours 
of its being cut from the fields. This one single factor has, in our 
opinion, been largely responsible for the concentration of sugar factories 
in the U. P. and Bihar at the commencement of the period of protection, 
due to the ready availability of cane in large quantities, and in con- 
centrated areas in the vicinity of factories, thus enabling the economic 
operation of factories. Proximity to power is not a factorV of any 
importance (as, indeed, the raw material, which costs about 52 per 
cent of the total cost of manufactured sugar, is) in the location of the 
sugar industry, as Bagasse (residue of cane) itself provides the neces- 
sary fuel and factories are practically independent of coal. 

Curious Concentration of Industry in Sub-Tropical Area 

As we have already observed, however, it is somewhat curious 
that the industry has been concentrated in the sub-tropical areas 
(comprising Northern and Central India), although the tropical area 
(comprising Bombay, Hyderabad, Madras, Mysore and other States) 
is more favourably suited for the growth of sugarcane inasmuch as 
the conditions there approximate to conditions in the West Indies in 
Java. But here in India, the case is actually reverse for no less than 
91 per cent of the area under sugarcane is grown in the sub-tropical 



1 In his speech at the Bombay Rotary Club on " Problems and Prospects of 
Sugar" on the 13th October 1942, Mr. M. P. Gandhi pointed out that the sugar 
industry had not developed uniformly all over India. Few industries did. The 
iron and steel industry was confined to Bihar and her borderland with Bengal. 
In Cotton Textiles, Bombay and Ahmedabad had a big share of the total Indian 
market. In Jute, Bengal had the sole monopoly, and in Mica, Bihar dominated. 
He pointed out, however, that the position of sugar ought to be different, for 
every part of India can grow cane and has its own supply of labour, skilled and 
unskilled. According to him, however, this position was due to the fact that the 
U.P. and Bihar grew cane more cheaply than other provinces with the result that 
in the first flash of liberal protection to the sugar industry, the U.P. and Bihar 
jhad more than a lion's share of the development of this industry in the country. 



197 

region and only 9 per cent in the tropical region, in spite of the higher 
yield and superior quality of cane there. The reason is the compa- 
ratively high cost of cultivation in the tropical region. The rich 
alluvial soil of the Gangetic Plain is an initial advantage in favour of 
the main sugar producing belt of the U. P. and Bihar. 

Thus, the only combination of factors which will explain this 
phenomenon of " concentration " of factories in the U. P. and Bihar is 
(1) ready availability of cane in large quantities in the U. P. and Bihar 
when protection was granted to the industry. (2) the fact that as many 
as 26 out of the 32 factories which existed in the pre-protection period 
were located in the U. P. and Bihar (14 being in the U. P, and 12 in 
Bihar), (3) cheaper cost of cultivation in these provinces, (4) avail- 
ability of suitable quality of cane as a result of researches carried on in 
the Research Station in Coimbatore (Southern India) for evolving a 
suitable quality of cane for the sub-tropical region and (5) availability 
of capital and business enterprise in Northern India. 

Further Development of Industry should be Outside the U. P. and Bihar 

A glance at the distribution of factories will at once indicate that 
this phenomenon of excessive concentration of the factories in these two 
provinces, which leads to compulsory transport of 75 per cent of their 
production to other territories which are thus dependent upon the 
former for their supplies of an important article on the diet of millions 
in their areas, should be remedied at the earliest opportunity. As 
observed elsewhere, however, with the per capita consumption of sugar 
in the country remaining at its present low level, more factories are not 
required to be set up, as the existing factories, if they work for the full 
season and up to their full capacity, are capable of producing about 
15,00,000 tons of sugar, which is about 25 per cent more than our 
present annual reauirements. But, when there is an increase in the 
demand as a result of either increased consumption of sugar or possi- 
bility of export of sugar, any new factories that may be necessary 
should be located outside the provinces of the U. P. and Bihar in order 
that the various provinces may be able to supply to a larger extent 
their own requirements of sugar, and thus be free from the danger of 
lack of supplies of sugar from these distant provinces owing to the 
transport difficulties. This phenomenon of scarcity of sugar in various 
areas located at a distance from the main sugar producing belt, in spite 
of there being large quantities of sugar in the godowns of the sugar 
factories in the U. P. and Bihar, due to transport difficulties caused by 
the shortage of wagons and locomotives since the outbreak of World 
War II, was witnessed for the first time in the latter half of 1942, when 
various provinces had to go on ration in spite of the country having 
sufficient stocks of sugar. It is a matter of gratification to note in this 
connection that the Indian Sugar Mills Association, as also the Govern- 
ments of the U. P. and Bihar have reconciled themselves to the above 
view which is only fair, natural and justified on the part of the other 
provinces, viz. that any further development of the industry should be 
in other territories. Indeed, the Indian Sugar Mills Association has 
passed resolutions at its various Annual Meetings since 1937 express- 
ing its opinion that in order to achieve a balanced development of the 
industry and in order to prevent inter-provincial jealousy, future expan- 
sion, when necessary, should be outside the U. P. and Bihar. In fact, 



198 

in order to regulate the industry properly and rectify the present posi- 
tion, proposals were also made to the Government of India for legislating 
that no factories should be allowed to be set up without a license, but 
the Government of India have shown their unwillingness so far to take 
any action on these lines. In the interest of an orderly development 
of the industry, we feel that the Government of India should control 
location of factories except under licences, as is done in the U. P. and 
Bihar. It should be observed here, however, that it was as early as 1937 
that the Government of the U. P. and Bihar passed legislation 1 whereby 
no new factories could be constructed and no extension of the plant of 
an existing factory, which is likely to increase its capacity for crushing 
cane, could be made, unless it had been granted a license by the Govern- 
ment. This step of the Government of the U. P. and Bihar was very 
timely and commendable as it prevented any further concentration of 
factories in these two provinces. 

Future Trends of Development more even spread Desirable 

We may venture the opinion that the future trends of the sugar 
industry and its localisation in India will depend to a large extent on 
the trends of consumption. While the other provinces may now be 
reconciled to the present disproportionate share of the U. P. and Bihar, 
they will certainly insist that every increase in the demand ought to be 
met by their own domestic production with a view to ensure a certain 
amount of self-sufficiency and freedom from dependence on other pro- 
vinces for the supply of such an essential article of food. And this will 
remedv the present uneven distribution and bring about a diffusion of 
the industry. In fact, looking ahead to the possibility of export of 
sugar from India, we may unhesitatingly state that factories near the 
Port towns would be an ideal location. These factories would make a 
great saving in freight charges while exporting sugar out of India, and, 
in addition, they would also be able to offer a more effective competition 
if any attempt was made at anv time to dump sugar in India by foreign 
countries, although this is unlikely in view of India's present produc- 
tion, and high tariff duties which are bound to continue till the 31st 
March, 1946, under the Sugar Industry (Protection) Act, 1932. 2 

Comparative Increase of Production and Consumption of Sugar 

It will be interesting to see at a glance the comparative figures of 
production and consumption of sugar in the various Provinces. This 
interesting study, in addition to pointing out the great disparity 
between figures of production and consumption in various areas, also 
shows how widely varying the per capita consumption of sugar is, in 
the various provinces. 8 



*Vide Clause 9 of the Sugar Factories Control Act, U.P. and Bihar. The 
entire text is given in the "Indian Sugar Industry", 1941, pp. 12-33. 

2 The present protective duty on suear is continued from year to year, under 
the Indian Finance Act, since 1939. The Government have not passed an Act 
for continuing the duty till the 31st of March 1946. 

8 It was a revelation when, in a speech at the Bombay Rotary Club on the 
13th October 1942, Mr. M. P. Gandhi pointed out that Bombay was the sweetest 
province in India, her per capita consumption being about 17 Ibs per annum as 
compared with Bengal, a province popularly believed to be a large consumer of 
sweets and sugar, which consumed only about 6 Ibs. Vide Indian Merchants' 
Chamber, Bombay, Monthly Journal for November 1942. 



199 
Bombay's Advance in Production 

Bombay is making a steady advance towards self-sufficiency 
since 1936, and it must be said that in this matter the factories in 
Bombay have been helped by the high profits which they have been able 
to make during the last few years due to high prices of sugar ruling in 
the country owing to fixation of high minimum prices of cane by the 
Government of the U. P. and Bihar since 1937. A comparison of the 
balance sheets of the factories in Bombay and Madras with those of 
the factories in the U. P. and Bihar for the last few years will bear this 
out. The Bombay factories have their own cane plantations unlike the 
factories in the U. P. and Bihar which have to buy all the cane from 
cane cultivators. The high profits provided by the industry in Bombay 
(and also in Mysore) have resulted in large extensions to the existing 
plants and establishment of new ones. In 1932, Bombay had only two 
factories and in 1941 there were 12, including the factories located in 
Indian States in the Bombay Province. Production of sugar in Bombay 
has gone up from 19,000 tons in 1931-32 to 81,000 tons in 1943-44 : 

TABLE NO. 9 

Production, Consumption and Per Capita Consumption of Sugar in various 
Provinces and States, during the years 1937-38 and 1938-39 (Nov.-Oct.) 



1937-38 



1938-39 



Province 
Production 


Consump- g* 


Production 


Consump- 
tion 


Per capita 
Consump- 


! " j tion 






tion 


: i 

Tons Tons Lbs. 


Tons 


Tons 


Lbs. 


Bengal 


26,000 | 1,90,000 7.9 


14,900 


1,39,000 


5.8 


Bombay 


62,000 2,30,000 16.3 


73400 


2,44,000 


17.0 


Madras 


35,000 ! 1,00,000 3.9 


38 


700 


88,000 


3.4 


Bihar 


2,32,000 


58,000 3.3 


1,66 


600 


50.000 


2.8(a) 


UP. 


6,55,000 


1,50,000 6.4 


4,05 


400 


1,70,000 


7.1 


Punjab 


30,000 


2,06,000 14.9 


19. 


800 


1,64,000 


11.8 


C. P. & Berar 






44,000 5.0 




i 37.000 


4.2 


Assam 






18,000 


4.0 




19,000 


4.1 


Sind and British 
















Baluchistan 




30,000 


12.6 




34,000 


14.1 


Orissa 




8,000 


... 




8,000 





N.-W. F. P. 




22,000 


10.5 




13,000 


6.2 


Delhi 




10,000 


30.3 




16,000 


44.8 


Rajputana 




43.000 


9.9 




37,000 


6.7 


Central India 




i 23,000 


4.5 




24,000 


4.6 


Nizam's Territory 




21,000 


3.0 




19,000 


2.7 


Kashmir 




2,000 


1.2 




3,000 


1.7 


Mysore 




4,000 


1.3 






8,000 


2.6 


All-India 


11,59,000 


7.2 


10,73,000 


6.6 



(a) Includes Orissa also. 



Localisation of Gur Industry 

Incidentally it would be interest also to see the position of the 
localisation of the gur industry. The following table gives the net 
production of gur in different Provinces and States of India during the 
periods from 1st November, 1938, to 31st October, 1940 : 



200 



TABLE NO. 10 

Net Production of Gur in India (November-October) by Provinces and States 



Provinces and States 


1938-39 


1939 -40 




Tons 


Tons 


United Provinces (including States) 
Punjab 






7,28,000 
1,65,000 


9,16,000 
2,19,000 


Bihar 








1,24,000 


30,000 


Bengal 








3,50,000 


3,91,000 


Madras 








1,87,000 


2 67,000 


Bombay (including States) 








1,52,000 


1,81,000 


North -West Frontier Province 








i 50,000 


67,000 


Assam 








31,000 


35,000 


Central Provinces & Berar 








41,000 


38,000 


Orissa 








52,000 


52,000 


Sind 








9,000 


8,000 


Delhi 








400 


800 


Mysore 








20.000 


36000 


Hyderabad 








50,000 


54,000 


Baroda 








5,000 


5,000 


Bhopal 


. 






2,000 


3,000 



The output of gur has increased in most of the provinces. In Bihar 
it fell considerably, due perhaps to the utilisation of a greater proportion 
of the cane crop for the manufacture of white sugar. 

The estimation of consumption of gur in the Provinces presents 
great difficulties. In the first place, figures for imports and exports of 
gur by road for the different provinces, are not available. The error on 
this account is likely to be considerable. Further, the figures for 
imports and exports by rail and river are not known separately for gur, 
but only for gur and molasses combined. The difference between the 
initial and the closing " invisible " stocks are again unknown. Lastly, 
the exports of gur to places outside India are not known separately for 
each Province. It is, therefore possible only to make very rough 
estimates. 

The table No. 11 shows imports and exports of gur into and from 
various Provinces and States, during the same periods. 

A glance at tables No. 10 & 11 will show that the production of gur is 
concentrated in the U. P., the next being Bengal, Madras and the Punjab. 
The U. P. has to export a large bulk of ijs production to other provinces. 
Amongst those importing gur in large quantities are the Punjab, Bengal, 
and Bombay. 

Shortage of Sugar and Black Markets in 1942 

We would also like to point out that this factor of the concentration 
of the production of sugar and gur in the U. P. and Bihar attracted 
considerable attention in the middle of 1942, as, due to transport diffi- 
culties caused by shortage of wagons and restrictions placed on the 
movement of sugar by the Sugar Control Order of 1942, the distribution 
of sugar was badly affected leading to enforced rationing of sugar in 
various distant provinces like Bombay, Madras, Sind, etc. even when 



201 

TABLE NO. 11 

Imports and Exports of Gttr, Hab, Molasses, etc. into and from the various 

Provinces and States 





Period. November to October 


Provinces and States 


1937-38 


1938-39 




__ ., ___ 


r 


i " 




Imports 


Exports 


Imports Exports 




Tons 


Tons 


Tons 


Tons 


United Provinces 








2,181 


3,62,692 


5,000 


2.59,000 


Punjab 








1,48,658 ! 7.363 


1,03,000 


24,000 


Bihar 






f 


35,371 


96,701 


18,000 


89,000 


Bengal 






t 


1,42,519 ! 6.392 


1,23,000 


6.600 


Madras 








9,431 


30,890 


12,600 


38,000 


Bombay 








50,980 


19,237 43.400 


16.000 


Assam 








10.089 


1.446 10.000 


300 


C P. and Berar 








35.781 


186 30.000 


168 


Sind and British Baluc 


\ stan 






19,383 


119 14,000 


94 


Orissa 








2,083 


581 2,334 


2,664 


N.-W. F. P. 








551 


32,980 


527 


20,500 



there was enough sugar in the country. This phenomenon of " poverty 
amidst plenty " and of " black " markets demanding unconscionably 
high prices of sugar due to shortage in a particular area was witnessed 
in 1942 and also in 1943. The chief reason 1 of this distress caused to the 
people who had to form long queues for obtaining a few Ibs. of sugar 
in various cities like Calcutta, Bombay, Madras and other similar 
places in these provinces, who had also to go on ration in respect of 
sugar, if not entirely without it for some time, was the lack of an even 
spread of the industry in the country, due in a large measure to the 
absence of farsighted planning by the State and the industry. 

No Expansion Possible During War Period 

No further expansion of the industry appears to us to be possible 
till the duration of the World War, after which there are bound to be 
considerable changes in the sugar economy of the world, as also of this 
country. The destruction of the well organised system of production 
in Java, as a result of the " scorched earth " policy 2 and the dislocation 
of the sugar industry in countries like France, Russia, Czechoslovakia 
large producers of sugar may result in the necessity of a large develop- 
ment of cane sugar in this country for catering to various markets flung 
all over the world. Increased consumption of sugar which is required 



1 Vide Mr. M. P. Gandhi's speech before the Rotary Club of Ahmedabad on 
3rd December 1943, reproduced in the Indian Sugar Industry Annual, 1943. 

2 An authoritative account of the destruction caused by the " scorched earth " 
policy relating to the sugar industry in Java by Dr. Honig Hano of the famous 
sugar experimenting station at Pasoeroean (Java) stated that Java had to sur- 
render the sugar industry which was completely broken up, the warehouses at 
the ports which contained about 4,00,000 tons of sugar were burnt, harbour instal- 
lations were demolished and lighters used for transport of sugar from the ware- 
houses to coastal towns were burnt, workshops at the sugar factories were knocked 
to pieces, etc. Vide an article in "Indian Sugar", Cawnpore, issue for September 
1942. 



202 

according to the International Standards of Nutrition for the people of 

this country would also point to the necessity of a further expansion 
of the Indian sugar industry. For this and other reasons we feel that 
a further development of the sugar industry in India is in the offing in 
the post-war period, and when this opportunity presents itself we hope 
that Bombay, Madras and Bengal will make up the leeway and will 

develop the industry in their areas to a very large extent. 

\ 

Incidentally this post-war reconstruction 1 will provide an excellent 
opportunity for the reorganisation of this great industry the second 
biggest industry of the country next only to Cotton Textiles,- in the 
various provinces on proper lines, and we fervently hope that full 
advantage would be taken of this opportunity for a suitable and well 
planned territorial distribution 1 ' 5 of the industry along modern trends 
of economic thought. 



1 During the middle of 1944, the Hon. Sir Ardesher Dalai, Member of the 
Government of India in charge of Planning and Development issued a communique 
emphasising the necessity of regional development of various industries in the 
country in order to ensure a more orderly economic development of various 
provinces. 

2 M. P. Gandhi's " Indian Cotton Industry Annual " for 1941, 1942, 1943. 
s Vide " Industrial Organisation in India ", 1935, by Dr. P. S. Lokanathan, 



CHAPTER XIII 
SUGAR CONTROL IN THE U. P. AND BIHAR 



IT is only_ to be expected that with the uniqueness, among Indian 
industries, of its origin and the peculiarities of its position, the sugar 
industry should confront the industrialists and the governments alike 
with a number of knotty problems.. We have so far confined our atten- 
tion to the issues that arise from the grant of a high degree of sub- 
stantive protection to the sugar industry in India. Though, as we 
endeavoured to show in the earlier chapters, the grant of such protection 
is to be attributed to the impact of deeper economic and social forces, 
the fact remains that in rearing a sugar industry on a large scale, the 
costs which the nation lias had to incur are apparently on an even 
larger scale. The primary question to be faced, therefore, is whether 
the experience of the last decade is on the whole calculated to reinforce 
our faith in this method of stimulating industrial development and how 
far the concrete results of a decade's working of the sugar industry may 
be deemed to be an adequate return for the costs of protection. In 
answering these questions, we brought out the fallacies of the anti- 
protectionists, their calculations of cost to the consumer, and urged the 
view that, if the price of Indian sugar wore compared with the price 
of foreign sugar as it would be if no Indian industry had come into 
existence, then the price paid by the consumer could not be held to be 
unreasonable. We urged at the same time that the benefits of pro- 
tection do not depend only on the protected industry any more than 
they are confined to investors in that industry, that if the cost of produc- 
tion of sugar were to be genuinely reduced, then equal attention must 
be given to the development of cane cultivation and of industries which 
can utilise the bv-products of the sugar industry. We have also sketched 
at length the short history of the Sugar Svndicate which is now the 
common selling organisation of the su^ar mills of the U. P. and Bihar. 
We also showed how the special position of the U. P. and Bihar mills 
in the su^ar industry of India led more or less inevitably to the exten- 
sion of the intervention of the Provincial Governments from the fixation 
of cane prices to the complete control of production and of sales. It 
is true that most of the problems arise primarily from the nature of the 
attemnt at State regulation ; but, as we shall see later, they are also 
problems which the industry would have had to tackle in due course ; 
and this chapter will be devoted to an examination of such problems 
which may be said to concern the Indian sugar industry inasmuch as 
they affect by far the largest section of it. 

The origin and history of government intervention in the working 
of the sugar industry have been indicated in the chapter on the 
" Fixation of Cane-prices ". Here, it should suffice to say that the 
natural solicitude of a popular ministry for the interests of the cane- 
grower vis-a-vis an industry with a verv liberal measure of protection 
led the Government of the U.P. and Bihar by rat>id stages to an as- 
sumption of the complete control of the working of the sugar factories 
in their respective territories. The identity of interest has impelled 



2m 

the Adviser to Governments of these two Provinces to continue the 
precedent set up by the Congress Ministries of working with the utmost 
co-operation and on identically similar lines. The chaotic conditions 
which often arose in the sugar market and the inability of the sugar 
mills to maintain a common selling organization on a voluntary basis 
compelled the Governments of the U.P. and Bihar to abandon half- 
hearted measures and aim at the most thorough-going forms of control. 
Once it became clear that the Sugar Syndicate could not survive with- 
out government recognition, all pretensions of adherence to laissez jaire 
were abandoned ; and the Sugar Factories Control Act and the Rules 
made under it vested the most far-reaching powers in the hands of the 
administration. 

We may now proceed to examine the main features of the new 
regime which was thus instituted for the sugar mills of the U.P. and 
Bihar. 

According to the statement of Objects and Reasons, the Indian 
Sugarcane Act, 1934 (XV of 1934), was not sufficiently comprehensive 
for dealing with the problems of the sugar industry, and it was found 
necessary to replace it by a new measure which will provide for a better 
organization of cane supplies to sugar factories. 

The Bill deals only with factories worked by the vacuum pan process 
and its provisions relate to : 

(a) the licensing of sugar factories, 

(b) the regulation of the supply of sugarcane to factories, 

(c) the minimum price for sugarcane, 

(d) the establishment of Sugar Control Board and Advisory Com- 
mittees, and 

(e) a tax on the sale of sugarcane intended for the use of factories. 

Section 9(1) of the Act (U.P.) lavs down that "no person shall 
commence the construction of any building intended to be used as a 
factory or any extension of the plant of an existing factory which is 
likely to increase its capacity for crushing cane unless he has been 
granted a licence by the Provincial Government. An application for 
a licence under this sub-section shall be made to the Provincial Gov- 
ernment in the prescribed form." 

And Section (II) lays down that " the licence shall be subject to 
such conditions as the Provincial may, after consulting the Board, 
impose in respect of all or any of the following matters at the time 
when the licence is granted : 

(a) membership of any organization of the sugar industry the 
main object of which is to regulate the sale of sugar and which 
is recognised by the Provincial Government ; 

(b) the price below or above which, the terms on which, and the 
persons to whom or organisations to which or through whose 
agency, and variety, grade or quantity of sugar produced in the 
factory may be sold ; 

(c) the manner in which sugar produced in the factory shall be 
graded, marked, packed or stored for sale ; 



205 

(d) the quantity of cane that shall be crushed during the crushing 
season, or the quantity oi sugar that shall be manufactured 
during the period of the licence ; 

(e) such other matters as may be prescribed, including conditions 
of labour. 

e 

The comprehensive nature of the control sought to be established is 
evident from the conditions set forth above. As regards the regulation 
of the supply of sugarcane to factories, the Act provides for the purchase 
of cane 

(a) in an area reserved for factory ; 

(b) in an area assigned to a factory ; 

(c) in areas which are neither reserved nor assigned. 

The differences were explained in the Statement of Objects and 
Reasons thus : 

" In a reserved area if a cane-grower or Cane-growers' Co- 
operative Society offers to sell cane to the factory for which the 
area has been reserved, the factory is bound to enter into agree- 
ments with such cane-grower or Cane-growers' Co-operative 
Society to purchase such minimum quantity of cane as may be pre- 
scribed in the rules. In other words, a cane-grower or a Cane- 
Growers' Co-operative Society in a reserved area is given an assu- 
rance that his or its cane will be taken by the factory in accordance 
with the terms and conditions of an agreement, but the factory will 
not be bound to enter into agreements with such cane-grower or 
Cane-growers' Co-operative Society for more than the prescribed 
quantity of sugarcane." 

This prescribed quantity is determined by thg area under cane 
cultivation with a proper system of rotation of crops. Latitude is allowed 
in fixing the boundry reserved. The Act, therefore, makes provision 
for a survey of reserved areas. It further provides that the factory 
shall make direct purchases from cane-growers or Cane-growers 7 Co- 
operative Societies. Purchasing agents are not allowed to function 
within a reserved area. In return for the assurance regarding the 
purchase of cane, the Act prohibits the purchase of cane within the 
reserved area by or on behalf of other factories. As in some years 
there may be overproduction of sugarcane within the reserved area, 
the Provincial Government is given power to direct that the factory 
shall not purchase cane outside its reserved area unless it first agrees 
to purchase all the cane available for sale within its reserved area. This 
provision does not, however, affect agreements entered into by the 
factory with growers outside the reserved area. The object of creating 
a reserved area for a factory is to encourage factories to enter into 
direct relations with growers and to take an interest in the develop- 
ment of cane cultivation within its reserved area. 

There are three important differences between a reserved area 
and an assigned area ; firstly, in a reserved area a factory is bound to 
enter into agreements with all cane-growers or Cane-growers' Co-opera- 
tive Societies, whereas in an assigned area the only obligation is to enter 
into agreements for a specified quantity of cane ; secondly, in an assigned 



206 

area, cane may be purchased through a licensed purchasing agent 
whereas in a reserved area cane can only be purchased direct from 
cane-growers or Cane-growers' Co-operative Societies ; and, thirdly, in 
a reserved area only the factory for which the area is reserved may 
purchase cane whereas in an assigned area any factory or its licensed 
purchasing agent may purchase cane. fo assigned areas and in areas 
which are neither reserved nor assigned cane may be purchased by 

(a) the occupier of a factory or any of his employees specially 
authorised to purchase cane ; 

(b) a licensed purchasing agent or any of his employees specially 
authorised to purchase cane ; or 

(c) a Cane-growers' Co-operative Society. 

In order to encourage the organisation of Cane-growers' Co- 
operative Societies, the Act provides that a factory shall not enter into 
agreements direct with any members of such Society. 

As regards the minimum price for sugarcane the Ac I left a great deal 
to the discretion of the Government and provided the Sugar Control 
Board and the Advisory Committee for the consultation ol the Govern- 
ment, the former iri dealing with the major problems of licensing of 
factories ""and price-fixing, and the latter, the minor and local problems 
of determining reserved and assigned areas. The Act provided lor penal- 
ties of an effectively deterrent kind. It is to the rules, therefore, that 
one has to look for the working of this part of the Act. 

It is laid down in the Rules that, subject to the control of the Pro- 
vincial Government, the Sugar Commission shall be the final authority 
to deal with the Indian Sugar Syndicate in all matters connected with 
the production and sale of sugar and such other matters as may be 
referred to it by the Provincial Government. And the Sugar Commis- 
sioner may, subject to the control of the Provincial Government, by 
order, require the occupier or manager of a factory to submit to the Sugar 
Commissioner or to any other authority specified in such order any in- 
formation or any return relating to the production, supply and crushing 
of cane, the manufacture of sugar, and the quantities and grades of sugar 
manufactured, in stock and issued and the quantities in which and the 
prices at which such sugar is sold. An Inspector may, within the local 
limits of his jurisdiction, issue instructions to ensure " the equitable 
purchase of cane." 

In the Rules framed under the Act, the conditions. for the grant of 
a licence are further detailed. No licence for a new factory is to be 
granted, if it is within 10 miles of another and if the quantity of cane 
available for it after meeting the cane reserved for another factory is less 
than 60 per cent of its estimated cane requirement and if the additional 
production of sugar is likely to affect adversely the interests of the sugar 
industry. 

As regards supplies of cane, the submission by the factory of its 
normal requirement based on its average daily crushing capacity is an 
essential preliminary for action to be taken by the Cane Commissioner. 
This officer may, after a certain stipulated procedure, declare an area to 
be a reserved area for the purpose of supply of cane to a particular 
factory and in doing so, he must take into consideration the position 



207 

obtaining previously, the distance between the factory and such area 
and the facility of transport therein. The factory shall then enter into 
agreements with cane-growers, Cane-growers' Co-operative Societies or 
purchasing agents for the purchase in the assigned area of such quantity 
of cane and in such manner as may be fixed by the Cane Commissioner. 

Provided that the total quantity of cane for which the factory is 
required to enter into agreements with cane-growers, Cane-growers* 
Co-operative Societies or purchasing agents in an assigned area shall be 
such that this quantity together with the estimated quantity of cane 
available in the reserved area of the factory shall not exceed 80 per cent 
of the provisional cane requirement of the factory as determined under 
Rule 21. Rules are also framed to ensure quick attention to cane-carts, 
correct weighment, i.e. with a margin error of 2 per cent, and payment 
without unfair deduction. 

It is unnecessary to go further into the details of this unique piece 
of legislation. What is important is that the Sugar Control Act con- 
fronts the sugar mills of the U. P. and Bihar with a jait accompli in a 
number of matters which were formerly subjects of keen controversy. 
As soon as it was evident that the majority of mills which protection 
would give rise to were established in these two provinces, the attention 
of the industry as well as ol those who were closely following its fortunes 
was concentrated on the various possible methods of ensuring an adequate 
supply of cane on economic terms, the agencies through which the pur- 
chases were to be effected and the modes and nature of payment to the 
cane-growers. There were, of course, in addition to these, questions of 
restriction of output whether of cane or of sugar and the fixation of price 
for cane. At quite an early stage, the industry was found to discuss such 
questions as zoning, licensing, the adoption of a system of licensed con- 
tractors for the purchase of cane, the advantages and disadvantages of 
having intermediaries between the cane-growers and the mills and the 
desirability of co-operative activity among the cultivators. It may be 
readily recognised that the industry naturally viewed these questions 
from its own standpoint while it was ready to appreciate suggestions 
calculated to improve the well-being of the cultivators. It could not see 
the justice, not to speak of the wisdom, of the Government fixing a mini- 
mum price for cane. It was alive to the need for regulating the output 
of sugar and for preventing needless additions to the total productive 
capacity of the industry. But the danger of having to pay a stiff price for 
State help in this direction was never overlooked. Likewise, a system 
of licensed agents for the purchase of cane from the growers was gene- 
rally viewed askance. In fact, in the early thirties, opinion in the Sugar 
Mills Association was decidedly against zoning. But the advantages of 
zoning were at the same time sought to be realised by bringing about 
private arrangements amongst a number of millowners calculated to have 
the same effect as formal zoning. The Indian Sugar Mills Association, 
which was established in June 1932, assisted several factories in coming 
to an amicable settlement on this question. The Association was also 
instrumental in getting the convention accepted that no factory should 
place its weighbridge for purchase of cane at another station where a 
factory is located, and wasteful competition was thus eliminated. Even 
the Railways co-operated in this matter, and they did not allow any 
factory to place a weighbridge on Railway land, on outside stations where 
factories were situated. Natural zones were then established, and there 



208 

was no difficulty, except perhaps at the fag end of the season, owing to 
the paucity of supplies, and even this was not very frequent. It is ^ 
question how far this system of private arrangement would have pro- 
gressed. 

But the position in regard to the licensing of contractors was some- 
what different. The factories no doubt preferred to deal with the 
growers direct ; but as the ignorant cultivators sometimes defaulted and 
could not be educated to a live sense of their responsibilities, it was 
found necessary to employ contractors. Complaints were oiten heard 
that even when the factories paid a fair price lor cane, the growers got 
little of it and were, therefore, hard hit. The United Provinces Govern- 
ment suggested at that time that there ought to be a system of licensing 
contractors which might provide that the licensee should give the actual 
grower from whom he gets the cane, at least 90 per cent ot the price he 
receives from the factory. The licence of a contractor who lailed to 
comply with this condition, it was suggested, would not be renewed. It 
was also suggested that the contractor would be responsible for giving 
out pass books to all growers in which the amount of cane supplied by 
them and the money paid to them would be duly entered. In answer to 
this suggestion, Mr. H. C. Prior, Revenue Secretary of the Government 
of Bihar and Orissa, pointed out at the Simla Conference of 1933 that he 
felt that the nature of proceeding for the cancellation of a licence of a 
contractor when he misbehaves, would be very complicated and stated 
that it seemed to him- that it was likely to be somewhat in the nature of 
Section 100 proceeding with a large number of witnesses appearing on 
either side. There is no guarantee, he observed, about the integrity and 
probity of the contractors and the system of licensing would only 
increase the abuses. The suggestion did not meet with approval ; and 
the sugar mills representatives who met at Gorakhpur at that time 
passed a resolution calling on the factories to buy cane from the 
cultivators. 

It should be mentioned here that both in regard to zoning and in 
regard to licensing, opposition was based in the main on (1) administra- 
tive difficulties and complications, and (2) the undesirability of state 
interference in the affairs of private industry. It may be supposed that, 
when they drafted the Sugar Control Bill, the Governments of the U. P. 
and Bihar neither had qualms about the latter nor apprehensions about 
the former. On all these matters which were subjects of controversy, 
the governments arrived at definite decisions and the Act is based on such 
decisions. Inasmuch as the control effected by this legislation is of a 
comprehensive kind, the argument about administrative difficulties loses 
much of its force. And the system adopted under the Act for ensuring 
the supply of cane to factories can hardly be said to be exclusively a 
system of zoning or of licensing. For the essence of the system, so far as 
purchases are concerned, is that factories enter into agreements with 
growers or Co-operative Societies or, in the alternative, purchasing 
agents for the bigger part of their cane requirements. The dangers which 
were formerly stressed have to a large extent been provided against. The 
entry of new factories coming in and competing for the identical supplies 
of cane is rendered impossible by the insistence on licence and by the 
provision that no licence shall be granted to a new factory within ten 
miles of an old one. And when the price of cane is fixed by the Govern- 
ment, there can be no danger that the seller or the buyer of cane would 



201 

be able to tyrannize over the other. The preservation of zones which are 
neither reserved nor assigned and the grudging recognition given to pur- 
chasing agents may be regarded as buffers against miscalculations or 
unforeseeable upsets. That such dangers are expected may be seen 
from Rule 4 of the Rules made under the Bihar Sugar Factories Act : 

If the cane-growers or Cane-growers' Co-operative Societies in 
the assigned area are not willing to enter into agreements to 
supply, or fail to supply, the requisite quantity of cane, the 
occupier or manager of the factory or the purchasing agent may, 
after giving a fortnight's notice to the Collector having jurisdic- 
tion over the area concerned, purchase the balance of the cane 
required from outside the assigned area unless otherwise directed 
by the Collector. 

An element of unfairness is discernible in the provision which provides 
conditions for the manager of a factory being left to his own resources 
in a difficult emergency. 

The thoroughness of the measure is obviously both the defence and 
the chief offending of the Sugar Control Act. Clearly, the merits of the 
questions which have thus been settled cannot change merely because the 
U. P. and Bihar Governments have chosen to decide them in a particular 
way. But it may be readily recognised that the Act solves, necessarily 
in a rough and ready way, a number of questions which would have 
worried the industry and which the industry would have been unable to 
solve solely by its unaided private effort. Inasmuch as fixed price for 
cane is of longer standing than the other features of the Sugar Control 
Act, the relief from the vexatious problems of a minor character, not to 
speak of the major problem of regulation of output may be regarded as 
something to be thankful for. 

But by far the most significant result of the Sugar Control Act is to 
be seen in the determination of the provincial governments to help the 
agriculturists by education, by promotion of co-operative effort, by intro- 
duction and encouragement of better methods of khandsari and gwr 
manufacture, etc. Before proceeding to describe the efforts in these direc- 
tions, it must be noted that the governments utilised the control which 
the new Act gave them, to introduce the system of deferred payment to 
cultivators. This, as we have seen in the chapter on price-fixing, is an f 
indispensable corrective to the errors inevitable in the system of price- 
fixing by Government. 

Deferred Payment to Cultivators 1941-42 

When fixing the minimum price for sugarcane for 1941-42 season, 
the U. P. and Bihar Governments made it clear that a deferred payment 
should be made to cultivators in the event of the price of sugar moving 
above Rs. 9-6-0 per maund and the average price for the season happened 
to be above Rs. 9-12-0 per maund. The exact method by which the 
deferred payment was to be made was clarified later as below : 

(1) If the average selling price of sugar produced in 1941-42 
exceeds Rs. 9-12-0 per maund but does not exceed Rs. 10-8-0, an addi- 
tional price of one pie per maund of cane shall be payable for every anna 
by which the average selling price exceeds Rs. 9-12-0. 



210 

(2) If the average selling price of sugar exceeds Rs. 10-8-0 per 
maund an additional price of one pie per maund of cane for each increase 
of 0-1-9 above Rs. 10-8-0 shall be payable. 

(3) The average selling price of sugar shall be determined in a 
matter to be prescribed by the Government in terms of the average selling 
price of standard sugar i.e. D-24 Nawabganj. 

(4) In reckoning the additional price payable, amounts returned 
by the Indian Sugar Syndicate to members from the reserve shall be 
reduced to annas and added to the average selling price of the sugar. 

(5) Excess payments for cane made by factories to growers above 
the minimum cane price will be set off against the amount calculated as 
the additional price due to the growers or the Society, 

At the end of the season, a total of 0-7-0 was paid per maund of 
cane, 

Improvement in Khandsari and Gur Manufacture 

We may now turn to the efforts made to improve the position of 
khandsaris and gur manufacturers. It should be emphasised that all 
these efforts are not directly traceable to the Sugar Control Act. As 
often happens, ideas originate in one or another of the technical bodies 
like the Imperial Council of Agricultural Research. Grants are obtained 
from various sources ; and the efforts, too, date from an earlier period 
than the passing of the Sugar Control Act. Nevertheless, in so far as the 
Act gives the Governments the power and the machinery to deal with 
these problems and particularly co-operative sales, they may be said to 
be linked to this piece of legislation. 

In regard to the Khandsaris, it is noteworthy in the first place that 
no minimum price has been fixed by the Governments of the U. P. and 
Bihar for cane purchased by Khandsari factories and the price paid 
depends upon the locality. During 1939-40 some Khandsaris in the U. P. 
purchased cane at 0-6-5 to 0-7-11 per maund, while those in Bihar at 
0-6-9 per maund. This compares very favourably with the minimum 
prices paid by the factories in the U. P. and Bihar varying from 0-8-9 to 
0-10-9 per maund. Besides the Khandsaris have not to pay any cess 
which the factories have to pay at the rate of 0-0-6 and have not to incur 
other expenses by way of commission to Co-operative Societies and rail- 
way freight on out-station cane. The total cost of manufacture of Khand- 
sari sugar may be taken at Re. 1 per maund. The Tariff Board has given 
interesting figures on the cost of production of sugar by Khandsaris and 
open pan concerns. The average price of Khandsari sugar is about six 
to eight annas lower than the prices realised by factory sugar. 

The Khandsari industry is at an advantage in the interior areas, far 
removed from factories where cane is available cheaply and which cannot 
be disposed of in any other way. Amongst other advantages may be 
mentioned the following : 

(a) Negligible transport and other charges on cane. 

(b) Saving of 0-0-6 per maund on cane cess. 

(c) Saving of Rs. 2-8-0 per cwt. in sugar excise duty. 

(d) Less transport charges on sugar which is consumed in areas in 
close vicinity. 

(e) Some preference for Khandsari sugar by orthodox people. 



211 

The Khandsari sugar factories can be helped by the Government by 
improvement of their equipment and introduction of improved types of 
crushers, juice-boiling bels etc., by improvement of the methods of manu- 
facture in order to improve the quality of the finished product ; by better 
facilities for getting the necessary equipment on hire and by better 
marketing facilities. The Imperial Council of Agricultural Research had 
sanctioned a grant of Rs. 1,67,380 for the establishment of a Sugar 
Research Testing Station for the indigenous system of gur and sugar 
manufacture for a period of 5 tears ending in November 1941. A small 
grant was also made to the Government of Bihar for investigation into 
the possibilities of manufacturing Khandsari sugar by single pan method. 

Gur Development Scheme in U. P. 

As regards gur, a gur development scheme has been in operation 
for some time in the United Provinces. Every rupee spent on the scheme 
has added much to the cane-growers' income. The improved types of 
mills alone introduced in the last two years are estimated to add Rs. 3 
lacs a year to the grower's income. The objects of the scheme of deve- 
lopment of gur are to avoid wasteful processes of manufacture and 
increase the quantity as well as quality of sugar by : (a) replacement of 
local Kolhus by improved ones to obtain better extraction ; (b) intro- 
duction of improved tvpas of furnaces to prevent waste of fuel and time 
to avoid inversion and charring ; (c) popularisation of cheap and simple 
methods of juice clarification to improve colour, taste and quality of 
the product, and (d) provision of marketing facilities to capitalise the 
results of improvements effected. 

The scheme was inaugurated in 1937-38 in almost 2,000 villages and 
has made great progress since then. The gur industry is growing in 
importance daily as it has become the only practicable method of dis- 
posing of the cultivator's surplus cane. Kolhus are being installed in 
areas which never saw one before. 

One important development affecting the gur industry is the in- 
auguration of the Gur Market Information Service by the Department 
of Industries, U. P. The object of the Gur Marketing Information 
Bureau is to collect and disseminate information regarding the condi- 
tions prevailing in all the important gur markets where, as in the case 
of the reserved areas, the cane-grower is assured of a fair price, gur- 
making is definitely discouraged, and this definitely is a point on which 
the apprehensions of the sugar industry were readily set at rest by the 
U. P. Government. 

The measures cited above are for the normal times. Special efforts 
are also put forth when the Government is confronted with the problem 
of surplus cane as a result of a large cane crop, and decline in mill con- 
sumption, and the consequent restriction in production. The Govern- 
ments of the U. P. and Bihar decided to levy a cess on cane in order 
to give relief to cultivators. At the same time there was a reduction in 
the minimum price in certain districts in the U. P. and in the whole 
of Bihar in 1939-40. The Government of the U. P. took steps in time 
to convert the surplus of cane into gur and carried on a widespread 
campaign to impress upon the districts where there was a real paucity 
of Kolhus (indigenous cane-crushers). Special efforts were made to 



o jo 

supply these on hire. A sum of Re. 1 lac was sanctioned on account of 
Takavi for supply of improved types of Kolhus and pans on payment 
of hiring charges. The big farmers were also advised to instal power 
crushers and financial help was promised in deserving cases by the Cane 
Commissioner. The staff of the Gur Development Department was also 
augmented so as to enable co-operation between the cultivators and to 
ensure fullest use of all available Kolhus. It would be a wise course 
for the cane-growers in the province of the U. P. to possess gur manu- 
facturing equipment for use in abnormal years. 

Development of Co-operative Cane Societies in Bihar and United 
Provinces by means of the Sugar Control Act 

The Government realised that it was through the encouragement 
of co-operative activity that the utmost good could be done to the culti- 
vators. And here the Governments of Bihar and U. P. have the credit 
of having evolved a comprehensive and well thought out plan of deve- 
loping the spirit of co-operation among the cane-growers. 

Co-operative Activities n? Bihar 

The Government of Bihar sanctioned a scheme for the organization 
and operation of: Cane-growers' Co-operative Societies in December 
1935, from the assistance given by the Government of India from 
the excise duty on sugar for organizing the cane-growers into Co- 
operative Societies and to enable them to obtain a fair price for their 
cane or for other purposes directed to the same end. Two Special 
Officers, with headquarters at Chapra and Samastipur, 13 Organizers 
and 13 Supervisors were appointed under the scheme with instruc- 
tions to form experimental Cane-growers' Co-operative Societies in 
the areas of a few factories, in consultation with the local officers 
and the representatives of sugar factories interested in the well-being 
of the cane-growers. Only 103 Cane-growers' Co-operative Societies 
operated in the crushing season 1936-37. These Societies supplied 
9 lacs maunds cane to the sugar factories. The number of these 
Societies increased to 215 and the amount of cane supplied by them 
to 16.28 lacs maunds in 1937-38. 

Cane-growers' Co-operative Societies under the Bihar Sugar 
Factories Control Act, 1937 

When the Bihar Sugar Factories Control Act, 1937, came into 
force, the Government of Bihar announced their decision to form 
Cane-growers' Co-operative Societies in all the villages in the reserved 
areas of the sugar factories to enable cane-growers to obtain the"~full 
protection vouchsafed to them by the aforesaid Act. As it was 
impossible for a small staff to form Societies in the reserved areas 
of all the sugar factories, the local Government sanctioned an addi- 
tional staff of 3 Special Officers, 22 Organizers and 57 Supervisors to 
take up the organization of Cane-growers* Co-operative Societies in 
the areas of all the factories in the province. Four circles under 4 
Special Officers, 3 in North Bihar and one in South Bihar, operated 
in 1938-39. The total co-operative supply of cane by 425 Cane-growers' 
Co-operative Societies amounted to 13.40 lacs maunds cane in this 
season. Witl\ the appointment of additional officers, it became possible 



213 

to organize 671 Cane-growers' Co-operative Societies in 1939. Thus, 
1096 Cane-growers' Co-operative Societies operated in the crushing 
season 1939-40 and supplied 66,75 lacs mauncls cane to the sugar 
factories. 

Cane-growers Co-operative Societies in Bihar upto 1941-42 

The policy of cautious expansion of Cane-growers' Co-operative 
Societies was followed in the year 1940 as well. Although a large 
number of Cane-growers' Co-operative Societies were formed in this 
year, most of the Societies were placed on probation for periods vai'ying 
from 6 months to a year to enable them to qualify them for registra- 
tion under the Co-operative Societies Act. Only 392 Cane-growers' 
Co-operative Societies were registered under the aforesaid Act. 
Altogether 1,488 Cane-growers 1 Co-operative Societies functioned and 
supplied 88 lacs mauncls cane to the sugar factories, representing 
approximately 13 per cent of the total cane crushed in Bihar in the 
crushing season 1940-41. 

Most of the Societies placed on probation were registered in the 
next year under the Co-operative Societies Act. Over 2,000 Cane- 
growers' Co-operative Societies with 40,000 members functioned in the 
crushing season 1941-42, in Bihar. 

The Cane Department was sought to be unified by placing the 
Cane-growers' Co-operative Societies under the control of a Cane 
Commissioner from the 16th November 1939. The Cane Commissioner 
was appointed the Joint Registrar of Co-operative Societies and vested 
with the powers of a Registrar of Co-operative Societies, for adminis- 
tering these societies. To ensure the maximum co-ordination between 
the different sections of the Cane Department, he was further appointed 
as the Cane Development Officer, Bihar. The main intention in 
bringing the three sections mentioned above under unified control 
was to ensure the maximum co-ordination among them. A detailed 
plan for co-ordinating the work of these sections was laid down at 
a meeting of the gazetted officers of the department held on the 9th 
November 1940. Amongst other things, it was decided that the 
gazetted officers of the department posted in the various circles should 
meet at least twice every year and more frequently, if need be, to 
decide on their common programme and that local committees should 
be formed to carry out this programme into effect. The Assistant 
Directors of Agriculture were directed to conduct development work 
mainly through the societies and the Special Officers were instructed 
to select villages for the formation of the Cane-growers' Co-operative 
Societies with the concurrence of the Assistant Directors of Agricul- 
ture. 

The scheme of co-ordination has been extremely successful so 
far. During the period, demonstrations were carried on cane cultiva- 
tion, green manuring, compost making and the use of improved 
implements, of which by now there are 768 sets in Cane-growers' 
Co-operative Societies. In addition, interesting lectures were delivered 
at which members were advised not to ratoon their cane and where 
they were instructed how to recognise the prevalent diseases of cane 



214 

and how to prevent their spread by the use of good seed. As a 
result of these efforts, the cultivation of cane in line is now universal 
in Cane-growers' Co-operative Societies in North Bihar. Nearly 95 
per cent of cane planted by the old members of these societies for 
supply to the sugar factories in the crushing season 1941-42 is under 
improved varieties of cane. Altogether 4,526 demonstrations were 
conducted in the Cane-growers' Co-operative Societies by the staff 
employed under the scheme for the improvement of sugarcane cultiva- 
tion in the province. 

Along with cane development, the Cane-growers' Co-operative 
Societies interested themselves in the campaign of Mass Literacy initia- 
ted by the Hon'ble Dr. Syed Mahmud, the late Minister of Education 
and Development, Bihar. The number of Mass Literacy Centres 
increased from 250 to 350 during the period under review. There was 
also a corresponding increase in the number of attending adults. More 
than 100 Societies are receiving copies of the " Roshani," the organ 
of the Provincial Mass Literacy Committee, Bihar. About 100 sociotic^ 
have equipped themselves with books issued under the u Mahmud 
Series ". 

Other Improvements 

As the resources of societies are increasing, they are undertaking 
projects of general welfare in the villages. In the South Bihar Circle 
20 surface wells were dug and two tube wells were sunk and two Rahat 
pumps were bought in the Saran Circle ; 1,176 yards of village roads 
were repaired in the Champaran and South Bihar Circles by co-opera- 
tive efforts. In the Samastipur Circle eleven village roads were built 
at a cost of Rs. 4,000, two-thirds of the cost having been contributed 
by the Government of India from the grant for rural uplift in the 
Darbhanga District. 

Common Good Fund 

All the Societies have been advised to establish a Common Good 
Fund by voluntary contribiilDns from their members. The rate of 
contribution varies from one anna per cart to 3 pies per maund of the 
cane supplied by them. The purpose of this fund is to create a capital 
of at least Rs. 1,000 in each Society to enable it to undertake short- 
term crop financing. A sum of Rs. 4,000 was collected in this fund 
during 1939-40. These efforts are being continued so that the fund 
may be built up as quickly as possible. 

Lack of Uniformity in various Areas 

Heartening as is the progress recorded above, it must be said that 
there was no uniformity in the various circles as to how societies should 
be organized, audited and inspected ; the bye-laws of the Primary 
Societies and Co-operative Development and Cane Marketing Unions 
varied from Circle to Circle ; and the forms and registers used varied from 
factory to factory. But the work of the standardization was taken up 
and very considerable progress has been achieved so far. The neces- 
sary minimum number of registers were planned, standard forms were 
drafted, bye-laws for Cane-growers' Co-operative Societies and Co- 



215 

operative Development and Cane Marketing Unions were framed and 
standard rules of financing were issued. Standard forms of audit and 
inspection notes are being framed and the procedure for systematic 
inspection and audit of societies has alrefdy been laid down. The work 
of re-organization is continuing. 

Training of Members 

Along with the re-organization of the department, attention was 
paid to the training of the members of the Cane-growers' Co-operative 
Societies. Unless the members are thoroughly trained in the principles 
of co-operation, they will not be able to manage their societies success- 
fully. The administration of these societies is extremely technical and 
calls for a specialised knowledge of accounts and business organization 
in its administration. The Registrar, Co-operative Societies, Bihar, 
deputed the Principal of the Co-operative Training Institute to train 
the members of the Cane-growers' Societies by holding peripatetic 
classes for a year. The training commenced in 1940 and it is hoped that 
it may bring about an all-round improvement in the working of these 
societies in this province in the near future. 

Cane-growers' Societies in the United Provinces 

Having referred to the organization set up by the Government of 
Bihar for development of the Cane-growers' Co-operative Societies in 
Bihar, we may refer in brief to the co-operative organization in the 
United Provinces. The U.P. Co-operative Societies have played an 
important part in assisting the solution of some of the major problems, 
e.g. regulation of cane supplies and development of cane. During the 
first years of the development of the sugar industry after the grant of 
protection in 1932, there was considerable inefficiency and confusion 
chiefly in the matter of cane supplies owing to lack of organization. As 
is observed elsewhere, factories sprang up like mushrooms and were 
located without much thought or plan, sometimes two factories working 
at the sarre station. This led to very conflicting arrangements over cane 
supplies and resulted in confusion. The cane cultivator who brought 
cane in bullock carts had to wait for a long time, sometimes more than 
two days, before his turn came for the weighment of the cane. In the 
meanwhile the cane dried causing loss in weight to the cultivator and 
causing loss in sucrose to the factory. Many of the contractors employed 
by the factories also robbed the growers of the legitimate price of cane 
also. There was no minimum price of cane before 1934-35. Factories 
were known to be paying only As. 3 per maund of cane and this 
gave a bad name to the industry as a whole. 1 

We have already referred elsewhere to the legislation undertaken 
by the Government of India for controlling prices of cane as also on 
other matters relating to the weighment and purchase of cane (Sugar- 
cane Act of 1934 and the Rules made by the U.P, Government under 



1 Vide observations of Pandit Jawaharlal Nehru in his Autobiography, 1936, the 
chapter on " Paradoxes " : " In recent years the fall in agricultural prices of 
most foodgrains and other articles suddenly led to millions of the peasantry, 
especially in the U.P. and Bihar, to cultivate sugarcane. A tariff on sugar had 
resulted in sugar factories cropping up like mushrooms, and sugarcane was in great 
demand. But the supply was soon far in excess of the demand, and the factory 
owners cruelly exploited the peasantry, and the price fell." 



216 

this Act). The Co-operative Department of the UJP. Government was 
then a very small one with limited resources of staff and funds. It 
was in 1935 that a grant of one lac of rupees from the Central Sugar 
Excise Fund was made " for the improvement of cane cultivation with 
a view to its co-operative marketing ". The U.P. Government organ- 
ized a scheme for the development of cane in the " gate " areas of such 
factories as were willing to pay an annual contribution of Rs. 3,000 to 
the Government to purchase cane through a co-operative society in the 
area. At the start about 20 factories joined the scheme. The primary 
intention of the scheme was to improve the quality of the cane both in 
respect of its yield per acre and its sucrose content. The factories, how- 
ever, generally did not like the intervention of the Co-operative Societies 
in the matter of their cane supplies. Nor were they pleased in paying 
a commission to these societies at the rate of 3 pies per maund of the 
cane. With the passage of the U. P. and Bihar Sugar Control Act of 
1938 after the advent of the Congress Governments in these Provinces, 
action was taken for reservation of specific areas for each factory, fixation 
of minimum prices, compulsion cm factories for accepting cane from a 
co-operative society within a reserved area, and prohibition of factories 
in dealing directly with members of co-operative societies. The very 
form of agreement to be entered into among the societies by factories 
was prescribed by rules. A cess on the sale of sugarcane was also 
imposed, and it gave the Provincial Government a revenue of 30 to 40 
lakhs of rupees per annum, which is being utilised for the development 
of cane, transportation facilities in several areas and other development 
objects. A separate department with the Cane Commissioner as the 
head was established to administer the scheme. Co-operative Societies 
were established freely in the areas of many factories. The object of such 
cane societies was to develop cane, to arrange for its ordered supply and 
also for financing these members lor these objects. Latterly, they have 
also included, in their objects, all agricultural improvement and rural 
reconstruction work. These societies have done a great deal of 
work in introducing suitable se^d of developed varieties and getting cane 
sown according to improved methods. The societies are thus responsible 
not only for the improvement of cane, 1 but also have done useful work 
in combating diseases and pests in cane. It must be observed, however, 
that factories have not taken kindly to these societies, partly because 
there are various defects in the societies, which have been organised 
with " terrific speed " and partly because combination of growers is 
not very convenient to factory owners. 

The cane societies, we feel, need a better organisation and have to 
work, as far as possible, in collaboration with the factories in order to 
achieve best results. And if they succeed in doing so, they can play an 
effective part in the rural reconstruction of the provinces, and can add 
to the wealth, welfare and well-being of the cane-growers by evolving an 
improved cane of higher yield, free from diseases, ensuring at the same 
time full payment of the cane to the cane-growers without any inter^ 
mediaries. 



1 Vide an article in " Indian Sugar ", Cawnpore, of July 1942, on " Co-operative 
Cane Societies in the United Provinces", by Mr. R. P. Mathur, Assistant Registrar 
of Co-operative Societies. He estimates that the average increase of sugarcane 
as a result of Co-operative Societies has been over 33 per cent. 



CHAPTER XIV 

CENTRAL GOVERNMENT CONTROL OVER SUGAR INDUSTRY 
IN THE WAR-PERIOD 



ON the 14th April 1942, the Government of India passed the Sugar 
Control Order with a view to check the steep rise in prices of sugar 
and to prevent profiteering by particular mills situated in advantageous 
areas* Under this Sugar Control Order which was made effective from 
the 14th April 1942, and which was introduced under the Defence of 
India Rules, the Sugar Controller for India was empowered to fix ex- 
factory price of sugar which, for some qualities, was to be the same 
throughout India l to register dealers and to control distribution of sugar 
from specific factories to specific markets in view of the need for 
securing utmost economy in transport. The order was made applicable 
to all sugar made in factories in India by the vacuum pan process. 

While no exception can be taken to the introduction of the Sugar 
Control Order with the avowed object of checking any undue rise in 
the prices of sugar and of achieving an orderly development of the 
industry, it must be stated that the control over the affairs of the indus- 
try instituted by the Central Government was in complete disregard 
of the advice offered by the industry, and^ what J^s_more^jsuch_control 
was introduced without, jMrevJQUs consultatjon with the industry. As 
a result of the assumption of this control on the industry and the deci- 
sion of the Government not to avail themselves of the offer of the Indian 
Sugar Syndicate which was the marketing orgamsatipn^pf the sugar fac 
tories located in the U. P, and Bihar from 1937 to 1942, to use its agency 
for sale and distribution of sugar, the Syndicate had no other alternative 
but to suspend its principal activities for the duration of the control 
scheme. This was done with effect from June 1942 and the erstwhile 
functions of the Indian Sugar Syndicate, as. also of other smaller sales 
organisations in Madras and Bombay in regulating sales of its members' 
sugar in a manner which would maintain equality in their sales position 
ensure adequate supply of sugar to the market according to its varying 
seasonal requirements by releasing the sales quota from time to time, 
etc., have fallen in disuse as Government evolved their own organisa- 
tion for the purpose. Doubtless there were several noticeable defi- 
ciencies in the working" of the" Sugar Control Order during the first 
few months and black markets were in evidence in various parts of 
the country, but the initial difficulties in administration were slowly 
got over and a fairly satisfactory position was achieved Mwhereby. jjt 
was possible to sell sugar at the scheduled rates varying from 0-3-9 
to 0-4-0 per pound in various parts of the country. All sugar recovered 
from factories under Central Government's permits, is now consigned 
to Provincial Governments, or their nominees, and all intermediate 
agencies of recognised dealers have ceased to exist. Factories despatch 
sugar uniformly according to the plan prepared by the Sugar Controller 
and all factories are treated alike in the matter of disposal of stocks. 



218 

With a view to bring under control confectionery and peppermints 
in the manufacture of which sugar was diverted, the original Sugar 
Control Order was amplified and the Sugar Controller was given powers 
to regulate the price and movements of sugar as well as sugar pro- 
ducts. Accordingly* the Sugar and Sugar Products Control Order, 
1943, was passed in July, 1943. The Act, with all amendments up to 
30th, June, 1945 is given in the Sugar Industry at a Glance, vide page 
xxiv. 

Gur Control Order passed in 1943 

The Sugar Controller fixes ex-factory prices of sugar according to 
its grades and quality, and also the quantity of sugar to be despatched 
from each factory during each month to various destinations. Not 
a bag of sugar can now be removed without his permit. In order to 
assist in the proper maintenance of the control over sugar and in order 
to enable the Government of India to get production of sufficient quan- 
tity of sugar from sugar factories, the Gur Control Order was als o intro- 
duced on the 24th July, 1943. Under the Gur Control Order, the Gur 
Controller (the Sugar Controller is also the Gur Controller) can prohibit 
or restrict export of sugarcane to aay place, direct that cane-growers shall 
deliver sugarcane to a specified cane factory or factories in accordance 
with such conditions in regard to quantity, prices and time of delivery 
as he may specify, prohibit or restrict to such quantities or qualities 
or both, the manufacture of Gur by all or any class of producers, if 
in his opinion, unregulated production of Gur in any area is likely 
to affect adversely the production of sugar in any quantity which, in 
his opinion, is required for the needs of the community. Immediately 
after the Order was passed, movement of Gur was controlled and price 
fixed. The texts of these Acts are given earlier in the portion The 
Sugar Industry at a Glance vide page xxvi. 

Rationing of Sugar in India from 1943 

In view of the fact that the total production of sugar was not enough 
to meet the requirements of the country and the defence forces and 
the neighbouring countries to which sugar had to be exported, ratioiiing. 
of sugar supplies was introduced in all provinces of the country in 
1943, and ffie TSugar Controller allotted quotas for civilian consumption 
for the various areas jin the country/ and specified how much of such 
Quota was to be ma3e available tc the area from local production and 
how much should be transported from the U. P. and Bihar, the two 
largest sugar manufacturing areas in the country producing far larger 
quantities of sugar than were needed for consumption in those areas. 
The Provincial Government, in turn, introduced rationing for indi- 
viduals in big cities, and specified quotas for smaller towns and villages. 

Annual Quotas fixed for Provinces 

These annual quotas for the various Provinces and States were 
fixed by the Sugar Controller generally on the basis of consumption 
averages during 1934-35 to 1938-39. The sugar allotted for civilian 
consumption in 1942-43 was about 25% less than the present consumption 
requirements of the country which have appreciably increased as com- 



219 

pared with the average of the pre-war years. This has been due to 
various reasons including increase in the population in many towns 
and cities, which are known to be consuming larger quantities of sugar 
than the villages, the large influx of refugees in the country, the increase 
in the allied forces stationed in the country and the changes in the 
social habits of the people leading to a higher demand of luxury food- 
stuffs. The production of sugar in 1943-44 season was very much 
higher than in the 1942-43 season, and therefore allocations to the Pro- 
vinces were increased. But the production during 1944-45 being expec- 
ted to be much smaller due to the large reduction in the cane crop of 
the country, partly as a result of the divergence of cane areas into 
food crops as a result of the " grow more food " campaign, and partly 
as a result of the fixation of comparatively low prices of sugarcane 
as compared with the yield obtained from other cereals like wheat, 
rice, etc., the quotas for various Provinces were again revised in 1944-45. 
(Vide Table No. 35 in Sugar Industry at a Glance.) 

For the text of the Sugar and Sugar Products Control Order, 1943 
and Gur Control Order, 1943, as amended up-to-date a reference is 
invited to the pages in the portion entitled Sugar Industry at a Glance. 
The ex-factory prices of sugar fixed of various qualities as on October, 
1944 are also given in Table No. 29 on page xiii. 

Continuance of Official Control not Welcomed by Industry 

Industry, as a rule, resents any official control, particularly when 
in the case of an industry like sugar, it extends right from the fixa- 
tion of cane price and the method and manner of its purchase to the 
sale not only of the finished product, i.e., sugar, but even an important 
by-product like molasses.* It was also the industry's contention that the 
manufacturing costs were not computed liberally, when fixing prices 
of sugar. What is more, such rigid attitude has put a severe limitation 
on the capacity of the industry to make large sized profits, even during 
the war-period, as in the case of other industries like cotton textile, 
cement and coal, and has prevented it from building up adequate reserves 
during the war-period for reconstruction and replacement of machinery 
and spare parts which were greatly depreciated and became obsolete. 
The industry has, therefore, had no opportunity from the war for 
ameliorating its position. This being so, it is quite understandable that 
it wishes to be decontrolled at the earliest possible date. It appears 
to us, however, unlikely that the Government will relax control, on sugar 
and Gur, at any rate, before a couple of years from the date (15th 
August, 1945) of cessation of hostilities in the Far East. 

We feel, however, that in the interest of an efficient and orderly 
development of industry in the post-war period, the present form of rigid 
control shou Id be relaxed^ and a suitable scheme should be devised by 
the industry itself to ensure (1) that there is proper dispersal of the 
industry all over the country whereby all new factories to meet the 
expanding needs of sugar are put up at appropriate centres outside 
the U. P. and Bihar, bearing in mind the necessity of Province-wise 
development of industry and the desirability of minimising transport 
of sugar over long distances from producing centres to consuming areas, 

*For details regarding the Molasses Control Order, in U. P. and Bihar vide 
page xxviii in the "Sugar Industry at a Glance". 



220 

and (2) that there is a Central Marketing Organisation for the entire 
industry which should study and arrange for adequate supplies of sugar 
in all markets at all times, and promote the utilisation of sugar for 
human consumption both in towns and villages by propaganda and by 
bringing home to the people the nutritive and energising qualities of 
sugar, and also for other industrial uses, as in the western countries, e.g., 
in confectionery, road making, etc.. (3) that there is a proper correla- 
tion between the output and demand and a suitable carry over of sugar 
to the extent of 2 to 3 lacs tons at the end of every season, to provide 
against bad crop or other unforeseen circumstances, e.g., outbreak of 
hostilities, sea-blockade, etc. 

Licensing of Factories Central Control Recommended 

There has been some controversy in regard to the appropriateness 
of Government intervention in the matter of establishment of factories. 
The Sugar Conference convened at Simla in 1933 comprising of repre- 
sentatives of various Provinces did not view with favour the proposal 
of a factory acquiring a licence before its establishment. This was due 
largely to the apprehension that the interests of nationals would suffer 
as also perhaps of various Provinces. But as a result of the haphazard 
development of the industry during the last 12 years, the consensus of 
opinion today is in favour of Government taking powers to issue licences 
before factories are established or the capacity of existing ones is in- 
creased. As a matter of fact, the U. P. and Bihar Sugar Control Acts, 
passed in 1937 have conferred such powers on these two Provincial 
Governments and indeed they have exercised it. Only in August 1945, 
the U. P. Government issued a circular permitting under particular 
conditions factories having a cane crushing capacity of less than 800 
tons to increase the capacity to 800 tons and stating that the Govern- 
ment would not permit the establishment of any further factories in 
the United Provinces. We definitely favour the system of licensing 
of sugar factories by the Central Government in the interest of a pro- 
per dispersal of the industry all over the country and suggest that the 
Government of India should take such powers at once for ensuring 
the object in view, viz., the properly regulated development of industry 
along planned lines to ensure the establishment of economic units (we 
recommend units of 800 tons of cane-crushing capacity*) in suitable areas 
well spread over the various Provinces and Indian States. We also 
suggest that no new factories should be allowed to be established here- 
after until a licence for this purpose is issued by the Government of 
India. f 

* The list of sugar mills given in the appendix shows the cane crushing capacity 
of factories established in various Provinces and States. 

fin this connection, we give below a general resolution, adopted by the National 
Planning Committee in 1940, with which we are in agreement. 

" This Committee is of opinion that no new factory should be allowed to be 
established, and no existing factory should be allowed to be extended or to change 
control without previous permission in writing of the Provincial Government. In 
granting such permission the Provincial Government should take into consideration 
the factors as the desirability of the location of the Industry in a well -distributed 
manner over the entire province, prevention of monopolies, discouragement of the 
establishment of uneconomic units, avoidance of over-production and the general 
economic interests of the province and the country, llie various Provincial Gov- 
ernments should secure for themselves requisite powers for the purpose, if neces- 
sary by undertaking suitable legislation/' 



221 

Dividends of Sugar Factories from 1935 to 1944 

In an early paragraph we referred to the action of the Government of 
India in fixation of prices of sugar since 1943 in a manner in which 
even during the war-period the industry had no opportunity of making 
satisfactory profits of which they were deprived during some years in 
the past. At this stage it will be of some interest to see how profitably 
the industry has worked during the last ten years and particularly 
during the war-period. A glance at the table on page 222 will 
show the dividends declared by a few representative sugar companies 
from 1935 to 1944. It will be seen that the industry has had a che- 
quered career, its fortune swinging from year to year, depending on 
various factors such as availability of suitable quantity of cane, quality 
of cane, fixation of minimum cane prices, prices of sugar, imposition 
of cesses, excise duties, etc. On the whole, however, it must be stated 
that the industry has had a satisfactory period and has been able to dis- 
tribute fair dividends on the investment of capital in the industry. It 
will also be clear from the tablfe that factories outside U. P, and Bihar, 
e.g., those in Bombay, Mysore, have been able to make larger profits 
and declare better dividends as their cane cost compared very favourably 
with the cost of the factories in U. P. and Bihar and they also had the 
advantage of a better and longer season. We feel that in appreciation 
of the part played by the industry in supplying the sugar requirements 
of the country during the war-period without any profiteering, the 
Government should accord it a liberal treatment as and when necessary 
during the post-war period, particularly as this industry, unlike other 
major industries, e.g., Cotton Textile, Coal, Iron and Steel, was unable 
to lay by adequate reserves for depreciation, replacement of machineries 
during the war-period, and against lean years of depression, due to bad 
crop, uneconomic competition, etc. 



222 

TABLE No. 1 

Capital and Net Block of Sugar Companies,, and Dividends 

since 1935 



] 
Paid-up ! 
Name of Sugar Capital j Net 
Factory with De- \ Block 
bentures* 


DIVIDENDS % 


i ( 
193519361937 

1 1 


1938 


19391940 


1941 


1942 


1943 


1944 



Balarampur 
"Basti 
Belsund 
Belapur 
"Bharat 
Buland 


Rs. 

28,00,000 
18,00,000 
20,49,950 
37,59,800 
6,25,000 
24,00,000 


Rs. 

23,94,169 : 10 
18,94,611 15 
14,47,872 : Nil 
36,07,486 24 
4,91,832 Nil 
22,69,814 i ... 


10 3J 
25 : 15 

Nil 1 Nil 
16 14 
74 10 
5 6 


i 

24 Nil 

15 i 12 
Nil Nil 
14 * 20 
5 i 5 
111 HI 


Nil Nil 
10 
Nil Nil 
20 14 
Nil 5 

124 174 


Nil 
20 
Nil 
12 
74 
224 


5 

30 
Nil 
18 
12J 
224 


5 
20 
Nil 
18 
10 
25 


*Carew 
Cawnpore 
Champarun 


65,00,000 
25,0n,000 
18,00,000 


56,14,075 
27,66,414 
19,47,896 


12i 12J 
25 10 
10 20 


10 10 
5 5 

5 - 5 


Nil 
24 
74 


Nil Nil Nil 

24 15 i 15 
24 15 15 


124 

25 

30 


10 
15 
20 


Deccan Sugar and 
Abkari 

'East India Distilleries 
& Sugar Factories ... 

Durbhanga 
*Deoria 

Ganesh 
Ganga 
*Gaya 

*Mahaswastika 
Modi 
'Mysore 

*Nawabganj 
New Savan Sugar 
*New India 


23,60,000 

314,780 

26,00,000 
8,99,452 

8,00,000 
8,52,841 
9,84,200 

6,50,000 
12,00,000 
30,79,280 

19,46,030 
11,00,000 
14,12,700 


31,02,528 

3,09,055 

18,19,829 
10,33,906 

8,25,407 
9,36,912 
11,27,452 

5,42,176 
16,22,542 
21,79,280 

19,83,186 
8,00.000 
12,68,372 


35 20 10 10 < 10 
10 10 5 10 15 


5 

124 


10 
10 

124 

5 

124 
20 

8 












10 
74 


25 


10 


Nil 
*8 

10 
HI 

10 
Nil 

15 
Nil 

"6 

15 

Nil 
6J 
Nil 
124 

Nil 


10 

*8 

*9 
15 

10 
10 


5 

"s 

10 
10 

5 

Nil 

'" 

15 

Nil 

"h 

Nil 

Nil 
10 
Nil 
15 

74 


rj 
9 

8 

Nil 

,i 

i 11 
^Nil 
Nil 


5 

24 
18 
8 

Nil 
12 
15 

10 

Nil 
Nil 


Nil 

Nil 
12 
8 

Nil 
12 
20 

5 

Nil 
Nil 


20 


"8 


'"if 


15 
20 

12 
10 
Nil 








20 

"74 
Nil 


20 
20 

124 


20 

15 
15 


Punjab 
Purtabpore 

*Ramnugger 
Raza 
*Ryam 

*Samastipur 
Shree Sitaram 
*Sitalpur 
"South Bihar 

*Upper Ganges 


11,93,642 
15,00,000 

24,00,000 
15,00.000 
10,97,400 

17,19,000 
10.95,462 
13,01,310 
13,25,000 

11,99,900 


' 

26,17,247 
16,02,376 

28,99,038 
20,28,609 
7,10,917 

11.94,577 
10,20,378 
12,05,659 
16,79,861 

10,38,095 


20 
7i 

10 
10 

Nil 

Nil 
8 
115 

5 


15 

Nil 

Nil 
12} 
Nil 

Nil 
10 
2J 
25 

74 


6 

Nil 

Nil 

124 

Nil 
Nil 

"2J 

10 

10 


Nil 
Nil 

Nil 
124 
Nil 

Nil 
5 
Nil 
9 

Nil" 


10 
5 

Nil 

174 

Nil 

Nil 

74 
Nil 
15 

174 


10 
Nil 


10 
12J 


10 

74 


22* 
5 

5 

124 

5 
10 

15 


221 

20 

10 
15 

61 

15 


25 
15 

74 
"'61 



* Only those marked with asterisks include Debentures. 



CHAPTER XV 



METHODS OF UTILISATION OF SUGAR AND GUR IN INDIA 



IT will be useful to recapitulate and to set out, briefly, a few impor- 
tant data relating to supply of sugar and Gur, and their utilisation and 
demand in India at the present time, for assessing the possibilities of 
further development in consumption and production thereof in the years 
to come. 

In India, more than 96 per cent of the total sugar of various kinds 
is produced from sugarcane, and the balance of 4 per cent from the 
juice of different kinds of palms. 

It is noteworthy that Gur constitutes nearly 77 per cent of the 
total sugar of various kinds produced in India. It is mainly prepared 
from sugarcane and the juice of palm trees which respectively contri- 
bute approximately 94 per cent and 5 per cent of the total Gur supplies, 
and the balance consists of Gur prepared from Khandsari molasses. 
The quantity of cane used for purpose of manufacture of Gur varies 
from year to year. Approximately it works out to about 60 per cent 
of the total cane production as can oe seen, from the table below, which 
indicates the percentage of the crop used for manufacture of sugar in 
factories, for manufacture of Gur, for non-industrial purposes, etc. 

TABLE No. 1 





i Tnfal 


Percentages of the crop used for 


Quantity 




1 i. Uldl 










Year. 
(October to 
September). 


i cane 
production 
(Thousand 


Non- 
industrial 


Far- 


Sugar. used 

i -, - for gur. 




tons). 


purpose?. 


JT aC 

tories. 


Khand. 


Gwr - neous. tons.) 


1921-25 (1) 


31,935 


116 


12 


196 


66.6 


1.0 


21,258 


1926-30 (2) 


33,106 


13.1 


2.4 


15.9 


67.6 


1.0 


22,394 


1930-31 


34,247 


14.1 


3.9 


14.6 


66.4 


1.0 


22,748 


1931-32 


42,185 


14.6 


4.2 


12.4 


67.8 


10 


28,678 


1932-33 


I 49,134 


15.1 


6.8 


11.2 


65.9 


1.0 


32,399 


1933-34 


54,432 


15.6 


9.4 


73 


66.7 


1.0 


36,305 


1934-35 


54,206 


16.1 


12.1 


5.5 


65.3 


1.0 35,387 


1935-36 * 


61,316 


165 


16.0 


40 


62.8 


0.7 38,460 


1936-37 * 


67.200 


15.6 


17.4 


4.6 


61.7 


0.7 41,493 


1937-38 * 


55,970 


15.5 


17.7 


4.8 


61.2 


0.8 ; 34,269 


1938-39 * 


1 36,527 


17.9 


19.2 


4.6 


57.3 


1.0 20,924 




i 













(l)and(2) averages for the quinquennia 1920-21 to 1924-25 and 1925-26 to 1929-30 
respectively. 

* The figures include 880,000 tons of cane estimated to be grown in unreported tracts. 
For figures of later years, vide "Sugar Industry at a Glance". 

Due to increased cane production, however, the actual quantities of 
cane which became available for making Gur during the last few years 
has been practically twice as much as the average for the first quin- 



224 

quennium (1920-21 to 1924-25) omitting the case of 1938-39, which 
was a year of unusually low production. 

It is also of interest to note that the proportion of cane crop used 
for manufacture of Gur, in different parts of India, varies due to 
peculiar local conditions. The following table gives the estimated pro- 
duction of different types of Gur during the period 1935-36 to 1938-39. 
In order to indicate the relative importance of the Gur industry in each 
area, the proportions of the local cane crop utilised for this purpose 
in the various tracts have also been included. 

TABLE No. 2 

Production of cane gur in India. (Average 1935-36 to 1938-39 ). 
( In thousand tons.) 



Percentage 


Gur produced. 


Percentage 


( of cane crop 


- -, - 







of total 


used for 
gur. 


Lumps. Powder. 


Semi- 
liquid. 


Total 


gur 
production. 


[ ~ 
United Provinces* .. 55.5 


1,483 


90 


64 


1,637 


48.2 


Punjab* 


69.3 


267 20 


n 


287 


8.5 


Bihar ... 


32.8 


111 


n 


38 


149 


4.4 


Bengal 


..; 87.9 


116 


n 


349 


465 


13.7 


Madras 


77.3 


224 


6 


6 


236 


6.9 


Bombay* 


.- 60.6 


163 


n 


15 | 


178 


5.2 


North-West Frontier 
















Province 


.. 


80.6 


44 


11 


... 


55 


1.6 


Assam 


, 


98.2 


35 


5 


40 


1.2 


Central Provinces 


. 


866 


38 


n 


38 


l.l 


Orissa 


t 


75.8 


21 


22 


43 


1.3 


Sind ... 


f 


17.7 


2 


. . . 


2 


0.1 


Mysore 


. 


62.3 


63 


2 


1 


66 


1.9 


Hyderabad 




861 


74 


1 


n 


75 


2.2 


Others 


, 


72.7 


103 


n 


24 i 


127 


3.7 


India 





! 61.1 


2,744 


130 


524 

i 


3,398 


100.0 



* Including States. 



=Negligible. 



Owing to the concentration of the sugar factories in the United 
Provinces, Bihar and Bombay, the proportion of the cane crop used for 
preparing Gur in these provinces is comparatively less. The low figure 
in the case of Sind is due to the fact that a large part of the crop is used 
for edible purposes. On the other hand, in Bengal and Assam, where 
the amount of cane required for seed and various edible purposes is 
comparatively small, a much higher proportion of the crop is avail- 
able for Gur, while in the Central Provinces and the North-West Fron- 
tier Province there has been practically no demand for cane from 
factories. 

As stated elsewhere, Gur is mainly produced for the home market, 
which in its turn depends entirely on the local supplies. As such, the 
cost of production of Gur is chiefly by the trend of local demand, which 
is discussed in a subsequent paragraph in this chapter. It may, however, 
be observed that in recent years Gur production has fluctuated round 
about 35,00,000 tons per annum. 

The following table shows the estimated total production of different 
types of cane and palm Gur in India as a whole for the four years 
(October to September) from 1935-36 to 1938-39. 



225 

TABLE No. 3 

Total estimated production of gnr. 
( In thousand tons.) 



Year. 



1935-36. 1936-37. \ 1937-38. 1938-39. 



Average. 



Cane 










Lumps 


3,145 3,416 


2,804 


1,611 


2,744 


Powder 


145 171 


142 


63 


130 


Semi-liquid* 


579 579 


490 


449 


524 


Total .. 


3,869 4,166 


3,436 


2,123 


3,398 


Palm 










Lumps 


94 98 


88 


94t 


94 


Semi-liquid 


68 74 


73 


81t 


74 


Liquid 


6 6 


6 


7t 


6 


Total ... 


168 178 


167 


182f 


174 


Molassein 


50 42 


49 


49 


47 


Other kinds 


1 1 


1 


1 


1 


Total ... 


4,088 4,387 


3,653 


2,355 


3,620 



* Excluding approximately 10,000 tons of semi-liquid product estimated to be prepared 
by re-melting lump gur. 
\ Provisional. 
For figures of later years, vide " Sugar Industry at a Glance ''. 

Taking the average prices of Gur manufactured out of cane, palm 
and molassein products at Rs. 3-8-0, Rs. 2-8-0 and Rs. 14-0 per maund, 
respectively, for the period 1935-36 to 1938-39, the total value of Gur 
produced works out at roughly 34 crores of rupees, as compared with 
nearly 21 crores (at Rs. 8-4-0 per maund) for white factory sugar and 
3 crores (at Rs. 7-12-0 per maund) for khand. 

The above observations in regard to prices, which relate to the 
period 1935-36 to 1938-39, made in the Report on the Marketing of 
Sugar in India and Burma, (1943) have to be radically revised in 
view of the considerable increase in prices of both Gur and sugar, since 
1942. 

The value of sugar and Gur produced in 1945 is, of course, much 
higher, about Rs. 118 crores. (Sugar being Rs. 16-4-0 per maund, and 
Gur being Rs. 9-6-0 per maund.) 

Having considered the position of supply of Gur, we will see briefly 
the production and supply of sugar. Approximately 85 per cent of 
the white sugar produced in India is manufactured direct from cane 
in vacuum pan factories. The following table shows the position of 
the manufacture of sugar in vacuum pan factories in India since 1921-22 
up to 1939-40 : 



226 

TABLE No. 4 

Production of sugar and molasses from sugarcane in vacuum pan factories 
in India. (Quantities in thousand tons.) 















Year. 


Total 
Produc- 
tion 
of cane. 


tage of 
total cane 
used by 
vacuum 
pan fac- 


N - Of Pan* 

factories ua ? e , 
worked. crushed 


Sugar 
made. 


; Percent 
I very 

Molasses ' 
obtained. 
, Sugar. 


age reco- 
of cane. 

Molasses. 






tories. 

i 






L . . 




1921-22 ... 


29,761 


! 1.3 


18 395 


28 


na 7.1 


M/2 


1922-23 ... 


34,370 


1 0.9 


19 i 318 


24 


na 7.6 na 


1923-24 ... 


37,533 


i * 1.4 


23 514 


39 


na 7.5 na 


1924-25 ... 


29,195 


i 1.5 


23 434 


34 


21 7.8 ! 4.84 


1925-26 ... 


33,426 


1 2.0 


23 659 


52 


28 ! 8.1 4.25 


1926-27 ... 


36,489 


1 2.0 


"24 


742 


63 


H3 8.5 4.45 


1927-28 . 35,713 


I 2.2 


25 


786 


68 


31 8.6 3.95 


1928-29 . 29,809 


i 2.7 


2x3 791 


69 


32 ; 8.6 4.05 


1929-30 . . 30,053 


3.3 


26 ! 990 


90 


35 9.1 , 3.54 


1930-31 . . 34,247 


; 39 


28 ; 1,309 


118 


48 9.1 : 3.67 


1931-32 . . 42,185 


4.2 ; 


31 1,763 


156 


68 8.9 3.86 


1932-33 . . 49,134 


i 6.8 


56 


3,323 


286 


130 8.7 > 3.92 


1933-34 . 54,432 


9.4 


114 


5,138 


453 


188 8.8 3.68 


1934-35 . 


54,206 


12.1 ! 


128 


6,569 


571 ! 


228 i 8.7 i 3.*n 


1935-36 . . 


61,316 


i 16.0 i 


134 


9,821 


916 


337 : 9.3 


3 .43 


1936-37 . 


67,200 


17.4 j 


138 


11,666 


1,109 


407 95 3 *n 


1937-38 . 


55,970 


17.7 1 


137 


9,930 


931 


350 i 94 


352 


1938-39 . 


36,527 


19.2 i 


139 


7,017 


651 


242 i 9.3 


3.46 


1939-40* t 


na 


i 


145 


13,132 


1,242 


485 9.5 


3.69 



na = Not available. * Provisional. 

fFor figures of later years, vide "Sugar Industry at 



a Glance". 



The total crushing capacity of the cane factories in India, in an 
average season of about 120 days, is computed at roughly 13,500,000 
tons and in terms of sugar it is equal to nearly 13,00,000 tons, and 
under favourable conditions it can easily go up to 15,00,000 tons. Thus 
India's sugar manufacturing capacity is substantially in excess of her 
present production which is estimated at about 12,00,000 tons annually. 
As the vacuum pan sugar factories consume only about 20 per cent 
of the country's cane production and as the prices paid by the factories 
for cane are as a rule more favourable than what the cultivator can 
ordinarily obtain by converting his crop into Gur, the factories should 
have, in theory at least, no difficulty in obtaining enough supplies of 
cane. In practice, however, the position is not so simple and a number 
of factories have to obtain a considerable part of their requirements 
of cane from distant places (up to 150 miles) while many others may have 
to go without adequate supplies, particularly in years of scanty pro- 
duction. The main reason for this is that the majority oithe factories 
grow only a negligible proportion of their requirements in their farms. 
The concentration of many factories in limited areas is also respon- 
sible to a certain extent for the difficulty. This is particularly so in 
the case of factories operating in the U. P. and Bihar which crush 

? e ? y ^ per C ? nt of the total cane hailed by the sugar mills in 
India. The conditions are, however, different in parts of Southern 
India, where factories are not congested in any particular tract anc} 
where majority of the factories, particularly those in the Bombay Pro- 
vince, grow a large portion of their requirements on their own farms 



227 

The position in this respect in the more important sugar factory 
zones of India is shown by the data in the following table which gives, 
inter alia, the estimated proportion of the total cane obtained from (a) 
factories' own farms (own cane), (b) from the cultivators at the factory 
gates (gate cane) and (c) what is to be obtained from distances by 
rail or road commonly known as " rail cane ". The figures in the last 
column are, however, not quite comparable as the average distances 
from which cane can be obtained may vary from about 10 miles, as 
in the case of the Mysore factory, to about 50 miles and more the 
average lead for the U. P. and Bihar factories having been about 40 miles 
in 1937-38. 

TABLE No. 5 

Approximate percentage of cane obtained from different sources to total 

crushed. 





Percentage of quantity 


Number of 


Percentage __ CIU _ shed ' 




vacuum pan 1 of local cane 










factories. crop used. Own 


Gate 


Rail 




j cane. 


cane. 


cane. 




i | 




United Provinces * 




71 


18.7 


3 


65 


-32 


North Western j 




14 


15.7 


2 


60 


38 


Rohilkhand 




15 


15.1 


1 


49 


50 


North Eastern f 




34 


52.9 


5 


70 


25 


Bihar 




33 


53.4 


2 


53 


45 


North t 




! 28 


78.9 


3 


55 


42 


South t 




5 


18.4 


n 


40 


60 


Bengal 




9 


4.4 


7 


48 


45 


Punjab * 




3 


4.1 


n 


57 


43 


Bombay * 




9 


19.3 


85 


15 





Madras 




10 


8.5 


5 


67 


28 



* Including States. n = Negligible, 

f Refer to tracts as shown in Appendix XVII of the Report on the Marketing of Sugar. 

It may be noted that during recent years the quantity of cane 
available at the factory gate is increasing due to the system of allot- 
ment of zones in the U. P. and Bihar, under the Sugar Factories Con- 
trol Acts, whereby the factories are placed under an obligation to 
accept all the quantities offered (up to its sanctioned crushing capacity) . 
This is a very welcome feature because ' gate cane ' which is generally 
fresh cane and which is to be brought from distances by rail or road, 
will not only deteriorate in quality to some extent but is responsible 
for increased transport expenses which on an average amounts to as 
much as 15 to 20 per cent of the value. 

In a previous paragraph we estimated the total crushing capacity 
of the cane factories on an average season of about 120 
days. The length of the cane crushing season has a very im- 
portant bearing both on the cost of sugar manufactured and carry- 
overs the longer the season the lower the cost. Apart from the dura- 
tion of the harvest period which depends upon the varieties of cane 
cultivated and climatic conditions, the actual working season of sugar 
factories has been influenced by several other factors, i.e., (1) position 
of stocks, (2) variety of cane supplies, and (3) prices of cane, Gur 



228 



and sugar. Consequently, the working period in different parts of 
the country varies considerably from year to year as will be seen from 
the figures in the following table for the years 1934-35 to 1939-40. 

TABLE No. 6 
Average number of working days. 



Punjab 
United Provin 
Bihar 
Bengal 
Madras 
Bombay 
Mysore 


ces 


1934-35 

76 
107 
109 
94 
77 
170 
191 


1935-36 

93 
134 
124 
141 
104 
159 
264 


1936-37 

130 
140 
150 
138 
105 
150 
264 


1937-38 

128 
124 
99 
92 
88 
119 
na 


\ 1938-39 


1939-40 

n 
133 
136 
na 
na 
na \ 
na | 


Average 
1935-36 to 
1938-39. 


I 71 
i 77 
79 
61 
i 84 
157 
191 


105 
119 
113 
108 
95 
146 
240 



India 



104 



126 



138 



112 



83 



129 



115 



na = Not available. n = Negligible. 

For figures of later years, vide " Sugar Industry at a Glance ". 

Apart from special factors which may influence crushing in any 
particular year, the length of the working season depends upon the 
duration of the harvesting period. An idea of the average monthly 
cane crushings in different parts of the country is given by the figures 
in the following table, which are based on the quantities of cane crushed, 
in typical factories, during the four years 1935-36 to 1938-39 : 

TABLE No. 7 
Percentages of cane crushed in different months. 



Months. 


Punjab. 


United Provinces 
Western Eastern. 


Bihar. 

2.8 

19.4 
22.2 
21,0 
20.9 
8.2 
5.5 


Bengal. 

1.6 
23.5 
26.2 
21.6 
16.8 
8.7 
1.6 


Bombay. 

6.8 
12.8 
15.9 
15.4 
14.6 
15.1 
12.3 
6.8 

03 


! 

Madras. 

1 

i 
! 

1.4 
3.2 
17.1 
22.4 
24.0 
18.8 
12.8 

0.3 


Mysore. 

9.6 
11.7 
6.2 
5.5 
11.2 
12.0 
10.7 
9.8 

23.3 


October 
November 
December 
January 
February 
March 
April 
May 
June to 
September ... 

Total ... 


13.5 
26.5 
28.1 
18.7 
13.2 


10.7 
22.1 
22.7 
19.5 
15.9 
7.8 
1.3 


2.2 
19.7 
28.2 
20.1 
19.7 
9.5 
0.6 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 



It may be observed that excepting Mysore and Bombay, the crushing 
season mainly extends from November to May and that nearly 83 per 
cent of the total cane handled by the Indian mills is crushed during 
the four months from December to March. 

Recovery 

The recovery of sugar on cane for India as a whole has increased 
from an average of nearly 8.6 per cent for the quinquennium ending 
1929-30 to about 10 per cent during recent years. This is attributable 
to the improvement both in the quality of cane and milling efficiency. 



229 

It must be stated, however, that the sugar recovery in India even yet 
is much lower than in most of the other important sugar producing 
countries as will be seen from the data given in the following table : 

TABLE No. 8 
Percentage recovery of sugar on cane. 





Recovery 




Recovery 




percentage. (1) 




percentage. 


United Provinces 


9.4 


Java 


12.1 (2) 


Bihar 


9.2 


Cuba 


12.8 (3) 


Madras 


9.3 


Formosa 


12.6 (4) 


Bombay 


10.9 


Australia 


14.3 (5) 


India 


9.4 


Mauritius 


11.7 (4) 



(1) Average 1935-36 to 1938-39, (2) Average 1935-36 to 1937-38, (3) 1937-38 
(4) Average 1936-37 to 1937-38 and (5) 1936-37. 

It may be observed that more than 90 per cent of the cane crushed 
in India is of medium type grown under sub-tropical conditions and 
its sugar content, is lower than that of the thick canes generally grown 
in other parts. As such, there is a limit to the increase in recovery 
which can be expected from improved cultivation and manuring, though 
it is hoped that the intensive programme of cane development which 
is being pursued in the factory areas, particularly those of the United 
Provinces, will yield results. Some improvement in recovery could 
perhaps also be secured by improving the milling efficiency. The fol- 
lowing table gives relevant data regarding manufacturing efficiency 
of mills in India as compared with other important cane-sugar 
countries : 

TABLE No. 9 



Tract. 



Period. 



Milling 
extraction. 



Boiling 

house 

extraction. 



Over all 
extraction. 



United Provinces- 






Per cent * 


Per cent * 


Per cent * 


Western 




1936-37/1938-39 


90.36 


87.47 


79.04 


Eastern 




1936-37/1938 39 


91 18 


88.90 


81.06 


Bihar ... 




1937-38/1938-39 


9161 


87.75 


80.39 


Madras ... 




1934-35/1936-37 


92.93 


83.45 


77.56 


Bombay 




1934-35/1936-37 


89.61 


88.89 


79.66 


Java 




1933 


94.68 


91.55 


8623 


Queensland 




1933 


94.48 


92.81 


87.35 


Formosa 




1936-37 


97.89 


93.81 


9169 


Cuba 




1931 


97.55 


92.36 


89.91 



* Percentages refer to weight of cane crushed. 

Quality of Sugar 

The total production of sugar in India at the present time varies 
between 10,00,000 tons and 12,00,000 tons annually, and more than 95% 
of the total sugar produced in vacuum pan cane factories iri India is 
estimated to be put on the market in the form of crystals the balance 
is covered by the powder sugar which includes mill dust and also 



230 

a quantity of sugar prepared by crushing sugar lumps and dull coloured 
crystals. 

The quality of sugar is judged mainly by colour milk-white with 
a shining appearance being considered the best. In the case of crystal 
sugar, the size of the grain is also an important consideration, and as 
a rule, the bolder the grain, the better the quality. 

A general idea of the sugar produced in India direct from cane 
in vacuum pan factories can 6e had from the following table which 
gives the estimated proportions of different qualities of sugar in India : 

TABLE No. 10 
Estimated proportions of different qualities of sugar produced in India. 

( Percentages refer to about 80 per cent of the total production which is 
handled by the Indian Sugar Syndicate, Ltd. ) 

i White, i Dull white! * i Total 



Crystals 
Bold 
Medium 
Small 

Total ... 
Crushed 


(Per cent) 
14.0 
35.8 
8,1 


(Per cent) 

27*.8 
i 5.2 

! 


(Per cent ) 
0.3 
1.4 
0.4 


(Per cent) 
21.3 
65.0 
13.7 


57.9 


40.1 


2.0 


100.0 


21.8 


! 66.3 i 11.9 

i 1 


100.0 



Production of Sugar from Gur 

The production of sugar from Gur in refineries has gone down 
considerably during recent years. The javerage production for the 
period from 1936-39 amounted to 26,500 tons, forming less than 2i 
per cent of the total production of white sugar in India as a whole. 

Production of Khandsari Sugar 

The production of khandsari sugar, however, has been roughly 
maintained at about 1,00,000 to 1,25,000 tons annually, including a small 
quantity of about 4,000 tons prepared from palm juice. The produc- 
tion of khand sugar is thus equivalent to roughly 13 per cent of the 
total production of white sugar in India. Alhough the khand method 
of production is less economic, its production in fairly large quantities 
is due to the favourable location of the khand concerns who are able 
generally to obtain their raw materials at comparatively cheaper rates, 
and the fact that they have to pay a far lower excise duty as compared 
with factory sugar, squares up the handicap arising out of low recovery 
and the high manufacturing cost. Another reason is that there is 
a special demand for khand sugar from a section of the orthodox people 
who have a certain sentimental objection against the use of factory 
sugar. This special demand is estimated at 40,000 tons per year. But 
it is likely that this will disappear gradually. 



231 



The following table gives estimated costs of production of various 
kinds of sugar per maund : 

TABLE No. 11 

Estimated costs of producing 1 maund of various kinds of sugar. 
( Figures in brackets indicate percentage recoveries on cane. ) 





Factory sugar. 


Khand. 











From cane-ro. 


From gur. 




Prom cane. 


From gur. 


r f " 










en n- Khanchi. 






Rs. a. p. 


Rs. a. p. 


Rs. a, p. 


Ks. a. p. 


Rs. a. p. 


Cost of cane 


2 10 2 


428 


489 


5 10 9 


693 




(9.5) (6.0) 


(5.5) 


(4 A) 


(3.8) 


Transportation and assembling 












charges 


13 2 


15 


022 


010 


026 


Manufacturing costs 


1 10 


280 


2 7 3f 


320 


3 12 0* 


Excise duty 


233 


233 


5 10 


... 


... 


Total cost ... 


7 9 lit 


9 12 11 


780 


8 13 9 


10 7 9 


Less value obtained for 


005 


066 


049 


069 


076 


molasses 


(3.5) (3.3) 


(4.5) 


(5.0) 


(4.5) 


Net cost 


796 


965 


733 


870 


10 3 


Relative values on the basis of 












quality taking factory 












sugar as standard 


,.. 


796 


6 15 


796 


820 



* Includes cost of making gur at 12 annas per maund. 
f Includes cost of making rab at 13 annas per maund. 

| Includes an allowance of 5 annas 4 pies for cane cess levied in the United Provinces 
and Bihar. 

We may now iurn to the question of the consumption of different 
kinds of sugars, i.e., Gur and sugar. It may be noted that hitherto 
practically no information was available regarding the use of different 
kinds of sugar and the data given in. this chapter are primarily based 
on the results of investigations carried out by the Central Agricultural 
Marketing Department arid the Report on the Marketing of Sugar in 
India and Burma, published in 1943. 

Tables No. 12 and 13 on pages 232 and 233 give the estimated utili- 
sation of Gur (cane and palm) for various periods in India, and the 
estimated utilisation of sugar, including khand, in India. 

The total quantity of different kinds of sugar consumed in India 
for various periods during the years 1935-36 to 1938-39 average about 
4,818,000 tons, Gur constituting about 36,15,000 tons. Thus Gur includ- 
ing various unrefined sugars, forms nearly 75% of the total sugar 
consumed in India. The corresponding figures for factory sugar and 
khand are 21.5 per cent -and 2.8 per cent respectively, the total consump- 
tion of factory sugar being 24.3 per cent. 



232 



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322 

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233 



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ns of leesa (icing sugar). 
res. J Including Kashmir and 

as sugar or as sweets. 



ately ,00 
ensus figure 

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stant unitary rate of increase based 
ately 2,000 tons of leesa ( icing sug 
for preparing bura, candy, and bat 



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t a c 



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ap 



As adopte 
Calculated 
Including 
Inclu 
T Incl 



=^ 



234 
Quality Characteristics Gur Considered, more Nutritive 

The quality characteristics of different kinds of refined and unre- 
fined sugars are quite distinct although they are all used for sweeten- 
ing purposes. While the white sugars are generally colourless and 
odourless, the different types of Gur have a marked flavour and a 
colour which may range from light to dark brown. Further, the sugar 
content of Gur is comparatively low and generally averages from 70 to 
80 per cent of sucrose and 8 to 14 per cent of invert sugar as against 
nearly 99 per cent of sucrose and a fraction of 1 per cent of inverts 
in factory sugar. The moisture content of white sugar is very low 
and seldom exceeds i per cent as compared with about 5 per cent 
in the solid Gur and 8 to 12 per cent in semi-liquid types. Gur also 
contains, in small proportions, a number of organic and inorganic 
salts, which should have a certain nutritive value, but so far their 
effect on the human system has not been fully studied. This pro- 
duct is, however, considered to have a greater warming effect than 
sugar. It is also a mild laxative and if taken in large quantities, 
particularly during summers, it may act as a purgative. Gur is com- 
monly believed to be more nutritive than white sugar, and that explains 
its popularity and large consumption. 

The different kinds of Gur prepared from the juice of various 
palms are also said to possess special qualities of their own and cane 
Gur or white sugar are not suitable for certain medicinal purposes 
for which palm products are used. 

In the case of white sugars also, the khand prepared by treating 
rab with siwar (a water weed) is considered to be more cooling in 
its effects than factory sugar or bura. 

No scientific data are, however, available to show how far the 
various widespread popular beliefs in regard to Gur, are based on 
facts. The importance of research regarding the nutritive and dietetic 
values of the various types of Gur, which account for more than three- 
fourths of the sugar consumed in India, need to be emphasised. 

It may also be noted that though the total sugar contents of various 
unrefined sugars included under Gur are lower than factory sugars, 
the quantity of Gur required to sweeten a particular preparation is 
generally 20 to 30 per cent less than that of sugar. No definite scientific 
data regarding the relative sweetness of different kinds of refined and 
unrefined sugars are, however, available at present and the statement 
made above is mainly based upon the information collected during the 
survey from the various types of consumers using both Gur and sugar. 
This view seems to be borne out also by the general practice of using 
brown sugar in coffee, all over the country. 

The following Table shows the methods of utilisation of Gur and 
sugar for different purposes : 



235 



TABLE No. 14 

Utilisation of gur and sugar. 
( Figures in brackets indicate percentages to total gur or sugar used. ) 



I ( Thousand tons ). 



Sugar. 
( Thousand tons ). 



For stock-feeding 

For industrial purposes 

For human consumption : 
Drinks- 
Tea and coffee 
Milk 
Sharbat, etc. 

Total for drinks 

Domestic uses 
Confectionery 
Candy and batasha 

Miscellaneous products including murabbas 
Total for human consumption 

Grand Total 



183 (5.1) 
179 (4.9) 



43 (1.2) 

147 (4.1) 

151 (4.2) 

341 (9.5) 

2,504 (69.2) 

408 (11.3) 

(n) 

3,253 (90.0) 



3,615 (100.0) 



227 (19.4) 

104 (8.8) 

171 (14.6) 

502 (42.8); 

264 (22.5) 

338 (28.9) 

50 (4.3) 

17 (1.5) 

1,171 (100.0) 



1,171 (100.0) 



n = Negligible. 

As will be observed, practically the entire quantity of white sugar 
and nearly 90 per cent of Gur are used for human consumption. 

It may be noted that though both Gur and sugar are utilised more 
or less for similar purposes, the proportions of the two products used 
for different objects differ widely. For example, while nearly 20 per 
cent of the available sugar is consumed in tea and coffee, the quantity 
of Gur so used forms only about 1 per cent of its total supply. The 
fact is that the consumption of different kinds of sugar, as already 
stated, is governed mostly by their relative price positions, though for 
certain special preparations a particular type of sugar may be prefer- 
red more than any other. 

Broadly, the Gur, including the various unrefined products which 
generally cost one-third to one-half of the price of factory sugar or 
khand, is mostly consumed by the poorer classes, while the white sugar 
is largely used by the well-to-do, particularly in the urban areas. There 
are, however, certain tracts, e.g., Baluchistan, where due to the exis- 
tence of some prejudice against the use of Gur, even the poorer classes 
prefer to consume sugar to whatever extent they can afford. 

It is interesting to note that the total quantity of different kinds 
of sugar estimated to be used for human consumption in India during the 
period 1935-36 to 1938-39 averaged about 4,456,000 tons including appro- 
ximately 3,253,000 tons of Gur, 1,171,000 tons of white sugar and 
31,000 tons of minja dana. These cover about 90 per cent of the avail- 
able supplies of Gur and practically the entire quantity of sugar #nd 
minja dana utilised in India. 

The following Table shows the utilisation of Gur and sugar for 
various drinks: 



236 



TABLE No. 15 
Utilisation of gur and sugar for various drinks. 



* 


Gur. 


Sugar. 




Percentage 
of gur 
used for 


Percentage consumption on 


Percentage 


Percentage consump- 
tion on 


Area. 


drinks to 




of sugar 








total gur 








used for 










utilised for 


Tea 




Sharbat 


drinks to 


Tea 




Sharbat 




human 


and 


Milk 


and other 


total sugar. 


and Milk. 


land other 




consump- 


coffee. 




drinks. 




coffee. 


drinks. 




tion. 
















United 
















Province* 


9.0 


6 


36 


58 


26.5 


15 


39 


46 


Punjab 


27.3 


4 


54 


42 


54.2 20 


28 


52 


Bihar 


9.5 


5 


70 


25 


31.8 33 


39 


28 


Bengal 


2.9 


16 


64 


20 


34.9 52 22 


26 


Madras 


4.6 


78 


7 


15 


69.2 76 


7 


17 


Bombay 


4.8 


27 


38 


35 


51.9 68 11 


21 


North-West 
















Frontier 














Province 


42.3 


17 


26 


57 


41.0 26 


12 


62 


Mysore ... 


10.0 


79 


5 


16 


70.0 i 85 5 


10 


Hyderabad 


3.7 


19 


31 


50 


33.3 37 ! 13 


50 


Others ... 


5.1 


19 


35 


46 


322 36 | 23 


41 


Total India 


9.5 


13 


43 


44 


42.8 45 21 


34 



A glance at the above Table will show the utilisation of sugar and 
Gur for different purposes, namely, tea and coffee, milk, other drinks, 
the varying habits of the people in different provinces and the varying 
per capita consumption of both Gur and sugar. It has been computed 
that a large proportion of sugar is utilised in tea and coffee, while Gur 
is chiefly consumed, excepting in the case of Madras and Mysore, 
with milk or for preparing sharbats, etc. 

Increase in Consumption of Sugar along with Tea and Coffee 

The increase in the consumption of tea from 27.2 million Ibs. in 
1933-34 to 101 million Ibs. in 1939-40 has also been responsible for 
an increase in the consumption of sugar. Comparatively more tea is 
consumed in Bombay, Bengal, Madras and the Punjab than in most 
of the other tracts, while the largest consumption of coffee occurs in 
parts of Madras, Travancore and Mysore. The quantities of Gur and 
sugar estimated to be utilised for flavouring these two drinks are 
roughly 1,95,000 tons of sugar and 27,000 tons of Gur for tea, and 
32,500 tons of sugar and 16,100 tons of Gur for coffee. The 
quantity of Gur and sugar consumed per Ib. of tea, from which 
generally 150 to 200 pups of liquid drink are made, varies in different 
tracts from 4 to 8 Ibs. Taking into account the conditions in the various 
parts, the total sugar consumption for sweetening tea works out to 
2,22,000 tons, i.e., about 5& Ibs. per Ib. of tea. The quantity of Gur 
or sugar required to flavour the drink from 1 Ib. of coffee varies 
from 2 to 5 Ibs. in different tracts a rough average for Northern and 
Southern India being 3J Ibs. and 2\ Ibs. respectively. 

Taking into account the quantities of coffee consumed in different 
tracts and the demand for Gur and sugar; the total sugar required for 



237 

the purpose works out to about 48,600 tons including 32,500 tons of 
sugar and 6,100 tons of palm Gut and nearly 10,000 tons of the cane 
product. 

The consumption of Gur and sugar utilised for domestic purposes 
also varies considerably from tract to tract, depending chiefly upon 
the financial position of the people and their habits regarding con- 
sumption of various types of sweet preparations. A glance at the 
following Table will indicate the utilisation of Gur and sugar for domes- 
tic purposes : 

TABLE No. 16 
Utilisation of gur and sugar for domestic purposes. 







Gur. 






Sugar. 




Tract. 


Quantity 
used. 
(Thousand 
tons). 


Percentage 
of total 
quantity 
consumed. 


Consump- 
tion per 
head. 
(Inlb.) 


Quantity 
used. 
(Thousand 
tons). 


Percentage 
of total 
quantity 
consumed. 


Consump- 
tion per 
head. 
(In Ib.) 


United Provinces 
Punjab 
Bihar 
Bengal 
Madras 
Bombay 
North-West Fron 
tier Province 
Mysore 
Hyderabad 
Others 


933.2 
199.7 
90.4 
453.4 
245.8 
173.2 

7.5 
39.6 
76.7 
284.8 


67.5 
44.2 
66.5 
74.0 
80.2 
80.2 

41.7 
66.0 
89.3 
82.3 


40.4 
12.6 
5.8 
18.9 
10.8 
12.4 

3.3 
12.7 
10.8 
8.4 


64.0 
47.5 
11.2 
22.0 
17.2 
36.0 

7.8 
0.9 
8.5 
48.6 


33.3 
23.4 
20.0 
14.7 
17.2 
15.9 

39.0 
10.0 
31.5 
26.0 


2.8 
3.0 
0.7 
0.9 
0.8 
2.6 

3.4 
0.3 
1.2 
1.4 


Total India ... 


2,504.3 


69.2 


15.5 


263.7 


22.5 


1.6 

1 



* A sweet preparation made by boiling rice in milk. 

1 Crushed wheat or maize boiled in water and flavoured with ghee and sugar. 

It will be observed that the consumption of Gur for domestic uses 
excluding drinks varies from about 3 Ibs. per head in Mysore to 40 Ibs. in 
the' United Provinces. The per capita utilisation in the case of sugar 
is comparatively low and ranges from nearly i Ib. in Mysore to 3 Ibs. 
in the Punjab and 3.4 Ibs. in the North-West Frontier Province. 

Gur Consumption in Various Provinces 

In the United Provinces, where the per capita consumption of Gur 
is practically thrice as high as in any other tract, a large quantity 
of Gur is eaten as such. In the producing villages it forms the com- 
mon sweet particularly for children and quite often the only break- 
fast for the cultivator, particularly in the winter season. Though Gur is 
eaten as such in most of the other tracts, the practice is nowhere so 
common as in the United Provinces and in certain parts of the Punjab, 
in Gujerat, and in Bombay. It may be added that white sugar crystal 
or crushed is not eaten as such but a considerable quantity of this 
product is consumed in the form of candy and batashas. 

The following Table gives a comparative idea of the utilisation 
of Gur and Sugar for various purposes : 



.238 



TABLE No. 17 
Utilisation of gur and sugar in Ib. per head. 









Gur. 






c 


>ugar. 







CO 

jtt 
c 

*Ui 


Dome- 
stic 


Confec- 
tionery 
and other 


Total. 


CO 

Jtt 
a 
"C 


Dome- 
stic 


Confec- 
tionery 
and other 


Total. 




Q 


uses. 


products. 




Q 


uses. 


products. 




United Provinces 


5.4 


40.4 


8.1 


53.9 


2.2 


2.8 


3.3 


8.3 


Punjab 


7.8 


12.6 


2.9 


23.3 


6.9 


3.0 


2.9 


12.8 


Bihar 


0.8 


5.8 


1.3 


7.9 


1.1 


0.7 


19 


3.7 


Bengal 


0.7 


18,9 


3.2 


22.8 


2.2 


0.9 


3.2 


6.3 


Madras 


0.7 


10.8 


0.6 


12.1 


3.0 


0.8 


06 


4.4 


Bombay 


0.7 


12.4 


1.3 


14.4 


8.4 


2.6 


5.2 


16.3 


North-West Frontier 


















Province 


3.4 


3.3 


08 


7.5 


36 


3.4 


1.8 


8.8 


Mysore 


3.1 


12.7 


2.9 


18.7 


2.0 


0.3 


06 


2.9 


Hyderabad 


05 


10.8 


0.5 


118 


13 


12 


1.3 


3.8 


Others 


0.5 


8.4 


08 


9.7 


18 


14 


2.3 


5.5 


India 


2.1 


15.5 


2.5 


20.1 


3.1 


1.6 


25 


7.2 


Percentage to total gur 


















sugar consumed 


10.5 


77.1 


12.4 


100.0 


43.1 


22.2 


34.7 


100.0 



More than 87 per cent of the total Gur including the quantities 
consumed for drinks, is utilised at home. In the case of sugar, a large 
quantity of which is used for preparation of sweets and drinks for 
the market, the corresponding proportion may be between 35 and 40 
per cent. 

As has already been observed, due to varying financial conditions 
of the people and their habit regarding the use of different kinds of 
sugar, the quantities of Gur and white sugar utilised in different tracts 
for various purposes vary considerably. Taking both Gur and sugar 
together, the highest per capita utilisation of 62.2 Ibs. occurs in 
the United Provinces, as compared with 36 Ibs. in the Punjab, 30 Ibs. 
in Bombay, 29 Ibs. in Bengal, and only 11 Ibs. in Bihar. 

Wide differences are also noticed in the per capita utilisation 
of Gur and Sugar in the rural and urban areas of the different tracts 
as will be observed from the figures in the following Table which shows 
the consumption of these two products in certain provinces and their 
important urban centres : 

TABLE No. 18 
Per capita consumption of gur and sugar in certain rural and urban areas. 









Gt 


ir. 


Sui 


?ar. 








Urban 
areas, 
flb.) 


Total 
for the 
province. 
(Ib.) 


Urban 
areas. 

(Ib.) 


Total 
for the 
province. 
(Ib.) 


United Provinces 






13.2 (1) 


53.9 


58.1 (2) 


8.3 


Punjab 






18.0 (3) 


23.3 


504 (4) 


12.8 


Bengal 






15 4 (5) 


22.8 


85.5 (5) 


6.3 


Madras 






8.9 (6) 


12.1 


51.2 (6) 


4.4 


Bombay 






12 4 (7) 


14.4 


81.4 (7) 


16.3 


Sind 






6.0 (8) 


7.2 


82.1 (8) 


17.8 



(1) 22 markets. 
(5) Calcutta. 



(2) 29 markets. 
(6) Madras. 



(3) 6 markets. 
(7) Bombay. 



(4) Delhi. 
(8) Karachi. 



239 

It will be noted from the figures in the above Table that a much 
larger quantity of Gur is used in the rural areas than in towns. Just 
the opposite and in a greater degree is the case with sugar. Further 
the total consumption of Gur and sugar per head in towns is generally 
2 to 4 times higher than in rural areas. It may be assumed that these 
differences are mainly due to the relatively higher income and the 
consequent higher standard of living of the town-dwellers. 

The following figures show the consumption of sugar per head 
in some of the more important countries of the world. 

TABLE No. 19 





Ib. 








Ib. 


United Kingdom 


106 


France 






52 


United States of America 


97 


Netherland 






64 


Australia 


116 


Germany 






52 


Union of South Africa 


47 


Italy 






17 


Java 


11* 


Japan 


. 




33 


India 


271 


Brazil 







34 



* Excluding unrefined sugars. Consumption of unrefined sugars in other countries. 
( excepting India ) is comparatively negligible. 
I Including 20 Ib. of gur. 

It may be noted that though the per capita utilisation of sugar in 
India as a whole makes a rather poor comparison with the figures for 
most of the other countries, the consumption in large Indian towns, 
particularly ports, is more or less of the same order as in some of 
the most advanced industrial countries like the United Kingdom and 
the United States of America. 

Periodicity of Consumption of Sugar and Gur in India 

From the above statistical data relating to consumption of sugar 
and Gur for various purposes, it is possible to draw certain conclusions 
of value in regard to the possibility of increasing the consumption 
of sugar and Gur in India. Firstly it is noteworthy that Gur is con- 
sumed in larger quantities during the winter season than in the summer 
months. It is liked most for eating such when fresh, and as already 
observed, its production is also chiefly concentrated during the winter 
months from November to March. Roughly 65 to 75 per cent of the 
total quantity of Gur consumed in different parts of Northern India 
including the U. P., Punjab, Bengal, Bihar, Rajputana, etc., is esti- 
mated to be used during the six months from October to March. Unlike 
Gur, however, the demand for sugar is more or less fairly evenly distri- 
buted throughout the year. Larger quantities are, however, consumed 
on the occasion of festivals such as the Diwali and Id, and during 
marriage seasons. 

The annual consumption of the different kifids of sugar in India, 
during the period 1935-36 to 1938-39, averaged about 4,818,000 tons 
including nearly 3,647,000 tons of Gur and 1,171,000 tons of sugar. The 
consumption has increased considerably during recent years, 
particularly in the case of Gur. This is shown by the figures in the 
following Table which gives among other things, five-year running 
averages of the estimated net available supplies of Gur and sugar for 



240 

the period from 1920-21 to 1938-39. For comparison, the corresponding 
price data have also been included. Further, with a view to studying 
fluctuations in consumption in individual years, the position in respect 
of the recent seven years has been shown separately in the Table. 
It may be added that in calculating the net available supplies 
of sugar for the recent years due allowance has been made for stocks 
and carry-overs, particularly in respect of the major ports and mills. 
These factors have, however, not been taken into account in the case 
of Gur as the carry-overs of this product from year to year are compa- 
ratively negligible. Nor was it considered necessary to do so in the 
case of running averages. 



TABLE No. 20 



Trend of annual consumption and prices of gnr and sugar. 





Estimated net available 


Weighted average wholesale 




supplies in thousand tons. 


prices per standard maund. 


Period. 
















I 








Cane pur. f 


Sugar. 


Cane gnr I 


Sugar. } 








Ks. a. 


Rs. a. 


1921-25* 


1,956 


792 


9 4 


16 12 


1922-26* 


. 


2,030 


866 


8 10 


14 15 


1923-27* 


. 


2,159 


911 


8 2 


14 


1924-28* 




2,196 


975 


8 


12 9 


1925-29* 




2,086 


1,053 


8 


11 5 


1926-30* 




2,106 


1,081 


7 11 


10 11 


1927-31* 


. 


2,131 


1,080 


7 


10 1 


1928-32* 




2,204 


1,080 


6 7 


9 13 


3929-33* 




2,365 


1,080 


5- 12 


9 10 


1930-34* 




2,700 


1,045 


5 2 


9 10 


1931-35* 


m 


3,019 


1,026 


4 10 


9 9 


1932-36* 




3,352 


1,060 


4 5 


9 9 


1933-37* 


. 


3,626 


1,126 


4 2 


8 13 


1934-38* 




3,685 


1,139 


4 6 


8 11 


1935-39* 




3,405 


1,147 


4 14 


9 2 


1932-33 


. 


3,143 


1,020 


3 12 


9 8 


1933-34 





3,521 


1,011 


4 14 


9 7 


1934-35 




3,433 


1,051 


4 14 


9 7 


1935-36 




3,869 


1,253 


3 12 


8 8 


1936-37 


. 


4,166 


1.293 


3 6 


7 2 


1937-38 


. . 


3,436 


1,085 


4 15 


8 14 


1938-39 


... 


2,123 


1,052 


7 6 


11 10 



* Quinquennial average based on statistics for crop years ( October September). For 
example, 1921-25 refers to the period from 1920-21 to 1924-25. 

t As the imports and exports in the case of gur are negligible they have not been taken 
into account. 

\ Based on Appendix XLIII of the Report on Marketing of Sugar. 

The consumption of both Gur and sugar show considerable and 
almost a steady increase during the period under review. The increase 
in the consumption of both these products has been much more than 
proportionate, compared with the increase in population. This is chiefly 
attributable to the relatively low prices at which these products have 
been available upto 1940. As will be observed the demand for 
Gur and sugar is fairly elastic and there is a close relation between 
the supplies of these products and their respective price positions. When 



241 

the prices rise the consumption is curtailed and vice versa. In the 
case of Gur whose prices depend more or less entirely on home pro- 
duction it would, however, perhaps be more correct to say that demand 
is fairly steady and when supplies are short of demand the prices rise 
and the consumption is curtailed. The position is reversed in years of 
plentiful supplies. 

The slight depression in sugar consumption noticeable between 
1930-31 and 1934-35 was perhaps due mainly to the world-wide slump 
in commodity prices and the consequent loss in the purchasing power 
of the Indian agricultural producers. The consumption, however, appre- 
ciably increased in 193536 duo 1o both the general recovery in the 
commodity markets and the fall in the prices of Indian sugar as a 
result of increased home production. This tendency continued in a 
marked degree in 1936-37 when the consumption of sugar in India 
reached a record high figure when the prices touched the lowest level. 
In the two following years, 1937-38 and 1938-39, the sugar production 
in India was appreciably reduced, mainly due to the low prices during 
the former year and a poor crop in the latter. The fall in production 
was followed by a sharp rise in the prices and in consequence the 
consumption fell to a low figure of 1,085,000 tons in 1938-39 as com- 
pared with 1,293,000 tons in 1936 37. It may, however, be noted that 
in 1938-39 due 1o heavy imports there were ample supplies in the 
market and the year closed with a substantial carry-over. 

The consumption of Gur during the period under review has in- 
creased by nearly 85 per cent as against an increase of about 17 per 
cent in population and 45 per cent in the case of sugar consumption. 
The fall in the prices of Gur was relatively greater than in the case 
of sugar ; hence the greater increase in consumption. It may be pointed 
out that the prices of both Gur and sugar were relatively very high 
in the early years of 1he period chiefly on account of the general infla- 
tion in the commodity markets which followed the War of 1914-18. 

As in the case of sugar, the peak in Gur consumption was reached 
in 1936-37 and the quantities used in the following two years parti- 
cularly 1938-39 were substantially less mainly due to short production 
and consequent high prices. 

Considering the present low per capita consumption in the country, 
particularly of white sugar, and the wide differences in the quantities 
used per head in the urban and rural areas ; there would appear to 
be ample scope for increasing consumption. The actual increase would, 
however, depend largely upon the extent to which the cost of produc- 
tion or the sale prices of Gur and sugar could be reduced and new 
ways of promoting consumption of sugar in the country could be devised. 
Any improvement in the purchasing power of Indian consumers who 
are largely agriculturists is also sure to promote increased consump- 
tion. This has been discussed in detail in the next Chapter. 

It may be noted here that in recent years there has been a tendency 
among the working classes in urban areas to substitute sugar for 
Gur particularly in tea but as the quantities of Gur used for this pur- 
pose are comparatively small, it is not likely to affect the position 
materially in the near future. 



242 

As far as white sugar is concerned the position regarding Khand 
only seems to require some comment. It is generally known that certain 
orthodox members of the community have sentimental objections to 
the use of factory sugar believing that bone-charcoal is used in its 
manufacture. As, however, the knowledge regarding the methods of 
cane sugar manufacture is becoming more common, the belief is gra- 
dually disappearing and with it the special demand for Khand. In the 
near future the demand for Khand would probably be guided purely 
by economic and dietetic factors. These should, however, tend to favour 
the factory product which can be produced at nearly two-thirds the 
cost of Khand and having regard to the close relation between consump- 
tion and prices, the lower the prices of white factory sugar the greater 
is likely to bo its consumption. 

A close study of the existing conditions in regard to the^ consump- 
tion of Gur and sugar in different parts will also show that apart from 
the question of a general reduction in sugar prices or the increased 
purchasing power of the consumer, the demand for the different kinds 
of sugar can also be substantially increased by improving the quality 
and variety of the products prepared and through effective propaganda 
regarding their dietetic values and by their more economical distri- 
bution. The important points in this connection are as follows : 

(a) At present Gur is generally matfe without properly clarifying 
the juice and in bulky, inconvenient and unattractive shapes and sizes. 
Further, during handling, storage, transport and retailing due regard 
is not paid to sanitary conditions and it is not uncommon to see lumps 
of Gur without any covering material lying exposed to the attention of 
flies, pariah-dogs, etc. The product in such a condition, far from being 
attractive, becomes rather repulsive to the consumer. Gur made in 
attractive forms and properly packed in convenient sizes from well cla- 
rified juice can, therefore, be expected to command an increased sale, 
particularly in the urban areas. The possibilities of putting on the 
market spiced and flavoured Gur, commonly made by the cultivators 
in many tracts for their own consumption, might also be explored. It 
may be noted in this connection that the experience of some of the large 
producers and the Gur Development Staff in the United Provinces has 
been that the Gur made after properly clarifying the juice and distri- 
buted in neat and handy containers (e.g., paper envelopes) more than 
repays for the extra expenditure incurred on it. 

(b) The consumption of Gur can also be encouraged by using it 
in the preparation of a variety of cheap fruit products such as chut nix 
and murabbas for eating with chapatis, rice, etc., and as sweets. Such 
products are not marketed at present while similar preparations from 
white sugar are sold at fancy prices and are generally out of the reach 
of the ordinary Indian consumer. In many areas fruits, e.g., mangoes 
and guavas, are available at very cheap prices during their season. 
In such tracts, the Gur fruit products can probably be made and sold 
at a price not higher than that of Gur alone. This would also provide 
a good outlet for fruits and make them available for consumption 
throughout the year. The value of such products in the dietary of the 
people is obvious. 

(c) The consumption of date palm Gur which is chiefly produced 
in Bengal and is much relished for its flavour and aroma is mostly con- 



243 

fined to the producing months from November to March as the product 
does not keep well in summer. The producers are, therefore, not able 
to get the full benefit of the consumers' preference for the article. Pro- 
vision of cheap storage facilities and the use of suitable preservatives 
(e.g., sodium benzotte) which would not impair the flavour of the 
product might be tried with a view to making it available for con- 
sumption throughout the year. 

(d) Palm Gur improves the flavour of coffee. Its production after 
properly clarifying the juice in handy and attractive form, say cubes, 
would promote its use for sweetening this beverage. 

(e) A good outlet for refined sugars might be found in the increased 
consumption of fruit sugar products like syrups, murabbas, squashes, 
ice-creams, etc. At present these products are generally highly priced 
and are used for medicinal purposes only. In the case of syrups, essences 
are mostly used in their preparation instead of fruit juices. In the ab- 
sence of guaranteed quality the demand suffers. By proper organisation 
most of these products could be placed on the market at probably less 
than half the present cost. With relatively low prices, the consump- 
ion of these products and with them that of sugar would considerably 
increase. 

(/) The use of saccharine, which is commonly used for sweetening 
various drinks particularly aerated waters requires to be discouraged. 
This chemical has no food value and in most of the advanced countries 
its use in various edibles and drinks has to be declared on the label 
of the products concerned. No such provisions are, however, in existence 
in this country * at present and the various products sweetened with 
sacc'harine are generally sold as products of sugar. 

The annual imports of saccharine during the period 1934-35 to 
1938-39 varied from 18,000 to 82,000 Ibs. and averaged about 40,000 
Ibs. Taking the sweetening capacity of this chemical as 500 times 
that of sugar, the sugar required to replace it represent somewhere 
about 10,000 ions. There is, however, reported to be some smuggling 
in this article and the quantities actually used may be much more. 
Besides increasing the consumption of sugar, checking the use of .saccha- 
rine would immensely improve the quality of drinks put on the market. 
It may be added that the use of sugar instead of saccharine would not 
affect the consumers' price to any appreciable extent. 

(g) Well organised propaganda directed towards educating the 
consumers regarding the dietetic values of the different kinds of sugar 
and their products is likely to help in promoting consumption. Proper 
measures should also be taken to dispel superstitions regarding the 
harmful nature of Gur or sugar such as are current in certain tracts, 
e.g., parts of Sind and Baluchistan. 

(7i) In certain areas different kinds of sugar, particularly unrefined 
are available only at abnormally high prices due either to the high 
transportation costs or high trade margins. The result has been that 
the taste for sugar has not fully developed in such tracts, e.g., Dar- 



* Excepting in certain towns of Bombay and Sind where the use of saccharine 
is either prohibited or is required to be specially declared. 



244 

jeeling area in Bengal. Arrangements should, therefore, be made to 
make the sugar products available at economical prices in such tracts 
by making special arrangements for distribution. The process could 
perhaps be expedited by making sugar available at relatively low prices 
in the first instance. 

Above all, it has been found that there is a great world deficiency 
of energising foods like potatoes, sugar and cereals and inasmuch 
as sugar contains 100 per cent carbohydrate and is one of the cheapest, 
most universally used and palatable sweetening agent of proved high 
calorific value, unique for quick conversion into energy, its value 
as a prime and vital food is greatly enhanced. Besides sugar satisfies 
a craving that is well nigh universal among mankind. As consumed, 
it is chemically pure and practically sterile of bacteria. It is an impor- 
tant preserver of other foods. It supplies a large percentage of the 
total caloric intake* of a large number of people, and its produc- 
tion should be encouraged for meeting the shortage of carbohydrates 
and energising foods all over the world, as was revealed at the Hot- 
springs Conference in 1941. 

Having referred to the present production and utilisation of sugar 
and Gur in India, we will now turn our attention in the next chapter 
to the scope of optimum production and consumption of sugar and 
Gur in India in the years to come. 



CHAPTER XVI 

SCOPE OF OPTIMUM PRODUCTION AND CONSUMPTION OF 

SUGAR IN INDIA 



THROUGHOUT this work, up to this stage, the position and problems 
of the sugar industry have been considered from a special standpoint. 
It has been assumed that no indigenous industry is sound or economic, 
unless the cost to the consumer can be demonstrated to be no more 
than what it would have been in conditions of free imports. Due 
emphasis was, however, laid on the fact that, once an industry is estab- 
lished and is able to market its output, the question of the price at 
which imports would have been obtainable in the absence of such an 
indigenous industry and in conditions of free imports is too hypothetical 
to be of practical value. It has been contended, therefore, that in judging 
whether a protected industry has been economic or not, less reliance 
should be placed on the prevalent prices of the imported product 
than on other available methods of judging whether the price paid 
for an essential commodity like sugar is or is not, from the broad 
social point of view, a just price. These methods have been specified ; 
and it has been shown that, judged by these tests, protection to sugar 
must be considered to have justified itself. That these tests do not 
satisfy the free trader or other opponents of protection cannot be 
gainsaid ; and it can only be observed in this regard that it is unfair 
and unscientific to a protected industry to compare the prices of its 
product with the prices of its foreign competitors, without regard 
to the fact that the latter would have been at much higher levels but 
for the establishment of the protected industry. A more valid cri- 
terion of judgment can be had only from a comprehensive view of 
the resources and possibilities, immediate and remote, of the national 
economy as a whole. For, only in such a view does it become possi- 
ble to recognise that the cost of production of a particular industry 
is not a function only of the efficiency of the capital and labour engaged 
in that industry, but that it must necessarily reflect the efficiency of 
production of the raw material and of the extent to which the general 
social and environmental factors are helpful or otherwise to the 
increase of productive efficiency* 

General Toning up of Entire Economic Organisation 
Necessary for Progress 

The case of the sugar industry is almost unique among India's 
protected industries as it serves to bring out the differences, in the 
ultimate conclusions, between the two standpoints. By far the most 
important of the conclusions arrived at in this thesis is that for indus- 
trial development in India, in the sense of a progressive reduction 
of the cost of manufactured products, we have to look, not alone to 
industry, but to a general toning up of the whole of our national 



economic life and the entire economic organisation. This is brought 
about by the fact that during the last fourteen years since the grant 
of protection, the sugar industry in India has achieved more than 
what the Tariff Board expected of it and that for further progress in 
the reduction of the cost of production of sugar, we have to look to 
agriculture, far more than industry. Efficiency of industrial produc- 
tion is not attained by pillorying protected industries any more than 
by pampering them. And if a backward, though civilised, country 
is to attain industrial efficiency, it has to advance all along on the 
line instead of goading industry at some points. The importance of 
the sugar industry lies in bringing out this aspect of our national 
economy more clearly than any other. 

Need for Synoptic Outlook on Economic Problems 

The logic of this thesis has been fully borne out by the logic 
of events. In the first place, the sugar industry is the first instance 
of a protected industry in which the Tariff Board virtually repudiated 
one of the fundamental conditions of the Fiscal Commission and refused 
to consider the date at which protection can be withdrawn. Secondly, 
the experience of the sugar industry has led to a general demand for 
the revision of the policy of discriminating protection and a liberal- 
ising of the terms on which protection is to be granted. Thirdly, thanks 
to the outbreak of the war and the change in men's attitude to economic 
problems, the need for a synoptic outlook on economic problems has 
been recognised and expressed in the most challenging terms in " Tjie 
Bombay Plan * " and in the acceptance of planned economic develop- 
ment as the official policy of the Government in this country. The 
acceptance of planning alike by the Government and by the public 
as the established policy for the country means in effect that the rea- 
soning adopted in this thesis, which formerly might have appeared to 
some as a kind of special pleading for one protected industry, is now 
seen to constitute the only rational approach to all our economic pro- 
blems. No longer will the question be one of either reducing some- 
how the price of Indian sugar to that of Java and Cuba or of scrap- 
ping the Indian industry and leaving a large part of the country's 
natural resources to run to waste. While economic planning will not 
be indifferent to disparity in costs of production between India and 
Java, the standpoint is different from the old orthodox one in that 
it will ensure a reduction in the cost of production by securing the 
utmost improvement in all the factors that determine such cost of 
production. In concrete terms, planning will secure improvement in 
all the three spheres, industry, agriculture and the general instrumental 
factors. 

In view of the fact that planning has been unanimously accepted 
as the policy for the future, the old standpoint becomes altogether 



* A 15 years' plan for the Economic Development of India, put forward by 
eight distinguished industrialists and businessmen in 1944, is known as the Bombay 
Plan. This is a comprehensive plan, which has arrested the attention of the 
thinking public and the Government of India. 



247 

invalid, so far as the future of the sugar industry is concerned. The 
lines of development have no longer to be considered as within the 
rigid and cramping framework of a policy of discriminating protec- 
tion. Optimum production and consumption of sugar need no longer 
be considered as the resultant of the prices in a comparatively free and 
unregulated economic life. Optimum production will be determined 
on the one hand by the resources available and on the other by the 
requirements as fixed by other than the old economic considerations. 
It is not, of course, to be supposed that optimum production and con- 
sumption can be fixed at the sweet will of the planning authorities. 
Economic forces will, no doubt, be operative, but not in the form of free 
prices which they take in an economy of laissez faire and free trade. 
The forces that will operate will be economic in the broader and truer 
sense that thdy spring from the necessity of distributing scarce means 
among alternative ends. Nevertheless, these forces are so substantially 
different from the forces that operate in a free economy, that the ques- 
tion of optimum production and consumption has to be considered 
now from the standpoint of a planned rather than a free economic 
system. 

The starting point of economic planning, unscientific and impractical 
as it may seem, is an estimate of needs rather than means. The plan- 
ning authority proceeds from an estimate of the total production of 
each commodity needed to ensure the standard of life it has in mind, 
though with the full consciousness that this estimate may have to be 
considerably altered in consideration, of the actual resources at its 
disposal. In the case of India, the various plans published by non- 
official agencies have not, strangely enough, endeavoured to fix targets 
for the production of sugar. The Bombay Plan, which enjoys the 
greatest prestige and support, while it mentions a minimum for per 
capita consumption of cotton cloth and for housing accommodation, does 
not make any special reference to sugar. Sugar being an article of food, 
it is naturally included in food requirements which are estimated in 
terms of calories required to sustain the health and efficiency of the 
average individual. How this estimate of calories is to be distributed 
among the various articles of food is a question which may seem to 
offer a bewildering scope for variety of opinion and of choice. But, 
for all practical purposes, this scope may be deemed to be considerably 
narrowed by the fact that the primacy of sugar is ensured as much 
by the universal love of its -taste as by its indispensability for the 
growth of the adolescent and the health of the grown-ups. The exact 
amount of white sugar which each individual needs may vary according 
to the consumption of other foods which can provide carbohydrates 
for the physical system. But to fix the minimum per capita consumption 
of sugar for the purposes of economic planning, it is permissible to 
look to the consumption of other countries of the world and arrive 
at a figure which will meet with general approval. The following 
Table gives the per capita consumption of sugar for a number of foreign 
countries : 



248 



TABLE No. 1 
Per capita consumption of Sugar in various cotmtries 

United Kingdom ... 106 Ibs. per head Cuba ... 88 Ihs. per head 

U.S.A. ... 97 Java ... 11 

Brazil ... 34 Japan ... 33 

France ... 52 Union of South Africa 47 

Australia ... 116 Netherland ... 64 

Germany ... 52 India ... 27 (including 20 Ibs. Cur) 

It will be seen that the figure ranges from 116 Ibs. in the case of 
Australia to 11 Ibs. in the case of Java and works out to an average 
of about 80 Ibs. for the advanced countries. 

We may now turn to consider the per capita consumption of sugar 
in India. With our total supplies in the vicinity of about one million 
tons of sugar for a population of 400 million, the per , capita consump- 
tion of sugar may seem an incredibly low figure. It is necessary in 
our case, however, to take into account the large and more important 
factor of the consumption "of Gur, estimated at about 3 million tons. 
The total production and consumption of sugar and Gur in India is 
given in the Table below for a period of more than one decade, together 
with the per capita consumption in each year. 

TABLE No. 2 
Total, and per capita consumption of Sugar and Gur in India* 



Year 
(November- 
October) 


(Consumption 
of Sugar in 
| tons 


Official 
Estimate 


Consumption 
of Gur in 
tons , 


Per Cai 
Sugar 


>i/<2 Consumption Ibs. 

Total of 
Gur Sugar and 








Gur 




i 


Ibs. per 


Ibs. per Ibs. per 








head 


head 


head 


1931-32 


982,000 


2,758,000 


6.2 


i 17.2 


23.4 


1932-33 


1,006,000 i 


3,240,000 


6.3 


20.2 


26.5 


1933-34 


996,000 


3,486,000 


6.1 


21.5 


276 


1934-35 


1,059,000 


3,701,000 


6.5 


22.6 


29.1 


1935-36 


1,074,000 


4,101,000 


6.5 


24.8 


31.3 


1936-37 


1,167,000 


4.268,000 


7.3 


26.7 


34.0 


1937-38 


1,159,000 i 


3,364,000 


7.2 


20.9 


28.1 


1938-39 


1,073,000 i 


2,131,000 


6.6 


13.1 ! 19.7 


1939-40 


1,019,000 


i 2,441.000 ; 


6.4 


18.0 ! 24.4 


1940-41 


1,100,000 


( Our Est. ) 


3,410,000 ! 


6.7 


20.6 


27.3 


1941-42 


] ,050,000 


2,829,000 


6.0 


18.5 


24.5 


1942~43t 


966,000 


3,567,000 


5.9 


20.1 


26.0 


1943-44t 


1,086.300 


. 


3,989.500 


6.5 


23.8 i 30.3 



Total value of sugar, including gur, produced in the year 1943-44 may be estimated at 
about Rs. 118.33 crores. 

Price calculated at the rate of Rs. 15-4-0 per maund of sugar and Rs. 9-6-0 per maund 
of gur as the standard of average for the whole season. 

Maund 82.2/7 Ibs. Sugar 15J Gur 9.1/6 

Tons Rs. Price 

f Sugar 10,86,300 49,09,65,375 
1 GUI 39,89,500 69,23,44,479 



1943-44 



t Our estimates. 



Total Value Rs. 1,18,33,09,854 



Rs. 118.33 Crores. 

(Includes the excise duty) 



It will be seen that if our per capita consumption * is about 26 Ibs. 
(6 Ibs. of sugar and 20 Ibs. of Gur) , as against the average of 80 Ibs. 



249 

for the advanced countries listed in the foregoing Table and if this 
average may be taken as the index of what is necessary in the case 
of India, our production of sugar requires almost to be trebled, at an 
early date. About the desirability of a triple increase in the pro- 
duction of sugar there can be no question. Even at about 80 Ibs., the 
figure will be substantially less than the consumption of such countries 
as Britain, U. S. A., Denmark, Australia and New Zealand. As the 
world's biggest producer of sugar (including Gur), India may not 
unreasonably look forward to a level of consumption which, if it 
is not among the highest in the world, will, at any rate, not be lower 
than the average. 

The question which now arises for our serious consideration is : 
what is the minimum target which we should place before us for the 
immediate future, and for the distant future ? In fixing such a target 
we should assure ourselves on the one hand that the agricultural 
economy of the country is not upset to any degree and on the other 
hand that the maximum quantity of this energising food, sugar, is 
made available to the people with a view to meet their demand for 
improving their standard of living and nutrition which, now, is at 
a low ebb, to the level of International Standards of Nutrition. 

Prima facie, a triple increase in the production of sugar would 
require a similar increase in the acreage of the sugarcane. If so ( , 
would it be economic and would it be possible to devote three times 
the present acreage to the production of sugar, to increase the fixed 
capital of the sugar industry to a like extent, and secure the increase 
in sugar production ? Have we got sufficient cultivable land to devote 
to sugarcane without prejudice to equally important or perhaps even 
more important other food crops like wheat and rice, of which there 
is a shortage in the country. Are there no other avenues for utilisation 
of our savings and capital? 

Obvious and pressing as these questions may seem, they do not 
reflect the true nature of the problem we have on hand. A triple increase 
in sugar production does not call for a similar increase in the area under 
sugarcane. Economies in the utilization of the resources that are now 
devoted to the production of sugar will by themselves be able to 
solve by far the greater part of the problem on hand. It stands to reason 
that in attaining the target that we have provisionally set before our- 
selves, we should distinguish between such economies and the new 
developments that may be required. The position at present is that 
only four million acres of land (less than two per cent of the 
area under cultivation in India) are devoted to the production of 60 
million tons of sugarcane of which about l|5th or 12 million tons are 
utilised in modern factories for manufacture of white sugar, about 36 
million tons (roughly 60 per cent) are utilized for the production of 
Gur, and the balance is used for Khandsari sugar manufacture, sets 
and chewing purposes. It is no exaggeration to say that there is a waste 
of resources at every point, in the yield of sugarcane per acre, in 
extraction of sugar from sugarcane (1) in the Khandsaris, (2) in 
the making of Gur, and even, though to a far smaller extent, (3) in 
the modern vacuum pan factories. The scope for economies which 
the present conditions suggest, needs therefore to be examined, step by 
step. 



250 
Considerable Increase in Yield per Acre Possible 

Taking first the land under sugarcane, it is well known that the 
average yield of cane in India per acre at the present time is about 
15 tons and that this yield has increased to its present figure from a 
bare 9 tons in 1913-14. This is due to the fact that during the last 
30 years, 80 per cent of the cultivated area of the sugar has been put 
progressively under the improved varieties of cane bred at the Imperial 
Sugarcane Station, Coimbatore. Within the last 30 years, the yield 
per acre has increased by about 61 per cent due particularly to the 
improvements in cultivation and the new varieties. Again it is hearten- 
ing to state that this improvement both in yield arid quality of cane 
shows promise of further increase. The present yield of 15 tons of 
cane represents of course only a fraction of the yields in other tropical 
countries like Java and Cuba where yields as high as 50 or 60 tons 
of cane per acre are common. It is doubtful if the yield of cane in 
India will ever be as high as, for instance, in Java or Cuba, due to 
the disadvantage of climate, cane in this country being -grown mainly 
in sub-tropical areas. What is more, the benefits of large-scale pro- 
duction of cane are denied to the Indian growers, but it is pleasing 
to find that yields as high as in Java or Cuba have been achieved in 
some sugar factory estates, and in the experimental farms in Bombay, 
Deccan, Madras and other parts of tropical India. There is the arresting 
fact that already an increase in the yield per acre has been secured 
from 10 to 15 tons within the last 2 decades. There are still poten- 
tialities of further increase. It has been proved by the work of the 
Indian Research Stations * that quite astounding results can be achieved. 
The Ravalgaon Sugar Factory in Nasik District in Bombay has been able 
to raise 50.5 tons and 41.4 tons of cane per acre with CO.360 and 
POJ 2878. In 1941 it raised 52.9 tons. Yields of 80 tons and 100 
tons per acre have also been raised in a competition organised by the 
Maharashtra Chamber of Commerce in 1934.f Mysore has obtained 
yields of 36.86 tons, 51.88 tons and 50.40 tons with H.M. 320, H.M. 606 
and H.M. 607 varieties of cane. Sugarcane research has just reached 
the stage of adolescence ; and it is not undue optimism to suggest that 
the best results are yet to come. 

The increase in sugarcane output which we can secure with the 
present area of 4 million acres on the sugarcane has been estimated 
by an experienced Agricultural Officer Dr. W. Burns in his Report 
on "The Technological Possibilities of Agricultural Development in 
India ", published in 1944. After a very careful survey of the position 
of cane cultivation in each Province he has set out the increase in 
the yield which it should not be difficult to obtain by scientific culti- 
vation. The following Table indicates the possible yield in tons of 
sugarcane in various Provinces, according to this expert authority : 

* Vide M. P. Gandhi's Sugar Industry Annuals, 1939, 1940, 1941, 1942, 1943 and 
1944. 

fVide Walchand Diamond Jubilee Commemoration Volume published in 1942, 
p. 149, wherein it is observed " when the Maharashtra Chamber of Commerce 
organised a competition in 1934 for * Prize Plots * with record yield of cane, the 
Walchandnagar Farm at Kalamb on the Nira Canal area in the Poona District 
came out the best with a yield of 104 tons of cane per acre, the highest figure 
yet attained in India". 



251 

TABLE No. 3 
Possible Yield in Tons of Sugarcane 

North-West Frontier . . 30 to 35 

The Punjab . . .. 40 to 45 

United Provinces . . .. 27 to 35 

Bihar . . . . .. 25 to 35 

Bengal . . . . .. 35 to 40 

Madras . . . . .. 45 to 55 

Bombay . . . . .. 45 to 55 for plant 

cane 

Mysore . . . . .. 70 to 80 for Adsali. 

From the above, and as soon as the remaining 20 per cent of the 
cane-crop which is not under improved varieties at present is also 
put under improved varieties, it will be possible to expect, if not all 
too suddenly, at least in course of ,a few years, an increase in the 
present average yield of 15 tons to 40 tons an acre, and consequently 
an increase in the total output of cane to over 160 million tons of 
cane from the same acreage.* As far, therefore, as the provision of the 
raw material for the manufacture of sugar is concerned, we can safely 
assert that there will be no difficulty in producing the requisite quantity 
of cane for trebling, in course of a few years, the production of sugar 
and Gur, without increasing the area under cane. It is true that all 
this large increase will take time but if the process starts right now 
as a result of careful research work, there will be no difficulty whatever 
in doubling, at any rate, the production of sugarcane during, say, the 
next 6 or 7 years, and of trebling it within the subsequent decade. We 
are allowing ten years for the evolution of <a triple yield due to the 
assumption that increases in the yield from 30 to 40 tons would be 
more difficult than the first increase from 15 to 30 tons. Relying 
on the past progress, and the future possibilities as envisaged by 
expert authorities and our own achievements, we can safely conclude 
that we can produce double the quantity of sugarcane within the next 
6 or 7 years and treble it within the next 10 years from the same 
acreage. Indeed, if our recommendation for the utilisation of palms 
and Date trees, which India has in abundance (as discussed in Appen- 
dix No. Ill) is explored and implemented for manufacturing of Gur 
and sugar, it may even be possible to release some land from cane ior 
purposes of growing food crops also. 

The next source of economy lies in the improvement of Gur making, 
on the ground of its being a more wasteful method of sugar manu- 
facture. The Indian Gur makers recover only 52.4 per cent of the 
sugar content of cane as against the recovery percentage of 82.6 per 
cent in the case of modern factories. True it will not be possible to 
save at once all this 34 per cent of sugar contents in 3|5th of the 
total output of cane, thus making a substantial addition to the total 
Gur production, but we can hope that with the universalization of 
the establishment of more efficient methods of extracting the juice, 
e.g., by introducing power in place of bullocks for crushing the cane, 

* It is assumed that in trying to achieve the above goal, necessary help will 
.be accorded by the State, e.g., in preventing fragmentation of holdings, in securing 
suitable manure, rotation of crops, irrigation facilities, control and prevention of 
diseases and pests, etc. 



252 

improved methods of boiling the juice, etc., an improvement of 15 per 
cent can easily be made and the addition of 15 per cent will mean 
no small addition in improving the present supply position of Gur. 

Likewise in the case of Khandsari sugar the annual production of 
which varies between one lakh and two lakh tons, the present recovery 
of sugar from cane is only 5.5 per cent as against the 9.5 or 10 per 
cent in a modern vacuum pan sugar factory. Although we have grave 
doubts about the success of this form of manufacture, which is very 
wasteful and uneconomic, the importance of such improvement as can 
be made in the transitional stage of the industry cannot be minimised. 

The position in the case of modern vacuum pan factories is such that 
any large increase in recoveries and in costs may not be expected for 
a long time, unless the twin problem of improvement of quality of 
cane and of provision of an uninterrupted supply of early ripening 
and late ripening varieties of cane is solved suitably, with a view to 
ensure that maximum sucrose is extracted from the cane throughout 
the entire season. 



The establishment of modern sugar millsQg) sufficient for the utilisa- 
tion of the increased output (or a bulk thereof) of cane for the manu- 
facture of white sugar will, no doubt, also form a formidable problem 
in regard to organisation, location, capital and savings, but it is neces- 
sary in this context to note that since 1920, the utilisation of cane 
in factories has grown up from 1 per cent to 6 per cent in 1932, and 
a little over 20 per cent in 1944, and this process can be easily con- 
tinued uninterrupted to further extent with the provision of more 
mills, and without disturbing unduly the present ratio between the 
manufacture of white sugar and Gur. The production of Gur as 
compared with the production of sugar in the country has also fluctuated 
very greatly. In 1931-32, for instance, while India produced 478,000 
tons of sugar, the Gur production was 274 lakhs tons, over 6 times 
the production of sugar. The total consumption of sugar .was, how- 
ever, much higher, the balance of the requirements being imported 
from abroad. During the last 15 years, however, it must be stated 
that the consumption of Gur has been roughly equivalent to 3 or 3J 
times the consumption of sugar, the indigenous production of white 
sugar being supplemented to the required extent by imported sugar 
till very recent times. Since 1940, there have been practically no 
imports of sugar from abroad, and during the last 5 years, the pro 
duction of Gur has varied between 2 to 3 times the total production 
of sugar, (including Khandsari sugar) the variation being due to 
various factors like prices of cane, of sugar, of Gur, control over trans- 
port of cane, Gur, etc. We do not contemplate that during the next 
few years this ratio between the consumption of sugar and the con- 
sumption of Gur in this country will be radically altered for reasons 
explained in an earlier chapter, but we do feel that with the improve- 
ment in the standard of living of people, a preference for white sugar 
which is cleaner in appearance, which is easily dissolved and which 
lends itself more easily for use in sweetening cups of tea, 'coffee, 
other drinks, and sharbats, the consumption of sugar will certainly 
increase. Besides the growth in the population of India at the rate of 
1 per cent per annum will also mean a continually increasing demand 
for sugar. 



253 

We also feel that sugar which is now considered a luxury pro- 
duct will enter into the consumption of a larger number of people 
than at present due to improvement in economic conditions and the 
migration of people in towns, increase in the tea drinking habit, and 
this will certainly lead to an increased use and consumption of sugar 
in the country. We would not, therefore, be surprised if during the 
next 15 or 20 years the ratio between the consumption of sugar and 
Gur would be altered to some extent in favour of sugar, and while 
having no desire to prophesy in the matter we feel that it would not 
be incorrect to assume that while the consumption of sugar might be 
raised to about two and a half times the present consumption of about 
a million tons, the consumption of Gur may increase to about 5 million 
tons, i.e., may be about double, instead of 2& times or three times the 
present consumption of sugar, within the next 15 or 20 years. 



More Mills Necessary 

In this view of the matter, we would be required to plan for an 
early establishment of a few more mills in the country. To the extent 
that Provincial plans for industrial development must include plans 
for expansion of sugar industry and the improvement of sugarcane 
cultivation as well, a very large part of the problem on hand will 
be solved by Provincial Plans. It is well, therefore, to note at this 
stage that the expansion of the sugar production thus necessary to 
ensure a comfortable standard of living for all is only in accord with 
Provincial or Regional planning. 

And from the point of view of development, it is noteworthy that 
the expansion of factory production is called for in the Provinces 
(other than U. P. and Bihar) which are yet to have their proper share 
in the indigenous production of sugar. The following Table brings 
out the salient features of the present position in regard to the pro- 
portion of cane crushed in factories to the total cane crop in various 
Provinces. 

TABLE No, 4 

Percentage of Cane crushed in factories to the total Cane crop 
in various Provinces* 



\ 




; | 


Season U. P.* 


Bihar* 


Bombay 


Bengal ! Madras j India 


1934-35 




13.6 


30.9 


80 


27 50 


12.3 


1935-36 




17.1 


40.4 


11 


i7 


4 


8 i 5 


4 


16.0 


1936-37 




17.1 


49.3 


is 


to 


5 


2 6 





17.6 


1937-38 ( O 


rEst ) 


18.6 


62.3 


14 


10 








17.8 


1938-39 




14.5 


44.5 






i 


. 


19.5 


1939-40 




25.5 


48.4 








! 




27.7 


1940-41 




13.9 


29.3 








. i 




19.1 


1941-42 




I 14.6 


... 








. 




21.2 


1942-43 




! 21.9 


... 








, 




25.0 


1943-44 




22.3 


... 








; 




250. 








i 





* Figures based on Cane Development Department ( U. P. ) statement showing disposal 
of cane crop in the U. P. during 1934 to 1942 and on letters from Cane Commissioner, Bihar 
to Chairman, Sugar Commission, U. P. and Bihar. 



254 

These figures will show in a correct perspective the importance 
of the cane-crushing factories in agricultural economy particularly in 
Bihar and U. P. So far this fact has not been fully appreciated owing 
to these statistics not being brought to the notice of all concerned 
prominently. We have worked out these figures with the help of the 
Sugar Commission and Directors of Agriculture in the U. P, and Bihar. 
This will show that the factories are of preponderating importance in 
the U. P. and Bihar. It must further be noted that in some districts 
where there is a congestion of factories, 60 per cent to 70 per cent, 
or even 80 per cent of the cane crop is crushed by the factories, both in 
the U. P. and Bihar. 

The foregoing Table also shows clearly that the scope for economy 
in the utilisation of the present acreage under cane and for the exist- 
ing cane crop is far greater in other provinces than in the U. P. and Bihar. 
Obviously, and prima facie, mill consumption of cane is the most eco- 
nomic method of utilising the cane, and governments of the other pro- 
vinces are not likely to give up the idea merely out of consideration 
for the mills in the U. P. and Bihar. Avoidance of the wastage of sugar- 
cane involved in Gur manufacture will no doubt be attempted by 
increasing the number of mills. 

For our present purpose, what is important is that the drive for 
spreading improved varieties and for economies in Gur manufacture 
will have to be more vigorous in the " backward provinces ", e.g., 
Bombay, Madras, Bengal, where the total consumption is far greater 
than their production. The whole programme of work for increasing 
the production of sugar will have to be on a regional basis though 
this does not necessarily militate against understandings of a tenta- 
tive kind among the various provinces. 

Table No. 2 in the Sugar Industry at Glance shows the number 
of factories established in the various Provinces, and the Appendix 
at the end of the volume gives details regarding their capacity, etc. 

Estimate of Capital needed /or Expansion 

Considering that the total investment for machinery imported since 
1931-32 for this industry is estimated at about Rs. 12 crores and assuming 
that the machinery in the 32 factories which existed in the pre-war 
period was of the order of about 2 crores, we find that the total inves- 
ment in machinery for the establishment of the 150 mills 
in the country is about Rs. 14 crores. And the total capa- 
city of the industry is for a crushing of about 150 lakhs tons 
of cane sufficient for the production of 15 lakhs tons of sugar every 
year. The maximum, factory production of sugar has been 12 lakhis 
and 41 thousand tons in the year 193940. If, therefore, we wish to 
increase our sugar production from its present potential of 15 lakhs 
tons to 25 lakhs tons it will be necessary to spend on machinery roughly 
about Rs. 9 crores, and on the assumption that the price of machinery 
will be about 50 per cent over the prices of the machinery in the 
pre-war period, the cost will be about Rs. 13 crores. The capital cost 
of a factory of about 800 tons capacity, which, today, is the average, 
was in the pre-war period about 16 lakhs of rupees, Rs. 12 lakhs being 
the price and erection charges of machinery and Rs. 4 lakhs being the 



255 

cost of land and buildings. As stated before, for the establishment 
of a further capacity of about 10 lakhs tons of sugar, the amount of 
external capital required to be spent will be only Rs. 13 crores. Roughly 
this will mean the establishment of about 70 to 80 factories of an 
average cane-crushing capacity of 800 tons. Leaving the two Provinces 
of Bihar and U. P. aside, the other Provinces, namely, Bombay, Madras, 
Bengal, the Punjab, and suitable Indian States will have to establish these 
factories and there can be no doubt that with a liberal credit policy 
and financial system of the future, this capital will be found without 
much difficulty, particularly as the expansion visualised is gradual, 
and spread over a period of years. 

Export Possibilities of Sugar 

Up to this stage, we have assumed that the increase in produc- 
tion capacity is required for meeting only our internal needs of sugar 
in which we have estimated a large increase depending on an im- 
provement in the economic conditions of the people as a result of 
the State implementing the salient features of some of the well con- 
sidered economic plans, both official and non-official, and have also 
allowed some preference being shown to sugar over Gur, and have 
also included utilisation of sugar for other industrial purposes like 
manufacture of confectioneries, biscuits, etc. At the same time we 
cannot leave out of account possibilities of development of export trade, 
and particularly because of the severe damage to the sugar industry 
in Java and the great reduction in the production of sugar in various 
parts of the world from a total quantity of 30 crores tons in the pre- 
war period to only about 19 crores tons in 1944-45, India will have 
a good scope and opportunity for capturing a part of the world's 
demand particularly in countries adjacent to India, e.g., Afghanistan, 
Persia, Middle East, Ceylon, Burma, Nepal. While, therefore, we 
cannot plan for any large sized increase in our capacity depending 
upon export markets only due to the apprehension that the Java 
industry may be rehabilitated before long, it is reasonable to hope 
that we will be able to develop and retain some of the adjacent mar- 
kets. In view of this possibility it will not be imprudent to plan 
for some increased production for catering for such outside demand, 
say, about 2 lakhs tons, and thus provide for additional employment 
and utilisation of the Country's natural resources. 

Nutritional Survey Undertaken in 1945 

We are happy to note that Dr. V. K. R. V. Rao, Director of Statis- 
tics in the Food Department, who was appointed by the Government 
of India to collate data from Central and Provincial sources for for- 
mulating proposals for food planning, was directed in August, 1945, 
to undertake a country- wide investigation of nutritional conditions, 
resources and possibilities. We fervently hope that he will conduct 
an assiduous enquiry and appropriately assess the importance of sugar 
as a vital energising food,* rich in carbohydrates, and make recommen- 

* It would be interesting to note that about 16 per cent of the total food energy 
requirements of the people of the United States during pre-war years was sup- 
plied directly by cane and beet sugar. In addition sucrose (cane and beet sugar) 
is an essential ingredient or an integral component part of many major processed 
food items. (Vide Report of Food Industry War Committee, Washington, of 
December 1944, a summary of which was published by Lamborn & Co., New York.) 



256 

dations for its utilisation in increasing quantities for improving the 
nutrition of the people of India, which is at a low ebb today, parti- 
cularly as there is an enormous potentiality of further development of 
this industry, with the present set-up and equipment. 

Increased Expenditure on Research Recommended 

It is also necessary to emphasise at once the need of a well-planned 
reorganisation of the industry in its various aspects from a broad point 
of view, in order to ensure that the industry is reconstructed with 
a far-sightedness that will enable the country before long to produce 
such quantity of sugar and at such prices as would make it possible 
to supply the population with sugar and Gur in quantities considered 
necessary according to International Standards of Nutrition,* and 
which will be considerably higher than the present per capita con- 
sumption. < 

To achieve this, expenditure on sugar research has to be greatly 
increased as in other celebrated sugar producing countries like Java, 
Cuba, Philippines, etc. It is useful to remember in this connection 
that the Tariff Board of 1938 made strong recommendations for a vigo- 
rous development of research work, e.g., an increase in the number 
of testing stations in the various provinces, an improved system of 
trial in experimental plots, expansion of the famous Coimbatore 
Research Station, particularly for combating insect pests and diseases 
like red rot, pyrilla, which do appreciable damage to the sugarcane 
crop. The Tariff Board also suggested to this end that the grant from 
excise duty for the purpose of research work should be raised from 
one anna per cwt. to 3 annas per cwt. and they also made an observa- 
tion, with which we are in full agreement, that " they were convinced 
that the only hope of the industry ever being able to combat on equal 
terms with other countries is a reduction in the cost of raw material." 

We would also like to emphasize with all the stress at our command 
that a sum of not less than Rs. 40 lakhs per annum should be ear- 
marked by the Government of India for expenditure in applied and 
fundamental research work. We also feel that the industry should 
be associated actively with the research work being carried on at the 
various research stations and laboratories. Expenditure on research 
work should not be considered as fruitless and it should be treated 
as a profitable investment which will pay itself several times over, 
and a larger amount should be earmarked by the Government from 
its present excise revenue of well over Rs. 6| crores for this purpose, 
in order to ensure the stabilisation of the industry at an early date. 
We also suggest that this amount should be placed at the disposal of 
the Indian Central Sugarcane Committee, established in 1944. (Vide 
pages xxx to xxxii in the Sugar Industry at a Glance.) 



* Vide the observation made by Sir George Schuster, K.C.S.I., K.C.M.G.. M.P., 
Ex-Finance Member of the Government of India in his book India and Democracy 
(1941), where he states that there is a common agreement that the masses of 
the Indian people are undernourished, and that an improvement of nutrition must 
therefore, be the first step in any general plan for increasing the productive power 
and improved standards of living. He also observes that one of the main causes 
for the present low production is the physical condition of the people resulting 
from permanent malnutrition. (Pages 258 to 268). 



Referring to the advantages which have flown from the research 
work undertaken even on the present meagre scale, the Imperial Council 
of Agricultural Research assessed in 1939 the total increase in the 
output of the cultivators due to the improvement of sugarcane crop at 
2J crores of rupees per annum. * 

In this connection It will be of interest to observe that, while 
Hawaii spends on research Rs. 12 per acre, Java Rs. 3, Japan Rs. 3, 
India spends only 1/3 of a rupee.f 

An annual expenditure of Rs. 40 lakhs on research, as suggested, 
will work out to only one rupee per acre o/ cane, while the cultivator 
and the industry will receive multiple benefits. 

One word more. When it is remembered that in the Steel 
Industry iron ore costs less than 10 per cent of the value of the finished 
product, (as compared with about 52 per cent in the case of sugarcane) 
it will be realised how vast is the difference between sugar and 
other industries as regards the conditions on which further progress 
depends. 

Cane Cost and Sugar Prices must be Reduced for Attaining 

Optimum Consumption 

As we have observed before, cane represents about 52 per cent 
of the cost of production of sugar direct from cane, and a higher pro- 
portion still in the case of Gur. We entirely endorse the remarks of 
the Tariff Board of 1931 when they state (vide page 27) that the future 
of the sugar industry depends mostly on the cost of producing the 
primary material, i.e., cane. And for attaining optimum consumption, 
the price of sugar and Gur will have to be lowered, and this can be 
done effectively if the cost of cane is reduced, by comprehensive 
research, to about 0-4-0 per maund of cane, in the post-war period. 

Intensive Sugar Research in United States 

In this connection, it would be an eye-opener to see the interest taken 
and expenditure incurred in the United States in establishing a Research 
Foundation in New York in June, 1943, by companies that produce or 
refine cane sugar or process sugar beets, as a non-profit corporation. 
According to the Charter, this research is to relate " to sugar and any 
or all uses, or possible uses, of sugar in any form whatsoever, and whe- 
ther as a food or an ingredient of foods and beverages, or in industry 
or otherwise." 

The Sugar Research Foundation is an organisation of growers and 
processors of cane and beet sugar in the continental United States, Hawaii, 
Puerto Rico, Cuba and Canada. The purpose is to increase the con- 
sumption of sugar through the development of new industrial uses 
and establishment of the proper place of sugar in the diet. The Founda- 
tion will transmit to the consuming public, the scientific and medical 

* Vide also a Press Note of the Bihar Government issued in July 1939. stating 
that as a result of the measures taken for improvement of sugarcane cultivation 
it is computed that the growers realised approximately Rs. 2,45,37,250 during the 
1938-39 cane-crushing season. A larger amount still may have been realised 
by the cane growers in the U. P. Vide Indian Sugar Industry Annual, 1939, by 
Mr. M. P. Gandhi. Also Annuals for 1940, 1941, 1942, 1943 and 1944. 

fVidc Tariff Board Report, 1931, page 94. Also vide the Philippines Sugar 
Industry A plea for Research for the Healthy Development of the Indian Sugar 
Industry, by Mr. Chandra Prasad Gupta, with a foreword by Mr. M. P. Gandhi, 1937. 



professions, home economists, nutritionists and manufacturers infor- 
mation concerning sugar, its food value, its relative economy and its 
chemical characteristics in manufacturing process. 

To obtain this information, the Foundation has initiated extensive 
research into carbohydrate chemistry, bio-chemistry and nutrition. In 
furtherance of the programme, it is supporting authoritative studies at 
Universities and other research institutions under the direction of lead- 
ing scientists. 

The first and most ambitious of these studies is being conducted 
in the Sugar Research Foundation Laboratories established in December, 
1943, at the Massachusetts Institute of Technology. Here, new industrial 
uses of sugar and its derivatives are being determined by means of a 
systematic study of sugar considered solely as an organic compound. 
The five-year project operates under a grant of 12,500 dollars from 
the Foundation. 

On June 6, 1944, five additional grants-in-aid of research were 
announced by Dr. Robert C. Hockett, Scientific Director of the Founda- 
tion. Dr. Hockett is on a five-year leave-of-absence from the Massa- 
chusetts Institute of Technology, where he is associate professor of 
inorganic chemistry. The grants are as follows: 

(1) 36,000 dollars to Professor Ancel Keys, Laboratory of Physio- 
logical Hygiene, University of Minnesota, Minneapolis, for a study of 
the relation between the vitamins of the B group especially thiamin 
(B-l), and the utilisation of sugar in the body. 

(2) 21,500 dollars to Professor Julian D. Boyd, Department of 
Pediatrics, University Hospital, State University of Iowa, Iowa City, 
for a study of the relation between sugar intake and tooth decay, 
with children as subjects. 

(3) 25,000 to Professor F. J. Stare, School of Medicine and Public 
Health, Harvard University, and Dean A. Leroy Johnson, School of 
Dental Medicine, Harvard University, for a study of the relation between 
sugar intake and tooth decay, with animals as subjects. 

(4) 24,000 to Professor Melville L. Wolfrom, Department of Che- 
mistry, Ohio State University, Columbia, for a study of the non-ferment- 
able (non-sugar) components of molasses. 

The result of this and similar research will be the acquisition of 
a vast body of knowledge concerning carbohydrates in general and 
sugar in particular. In the period of readjustment after the war this 
increased knowledge will be immensely valuable. Research demons- 
trating " the proper balance between carbohydrates and other food 
elements in the diet will do much to aid the public in utilizing intelli- 
gently low-cost energy foods, such as sugar ", according to Joseph 
F. Abbott, President of the Foundation. " In the current period of 
world-wide food shortages, which will continue long after the cessa- 
tion of hostilities, it is obvious that populations v/ill have to be fed 
diets containing a high proportion of sugars and other carbohydrates, 
since these types of foods supply the maximum amount of energy per 
acre of land required for their production and at a minimum cost." 

Even more valuable will be the increased knowledge of industrial 
uses of sugar. " Many of us know that plastics, synthetic rubber, anaes- 
thetics and numerous other products have been made from petroleum," 



259 

says Dr. Hockett. " The era that has produced these wondrous pro- 
ducts has been known as the petroleum age. Over three-quarters 
of the dry weight of the total plant material on the surface of the earth 
is carbohydrate. The three great carbohydrates are starch, cellulose, 
and sucrose. We are reading daily that coal and petroleum supplies 
must eventually dwindle, but carbohydrates such as sugar can be 
produced perpetually from the soil. The inevitable trend must be to- 
ward increasing the utilization of carbohydrates. It is, therefore, very 
proper that sugar producers have taken their place besides other indus- 
tries in contributing research toward realization of the coming Carbohy- 
drate Age for agriculture and industry. 

In March, 1945, Dr. R. C. Hockett, President of the Foundation 
also announced at a dinner given by Dr. Karl T. Compton, President 
of the Massachusetts Institute of Technology, prizes totalling 45,000 
dollars to. be awarded to scientists for the discovery of new uses of 
sugar in medicine, and in every art, industry or technology. 

The present knowledge about sugar even in the food field is far 
from complete. As a staple product, universally liked, universally 
available, and universally used, it has been expected largely to sell 
itself by its appeal to the appetite. Physiologists and bio-chemists have 
made many more studies involving the function and behaviour of dex- 
trose in the body than with sucrose. One suspects that because animal 
experimentation is so immensely complicated these scientists have been 
tempted to simplify at least their carbohydrate. The result is that 
we actually know more about the bio-chemistry of a carbohydrate which 
is consumed as such in relatively minor quantities than we know about 
the one which provides fifteen per cent of the calories in the American 
diets. 

The Diet Reformers 

In the food field also, there has always been small fraternity of diet- 
reformers who have accused refined sugar of producing many evils 
including appendicitis, stomach ulcers, high blood pressure, sinus trou- 
ble, rheumatism, flatulence and diabetes. As a rule, such nature food 
promoters have not received very serious attention from Americans 
who have been inclined to view them as philosophical relatives of Cal- 
vin who reasoned that anything pleasant must necessarily be wicked. 
Nevertheless, such matters are hardly in the realm of philosophy. 
Those accusations which are not upheld by experimental evidence, and 
most of them are not, should be eliminated for once and all. 

The discovery of vitamins has raised new problems concerning 
the relation of sugar to the dietary as a whole. Though sugar contains 
no vitamins itself, it plays a considerable role in inducing consumption 
of the protective foods. To appreciate this function, we need only 
picture what would happen if sugar were eliminated. The use of grape- 
fruit, cooked and canned fruits, breakfast cereals, cereals in baked foods, 
and dairy products in ice-cream, custards and milkshakes would certainly 
fall to a very low position. Sugar certainly requires vitamins for its 
own proper combustion and it may have some influence on the produc- 
tion of vitamins by bacteria in the intestinal tract. Therefore, a re-assay 
of the total role of sugar in the diet becomes necessary as a part of 
the general programme to give the people the best possible nutritional 



250 

status and at the same time to give them appetizing *and palatable 
food. 

The problems to be undertaken by the Sugar Research Foundation 
are, therefore, numerous and cover a very broad field. They include 
studies in : 

1. Nutrition. 

2. Bio-chemistry. 

3. Physiology. 

4. Medicine. 

5. Dentistry. 

6. Metallurgy. 

7. Microbiology. 

8. Organic Chemistry, both fundamental and applied. 

9. Beet and Cane byproducts.* 

Important as sugar is as a food, however, it is equally important 
in the form of industrial alcohol. The April 1944, issue of Consumers' 
Guide, a publication of the War Food Administration of America, states 
that " the combined military and direct civilian needs for sugar, as a 
food, still represent only a part of its total war uses. Sugar flows into 
the roaring plants of industry. There is hardly a war commodity of 
which sugar is not a necessary part." 

" Normally ", according to the Consumers' Guide, " blackstrap 
molasses, a by-product of sugar, is the chief source of industrial alcohol, 
and alcohol goes into the making of an endless variety of products." 
One of these products, synthetic rubber has, as we all know, contri- 
buted an enormous share to victory. Others are contributing just as 
much. Explosives, for example. The bombs and shells and hand gre- 
nades which were tearing the guts out of the Axis to adopt a recent 
phrase of Prime Minister ChurchilPs were almost all made with the 
help of sugar, via industrial alcohol. By means of alcohol, too, we 
were able to make a variety of plastics, such as those that went into 
the so-called " green-houses " of fighter planes and into the more 
familiar celluloid and cello-glass. 

All told, sugar has more than 70 known distinct industrial uses. In 
addition to those already mentioned, sugar is a strategic material in 
the production of cement, motor fuel, penicillin, paper, soap, fabrics, 
and welding rods, without which no Liberty Ship would slip down the 
ways ! ! 

The war has taught us much about the value of sugar as a vital 
food and as an aid to industry. It has taught us an even more precious 
lesson, namely, that we are still vastly ignorant of the potential uses 
of sugar. It is this lesson that the Sugar Research Foundation of Ame- 
rica, has taken to heart and determined to master. 

We hope and trust that as a result of more extensive and intensive 
researches, referred to above, the importance of sugar will be properly 
assessed in various spheres, and that production of sugar will receive 
the encouragement it merits in due course. 



* Vide an article on Sugar the Unknown, by Dr. Robert C. Hockett, Scientific 
Director of the Sugar Research Foundation, New York, published in Indian Sugar, 
Cawnpore in July 1945 ; and also Lamborn's various Weekly Reports in 1944 and 
1945. 



CHAPTER XVII 
CONCLUSION 



AN inquiry into the position, problems and prospects of the sugar industry 
in India is in some ways different from a similar inquiry into the problems 
of our other protected industries. The concluding chapter of this thesis 
can be devoted to a recapitulation of the main results of this inquiry and 
to relate them to the standpoint appropriate to the period of planning that 
lies ahead. We showed in the first chapter that the history of the world's 
sugar industry reveals the tendency of sugar production to be distributed 
over the widest areas of the world and that in so far as this was helped 
by the development of the beet-root which was not in its original state a 
raw material for sugar, developments in the sugar industry may be 
deemed to give the world a foretaste of the changes which may overtake 
world economy when substitutes become more common than they are 
now. So far as India was concerned, this tendency towards the diftusion 
of sugar production was strengthened both by reason of India's fitness 
for growing cane and by the special stresses and strains of the period of 
the great depression. The view was urged that as the grant ot protec- 
tion to the sugar industry came in the wake of the ponderous historical 
forces reierred to above, a new orientation was inevitable in regard 
to the claims and the duties alike ot the new industry. It would be idle 
to expect the growth of the sugar industry as the result of a prolonged 
tug-ot-war between the indigenous producer and the foreign importers, 
a tug of war in which the relative strength is carefully determined by 
nice and hair-splitting calculations ot the tair selling price. Such a pro- 
longed fight with its natural vicissitudes is a familiar story to the 
students of the policy of discriminating protection. The Cotton Mill 
Industry and the iron and Steel Industry both had more than their just 
share ot such tribulation. It is unnecessary here to go in detail into 
the details of the cause of the departure in the case ot the sugar industry. 
But the link between the sugar industry and agriculture, a link for which 
there is no exact parallel in the case ot other protected industries, must 
be considered to be the reason which weighed most with the Tariff Board. 
Most of the local governments stressed the importance of fcane cultiva- 
tion in India, not only from the point of view ot the agricultural classes, 
but also in connection with the Provincial Governments' financial com- 
mitments. A very large sum of government money (9 crores) has been 
sunk in the construction of the Deccan Irrigation Canals. The revenue 
derived by way of irrigation dues, observes the Tariff Board of 1931, 
(vide page 41 of their Report) is about Rs. 26 lacs of which sugarcane 
pays over Rs. 10 lacs. In fact the development of this industry has 
enabled a large number of cultivators to pay their land revenue and 
other dues, and this has benefited the provincial revenues considerably. 1 



1 Also vide representation of the Imperial Council to the Government of India, 
dated 5th February 1930 in Vol. I of the Tariff Board's Report, 1931, p. 18. 



262 

Protection Fully Justified Rapid Development 

However that may be, the fact remains that the sugar industry had 
such a phenomenally liberal measure of protection, that its link with agri- 
culture was not only lost sight of but exaggerated, that the industry 
expanded beyond the most sanguine expectations of its protagonists, and 
also gave rise to problems such as other protected industries had never 
been confronted with. (Vide the following extract from Mr. M. P. 
Gandhi's speech in the Bombay Rotary Club on " Sugar Problems and 
Prospects/' in October, 1942, wherein he expressed the view that pro- 
tection to the Indian sugar industry has been fully justified 1 ): 

" Up to 1932, the industry was of a very modest size, but since 
the grant of protection to it in that year, the magnificent pro- 
gress made by the industry is a matter of pride to the country. 
It is interesting to note that the sugar industry is the second 
largest industry second only to the Cotton Textiles and 
represents an investment of Rs. 32 crores, finds employment for 
3,000 University men and one lac unskilled workers, and helps 
in keeping within the country a sum of not less than 16 crores 
of rupees per year, and the interests of not less than 20 million 
cultivators are indissolubly connected with it. Let economists 
say what they like about the costs of protection or the price to 
the consumer. An unbiassed study will, however, indicate that 
protection to the industry has been fully justified, that the con- 
sumer has been benefited, and that the country has been assured 
of supply of sugar in an emergency like the present and at a 
reasonable price. Indeed the protection has revolutionised this 
industry, which is a bright example of what the people of this 
country can do when the necessary help is forthcoming." 

In a special article contributed to " Indian Farming " in December, 
1941, on " Indian Sugar during the last decade," Mr. M. P. Gandhi also 
observed : 

" The amount of money paid to cane-growers by the factories 
alone has increased from about Rs. 1,77,50,000 in 1931-32 
to Rs, 18,00,00,000 in 1939-40.- The income of the cane culti- 
vators has been augmented considerably by the development of 
sugarcane crop on account of the comprehensive research 
undertaken at various places by the Imperial Council of Agri- 
cultural Research, and this increase in their income has been 
assessed at about Rs. 2,50,00,000 per year. 

" Transport agencies like railways, motor buses and village carts 
have also derived large benefits from it. The consumers have 
benefited due to the availability of sugar at rates cheaper as 
compared with the pre-protection period, except in the last two 
years due to the high price of cane and shortage of production 
of sugar. But this feature cannot be permanent and the con- 
sumer may again look forward to an era of cheap sugar." 

" Further, this industry has been responsible for the develop- 
ment of the village industry of gur manufacture. 

1 Vide also Mr. M. P. Gandhi's speech before the Rotary Club of Ahmedabad on 
3rd December 1943, printed in Appendix I of the Indian Sugar Industry Annual, 
1943. 

2 This amount increased to nearly Es. 26,00,00,000 in 1944-45. 



263 

" An idea of the importance of the sugar industry can be had 
when it is remembered that the value of the production of gur 
and sugar works out roughly to about Rs. 75,00,00,000 per year/ 71 

The sugar industry, thus, is unique in every way. To overlook this 
uniqueness is to spoil the perspective in which alone it can be viewed 
with any clarity and sense of reality and of realism. Nevertheless, those 
who have taken unkindly to the protectionist policy have regarded the 
sugar industry in the same light as other protected industries. And the 
enquiry into its problems has been conducted on the narrow lines of cost 
to the consumer, cost of production and the like. But if it is remembered 
that the distinctive characteristic of economic opinion and policy in the 
post-depression period is the shift from mere protection to regulation 
under the shelter of high tariff walls, then the inappropriateness of the 
old approach would be readily recognised. The tests that the old method 
applies to the soundness of a policy towards an industry are, 110 doubt, 
valid. But the Tariff Board, when it recommended protection to the 
sugar industry, did so realising that the expansion of the industry was 
an indispensable adjunct to agricultural development, and also expected 
to see the cultivation of cane sheltered and enabled to expand and 
prosper. 2 (Vide page 39 of the Tariff Board's Report for 1931.) 

Another important aspect of cane cultivation is in connection with 
the supply of cattle fodder. The reaping of cane commencing in Novem- 
ber and extending up to the middle of March also serves to afford employ- 
ment to the agriculturist and his cattle when other employment is scarce. 

It will thus be seen that sugarcane occupies a definite place in the 
crop rotation of this country and the number of people who depend on 
cane cultivation at present may be safely estimated at 20 million, assum- 
ing that one acre of cane occupies on the average the area grown by a 
family which is taken as comprising of from 4 to 5 members. 

Likewise it may be said that after a decade of liberal protection to 
the sugar industry, we have problems not of mere computation of costs 
and prices, but of strengthening every link in a whole chain of produc- 
tive activities from the cultivation ot cane to the disposal of molasses, 
bagasse and press mud. The policy in respect of the sugar industry 
is not a matter of lowering the import duties, a simple enough 
operation, when by means of an unrealistically simple logic, one 



1 The Imperial Council of Agricultural Research valued in 1930 the sugar- 
cane products in India at Rs. 42 crores, the value paid for imports of sugar being 
Rs. 21 crores. The Tariff Board of 1931 (vide p. 30) estimated the value of the total 
consumption of sugar and gur in India in 1930 at Rs. 42 crores. For the year 
1943-44, the value is estimated by us at Rs. 118 crores. (Vide Table 4 in the 
Sugar Industry at a Glance.) 

-Indeed, the Tariff Board of 1931 also expected a general increase in agricul- 
tural productivity, for it is established that the yield of crops grown after sugar- 
cane is, generally speaking, considerably higher than that after other rotation 
crops. The Tariff Board was informed that in the UP. improved types of wheat 
grown after sugarcane give a yield of *4Mh~raaunds as against 20 maunds when 
the same type is grown after other crops. This improvement is not merely a 
question of the utilisation of the manurial residue left in the soil after cane 
cultivation, but is a result of the general stirring up of the soil and deeper 
cultivation required for cane growing, particularly where intensive methods , are 
followed. It is also useful to remember that cane is an important crop on which 
the cultivator relies for his requirements of cash and payment of rent, and 
generally speaking, over a period of years, the return from cane has been con- 
sistently greater than from various other alternative crops. 



264 

comes to the conclusion that the growth of an industry adds 
or must add to the national income. It is rather a matter of 
directing the efforts of private producers as well as public autho- 
rity towards the improvement of efficiency in production and 
the realisation of economies in the various productive processes. 
This standpoint emerged for the first time in the history of discriminating 
protection in the case of the sugar industry. Formerly the cost of pro- 
duction was regarded as a determinant of the fair selling price and 
the import duty as deciding the question whether protection should be 
granted or withheld, or continued or cancelled. The cost of production 
in the case of Cotton Textiles or Iron and Steel depended predominantly 
on the efficiency of manufacture. Only in the case of the sugar industry 
it can be said that agriculturist, too, held the key to the progress of the 
industry. The history of the sugar industry then must be deemed to 
have provided a welcome corrective to the most serious of economic 
misconceptions in India, that economic progress can be achieved by 
attending to industry or agriculture without regard to the links between 
the two. This tendency to look at one divorced from the other is respon- 
sible for the alignment of economic opinion in favour of or against 
protection to industry. And the merits of the protectionist policy in 
the case of any one industry are discussed on the age old lines which 
have been found to be so inconclusive by the unbiassed. 

The problem of economic development as a whole and the problem 
of industrialisation as a part thereof, both alike tend to be viewed from 
a narrow standpoint. Prof. H. L. Dey goes so far in overlooking the 
importance of the economic and broadly social forces which make for 
industrialisation and economic progress that he regards the cost of pro- 
tection to the nation in the same light as an individual should look at 
the distribution of his personal income among the various competing items 
of expenditure. 1 This erroneous premise naturally drives him to suggest 
that India's national income being what it is, the first charge on it must 
be public health and then education and so on, as if the Government of 
India would have agreed to divert the revenue from sugar imports, which 
they have now had to forego, to public health, or that the consumers 
of white sugar could be prevailed on to pay a cess on sugar for the benefit 
of education, and public health ! Social progress never moves along 
lines chalked out by individual preferences. Nor will the population of 
India find the problem of industrialisation to be lightened ,by the im- 
provement in the statistics of public health and literacy. 

The function of a policy of protection is therefore understood to be 
one of increasing the technical efficiency of the manufacturing process. 
This is, no doubt, in accordance with the theory of protection in its 
classical form. But protection thus granted or thus viewed can 
achieve nothing in a country ilke India. Efficiency in industrial pro- 
duction is not an isolated phenomenon. It cannot appear all of a sudden 
like an oasis in a wide desert of productive inefficiency. So long as pro- 
tection was granted with the old ideas in the mind of the Tariff Board or 
of other authorities, it would in a sense be legitimate to criticise the 
policy with the general stock-in-trade of free trade arguments. But the 



i Vide The Problems of Protection, by H L. Dey, in " Economic Problems of 
Modern India" edited by Radhakamal Mukerjee, 1939 (page 358). Also H. L, 
Dey, "The Indian Tariff Problem", pp. 40, 41. 



265 

obvious difference between sugar and other protected industries is wholly 
forgotten, and the usual argument about protection failing to create em- 
ployment and the outlay on protection being more urgently required in 
other spheres is trotted out. 

The aim of this thesis is to bring out the fact that just as the grant 
of protection to sugar was a result not so much of the avowed fiscal 
policy of the Government as of the stresses and strains of the period, in 
the same way, the function of this policy lies not merely in the increasing 
efficiency of manufacture, but in the co-related development of agricul- 
ture and industry and the ancillary activities that intervene between 
them. Likewise, the success of the policy is to be sought in the accom- 
plishment of the requisite progress both in agriculture and industry and 
not the least in the development of industries for the utilisation of by-pro- 
ducts. It is not as well known as it should be that one of the unique 
features of the protectionist policy in regard to sugar is that the Tariff 
Board recommended protection for a period of 15 years the longest 
period l and at the same time did not attempt to foresee the time when 
the need for protection would be obviated. 

Far from being guilty of lowering the tests of a sound protectionist 
policy, the Tariff Board has only shown a keener grasp of the special 
requirements of the country. That the sugar industry has achieved 
during these years more than was expected of it should suffice to answer 
the carping criticisms of anti-protectionists. 2 

From the point of view of close governmental watch and vigilance, 
it is indeed fortunate that the sugar industry has become the major con- 
cern of two governments, those of the U. P. and Bihar. It is fortu- 
nate, too, that a thorough-going form of control and regulation was 
attempted by the Congress Governments during the period of their 
regime from 1937-40. The various minor problems like zoning, licensing 
and the like are being constantly tackled, while the industry is being 
sheltered from the violent gusts of over-production. It was left to the 
U. P. and Bihar Governments among the Governments of the British 
Indian provinces to initiate the efforts to establish a Power Alcohol 
Industry. After twelve years of the working of the sugar industry, there 
is every reason for confidence that protection to sugar will be completely 
justified not only by the reduction of costs, but also, as we have shown 
in the last chapter, by maximising the production and consumption of 
sugar in the country, before long. 



1 Prof. H. L. Dey in u Indian Tariff Problem, and Report of the Tariff Board 
on the Sugar Industry/' 1931, pp. 65-77. 

- Vide Tariff Board Report on the Indian Sugar Industry, 1937, which expresses 
'its satisfaction at the progress in efficiency achieved by the industry within a period 
of 6 years, and the pessimistic (as also incorrect) observation of Prof. H. L. Dey 
in 1939, when he observed that in cases where protection was given for long 
periods, as in the case of sugar, tk it would be idle to expect that those who are 
responsible for the industry concerned would make any great effort to achieve 
a rapid progress in efficiency." To our mind, no unbiassed and open minded 
observer could make such a statement regarding the Sugar Industry, unless he 
had some preconceived notion or theory to support. Vide " Problem of Protection ", 
by Prof. H. L. Dey in " Economic Problems of Modern India ", p. 358, etc. Also 
vide Review of the Sugar Industry in India, for 1936, 1937, 1938, 1939 and 1940, by 
Mr. R. C. Srivastava, Director, Institute of Sugar Technology, Cawnpore. 



266 

It is not speculative to suggest that it is through the sugar industry 
that India will learn her first lesson in the rationalisation of her agri- 
culture. For it is only in sugarcane that she is called upon to bring 
down costs and raise quality to +he level of the most economic producers 
of the world. And it has been aptly observed by the Indian Fiscal 
Commission that without industrialisation there can be no building of 
character, of alertness or of the qualities which make for progress. A 
quarter of a century of protection of the old kind in India still leaves us 
in the positipn which so careful an observer as Vfcra Anstey described 
in the following words in 1929 : 

" In the third place, it can be said that, whilst success has been 
achieved in particular instances in organising both certain long 
established and some new industries on a large scale, and 
although here are undoubtedly great potentialities in this 
direction, so far nothing worthy of the name of an " Industrial 
Revolution " appears to be taking place. The fact is that India 
still suffers from certain grave deficiencies with regard to the 
prerequisites of successful industrial production." 1 

For such a revolution, we have to attend to industry and agriculture 
at the same time, and for this no industry in this country lends itself 
better than sugar. 

The implication of this is that even if economic policy in Indie 
were to continue on the same old lines in the post-war period, the 
position of the sugar industry is such that it will compel efforts for a cor- 
related improvement of agriculture and industry. Fortunately, this 
recognition of the importance of allround development has been so 
keen in recent times, that the country as a whole is now committed 
to the policy of a planned economic development allround. The effect 
of this policy on the future of the sugar industry in India will be that 
the doctrine of graduation in the expansion of sugar production will 
be virtually abandoned, that the bogey of inadequate consumption 
or inadequate production will be got rid of, and the country can look 
forward to an enhanced per capita consumption of sugar, such as will 
help the maintenance of a high standard of health and energy - in the 
country's population. 



1 " Economic Development of India " by Dr. Vera Anstey, p. 227. Also vide , 
pp. 236-283. 

2 Vide the following observations of the Indian Famine Inquiry Committee 
in their Final Report, 1945, pp. 122 and 123, (to hand when the last page was 
under print). 

" While sugar is a carbohydrate food, containing no protein or vitamins, 

it supplies calories, and since there is much under nutrition, calories are 

needed" 

"The present per capita intake of sugar in all forms in India is much 

lower than peacetime intake in most western countries and we believe 

that its production and consumption can with advantage be considerably 

increased/' 



APPENDIX NO. I 

GLOSSARY AND EXPLANATION OF SOME INDIAN TERMS 
APPERTAINING TO SUGAR 

Gur or Jaggery. Contains anything from 60 to 85 per cent of 
sucrose. It may most nearly be described as hard-boiled massecuite. 
It is prepared by evaporating cane or palm juice in open pans. It is 
prepared in three forms, lumps, powder, and semi-liquid. Gur making 
constitutes an important cottage industry. It is unrefined brown sugar. 

About 36,00,000 tons of gur are produced from cane annually in 
India for direct consumption, i.e. about 3 times the quantity of sugar 
manufactured at present in India in factories. A small quantity of 
gur is also produced from Palmyra, and Date-Palm. There is no carry- 
over of gur to the next season. Gur constitutes nearly 76 per cent 
of the total sugar of various kinds produced in India, factory sugar consti- 
tuting about 21 per cent. 

Khandsari Sugar. Khandsari sugar, generally known as Khand, 
is powder sugar of white to light brown colour. Its sucrose contents 
generally vary from 96 to 98 per cent on weight as compared with 98 
to 99 per cent for factory sugar. It is produced in small factories which 
generally crush with oil engines and employ an open train followed 
by a centrifugal. Khandsari is concentrated in Rohilkhand (U. P.) 
which is the main centre of this industry. The annual estimated pro- 
duction is 125,000 tons, or roughly 2 per cent of all kinds of sugar. 

Adsali. Literally one and a half years' refers to the sugarcane 
crop in the Bombay Province which is sown from June to August, 
and harvested from October to December in the following year. 

Desi. An indigenous variety of cane. This variety occupies today 
(1943) approximately 17 per cent of the total crop area. 

Co. This prefix when appended to a variety of cane shows that 
the cane was bred at Coimbatore, e.g. Co. 213, Co. 281, Co. 290. 

Ff.M. This prefix, when appended to a variety of cane, shows 
that the cane was bred at Hebbal (Mysore), e.g. H.M. 320. 

P.O.J. 2878, E.K. 28, are some of the exotic varieties of cane of 
Java now under cultivation in India., 

P undid. This is thd chief variety of cane in the Deccan Canal tracts 
and Karnatak. It has a soft rind and is preferred for chewing purposes. 

Pyrilla. Steam borers, Top borers, Root borers are insect pests 
which do great damage to the cane crop by reducing the yield, the 
percentage of saleable cane, and its milling value. 

Rupee. Rupee Is. 6d. or 29.85 cents. 

Lakh or Lac. One hundred thousand, i.e. l/10th of a million, i.e. 
1,00,000. Crore. 10 millions, i.e. 1,00,00,000. 

Ton. One ton is equal to 20 cwts. of 112 Ibs. avoirdupois or 27.2 
maunds of 82-2/7 Ibs. avoirdupois. 



APPENDIX NO. II 

COMMENTS ON LEVY OF IMPORT DUTY AND EXCISE DUTY 
ON SUGAR FROM 1932 TO 1946 



(1) Too early and frequent impositions of heavy Excise Duty on 
the Sugar Industry. 

(2) A plea for effecting changes, in duty, whenever necessary, in 
November instead of March. 

(3) No further Tariff Board Enquiry during the war period 
desirable. 

(4) Removal of suspense to industry by Government extending 
protection straightaway for the remaining years of the period 
of protection, i.e. till 31st March, 1946. 



A protective duty of Rs, 7-4-0 per cwt. was imposed on sugar with 
effect from 1st April 1932, by the Sugar Industry (Protection) Act, 
1932, for a period of 7 years, ending on the 31st March, 1938. A 
revenue surcharge of Rs. 1-13-0 per cwt. (equivalent to 25 per cent of the 
protective duty) was also imposed. The total duty was Rs. 9-1-0 per 
cwt. 

On the 1st April, 1934, the Government of India imposed an excise 
duty of Rs. 1-5-0 per cwt. (roughly equivalent to Rs. 0-15-4 per maund) 
on factory sugar produced in British India by the Vacuum Pan process 
(modern system) and Rs. 0-10-0 on sugar produced by the Open Pan 
process (indigenous or Khandsari system) in spite of unanimous and 
strong protests from all quarters. No excise duty was imposed on 
Palmyra sugar (sugar obtained from boiling juice of Palmyra, produced 
largely in Madras). It must be admitted that the first excise duty 
imposed in 1934 doubtless pressed heavily on the newly started factories 
and was a measure taken too early after the grant of protection, but 
according to the Tariff Board of 1937, it had a steadying influence on 
the industry in so far as it put a check on the floatation of inefficient 
concerns. 1 

The protective import duty was increased from Rs. 7-4-0 to 
Rs. 7-12-0 per cwt. (0-8-0 being additional margin) from 1st April, 1934 
to 27th February, 1937, and along with the equivalent excise duty, the 
total duty was Rs. 9-4-0 per cwt. from 1st April, 1934. 

It was a matter of considerable surprise, however, that this excise 
duty was again increased on 28th Feb., 1937,- by 11 annas to Rs. 2 per 
cwt. (roughly equivalent to Rs. 1-7-6 per maund) and to Re. 1 per cwl. 
on Khandsari sugar. This increase was effected when the Tariff Board 
enquiry was in progress, and the Government did not await its report 
also. This imposition* was made by the Government without any notice 



Tariff Board Report, p. 156. 
-From 28th February 1937, the protective duty was reduced to Rs. 7-4-0 and 
along with equivalent excise duty of Rs. 2 per cwt. the total duty was Rs. 9-4-0 
per cwt, 



Ill 



being given to the trade or the industry and there was considerable 
opposition to this policy of the Government, and after very heated 
debates in the Indian Legislative Assembly and the Council of State in 
1937, the Finance Bill incorporating the Government's proposal for the 
increase of the excise duty on sugar was thrown out. Notwithstanding 
this, the Finance Bill was later certified by the Governor-General-in- 
Council and was passed into an Act, in 'utter disregard of and in direct 
opposition to the wishes of the Indian Legislative Assembly, with the 
ostensible object of increasing the revenues from the manufacture of 
sugar on the ground that the development of the industry was respon- 
sible for a reduction in Government revenue from import duty, forget- 
ting or ignoring that this was a foregone conclusion, if protection to the 
industry was to be successful, the only fault of the industrialists being 
that they developed the industry far more rapidly than was anticipated 
or imagined by the Government. 

The Tariff Board submitted its report during December, 1937, but 
its publication was withheld pending examination of its recommenda- 
tions by the Government of India, and the report was published only 
on the 30th March, 1939. During the year 1938, the Government of 
India continued the protection to the industry for a period of one year, 
by the Sugar Industry Protection (Temporary Extension) Act, 1938, 
up to 30th March, 1939. On the 30th March, 1939, the Government of 
India published the report of the Tariff Board, and along with it they 
also published a Resolution examining the various recommendations of 
the Tariff Board. They proposed introduction of legislation for fixing 
the amount of protection to the industry for a period of two years, from 
April 1st, 1939, to 31st March, 1941, at the rate of Rs. 8-12-0 per cwt. 

(i.e. at a rate lower by 8 annas than the then existing rate of Rs. 9-4-0 
per cwt.). The Government also observed in the course of the Resolu- 
tion, that a further investigation would be held in 1940 to enable a 
decision to be made as to the quantum of protection to be granted to 
the industry for the remaining 5 years from April 1st, 1941. The 
Government also criticised adversely the recommendations of the Tariff 
Board in respect of the necessity of lowering the excise duty and in 
respect of the detailed calculation by which the Board arrived at its 
estimate of a " fair selling price " of sugar and the " orthodox " line 
on which the Board proceeded in taking the difference between the 
estimated " fair selling price " of indigenous sugar and the landed price 
of imported sugar, as a measure of protection required for the industry. 

(A full text of the resolution -is published in " The Sugar Industry at 
a Glance " in the 1939 Indian Sugar Industry Annual) . It is a matter 
of surprise that the Government could not find time to consider the 
Tariff Board's proposals although no less than 15 months had elapsed 
between the submission of the report by the Tariff Board and the 
publication of their Resolution on the subject. 

We feel firstly that the argument advanced by the Government 
that the question of excise duty does not fall within the purview of the 
Tariff Board enquiry, and is outside the scope of their review, is 
untenable, and we cannot help feeling that such remarks by the Govern- 
ment of India on such a body as the Tariff Board are very undesirable 
and unwarranted. The effect of the excise duty on the industry is 
certainly a matter which falls within the scope of the enquiry, and we 
are tempted to think that such remarks against the Tariff Board should 



IV 

have originated due to anger at the inconvenience of their recommenda- 
tions which the Government found very difficult to turn down. The 
Government took the view that the imposition of excise duty was the 
best method to remedy over-production, and collect revenue for the 
state, but completely ignored the effects on the industry which would 
very nearly have sunk, had it not been for the world recovery of the 
sugar trade that took place later, 

The imposition of this duty of Rs. 2 per cwt., the incidence of which 
per maund of sugar works out to about 25 per cent was opposed princi- 
pally by the sugar manufacturers, inter alia on the grounds 1 that it was 
premature in view of the Tariff Board enquiry in progress, that its 
burden would fall not on the consumer but on the factories and the 
cane-growers, and that the duty was likely to drive the industry from 
British India to Indian States which gave various facilities lor the 
development of the industry, like loans of money without interest, 
provision of free godown accommodation, and exemption from income- 
tax, import duty on sugar entering the States, etc. It is true that the 
Indian States were asked by the Government of India to impose an 
equivalent excise duty, but the effect thereof was counteracted by other 
facilities given in the various Indian States. 

A study of the prices of sugar immediately after the imposition of 
the duty in 1937 will show that the price of sugar, instead of rising to 
the full extent of the duty or thereabouts, actually fell and it had to be 
borne by the manufacturer. The Tariff Board also pointed out that in 
the U. P. and Bihar the duty fell largely on the cane-grower, and in 
other provinces on the manufacturer. The Tariff Board also suggested 
on the analogy of the practice followed in the United Kingdom that 
" previous investigation by a statutory body of changes in the excise 
duty is desirable." 

While the excise duty may perhaps be justified after the industry 
has fully developed, there can be little justification for imposing such 
a heavy burden on an industry during the currency of the protection 
as it is bound to restrict consumption and injure the growth of the 
industry. In fact, such a step is contradictory to a policy of protection 
of industries. We would refer the reader to our 1938 and 1939 Annuals 
for a detailed discussion on the effects of the imposition of such a heavy 
duty on the industry by the Government of India. We also feel that 
the Tariff Board were fully justified in discussing the question of the 
effects of the excise duty on the industry, and apart from other reasons, 
the Fiscal Commission also observed that one of the ordinary functions 
of the Tariff Board should be " to consider the effects of excise duty 
on the Indian industries." 

A minor change in the excise duty on Khandsari sugar was made 
with effect from 28th February, 1939, when the duty was decreased to 
Rs. 0-8-0 per cwt. by an amendment made in clause 3 (b) of the Indian 
Finance Act, 1939, but the definition of " factory " was so altered as to 
make a larger number of Khandsaris liable to pay duty. 

A further high increase was made in excise duty with effect from 
1st March, 1940, by increasing the duty to Rs. 3 per cwt. (roughly 

l .Vide Tariff Board's Report, p. 158, 



equivalent to Rs. 2-3-3 per maund) , the excise duty on Khandsari sugar 
being kept at the same level, i.e. 8 annas per cwt. This further increase 
was effected by an amendment to Clause 3 of the Indian Finance Act, 
1940. One cannot help feeling that in their zeal for getting more 
revenue from the sugar industry, the Government have overlooked the 
commonly accepted economic principles, and imposed such a heavy duty 
on a growing industry, the effects of which have been very harmful to 
the industry. It has led to higher prices and has had the effect of reducing 
consumption which should have increased with the availability of sugar 
manufactured within the country at lower prices. The next three tables 
given below show the changes in the excise duty and import duty from 
1932 to 1944 and the revenue received by the Government from the 
excise duty and import duty from 1931-32 to 1943-44 : 



TABLE NO, 1 

Excise Duty and Import Duty on Sugar, Sugar Candy 1 and Molasses in India 



On sugar per cwt. 


Protective 
Import Duty 
per cwt. 


Additional Revenue 
Duty 


Total Import 
Duty per cwt. 




Rs. a. p. 




Rs. 


a. p. 


From April 1st 1932 to 31st 
March 1934 


740 


Revenue surcharge 
@ 25% of Protec- 
tive Duty Rs. 1-13-0 


9 


1 


From 1st April, 1934 to 27th 
February 1937 (Rs. 1-5-0 Ex- 
cise Duty on domestic produc- 
tion of factory sugar) 


7 12 
(0-8-0 being ad- 
ditional margin) 


Equivalent Excise 
Duty Rs. 1-5-0 


9 


1 


From 28th February 1937 
(Rs. 2-0-0 Excise Duty on do- 
mestic production of factory 
sugar) 


740 


Equivalent Excise 
Duty Rs. 2-0-0 


9 


4 


From 1st April, 1939 (Rs. 2-0-0 
Excise Duty on domestic pro- 
duction of factory sugar) 


6 12 


Equivalent Excise 
Duty Rs. 2-0-0 


8 


12 


From 1st March, 1940 (Rs. 3-0-0 
Excise Duty on domestic pro- 
duction of factory sugar) . 


6 12 


Equivalent Excise 
Duty Rs. 3-0-0 


9 


12 Oi 


From 1st April, 1942 (Rs. 3-0-0 
Excise Duty on domestic pro- 
duction of factory sugar) 


8 1 7-1/5 


Equivalent Excise 
Duty Rs. 3-0-0 


11 


1 7-1/5H 



(i) The import duty of Rs. 9-12-0 per cwt. works out at Rs. 7-2-9 per maund 
and Rs. 3 Excise Duty per cwt. works out at Rs. 2-3-3 per maund. This 
import duty has been continued till 31st March 1946. 

(ii) Includes surcharge of 20 per cent as from April 1942. 

The next table shows the yield of revenue from import duty on 
sugar in India from 1931-32 up to 1943-44. 



1 From 20th February 1934, a revenue duty of Rs. 10-8-0 per cwt. was imposed 
on sugar candy in place of Rs. 9-1-0 per cwt. The rate of import duty on molasses 
is 31J per cent ad valorem since April, 1932. r 



v! 

TABLE NO. 2 

Yield of Revenue jrom Import Diitij on Sugar in India (Burma excluded 

jrom 1937-38) 



Year 


Yield of Revenue 


Year 


Yield of Revenue 


(April-March) 


Rs. 


(April-March) 


Rs. 


1931-32 


7,97,63,000 


1937-38 


25,33,000 


1932-33 


6,84,79,000 


1938-39 


45,22,000 


1933-34 


4,72,04,000 


1939-40 


3,96,08,000 


1934-35 


3,81,35,040 


1940-41 


18,24,000 


1935-36 


3,24,16,000 


1941-42 


1,94,000 


1936-37 


50,52,000 


1942-43 


56,000 






1943-44 


4,14,000* 



* It is difficult to reconcile this figure as imports of sugar were reported to 
be negligible. It transpires, however, that some sugar imported previously was 
taken out of bond during the period and duty was paid during this period. 

The next table shows the revenue derived from excise duty on 
sugar from 1934-35 to 1943-44 : 

TABLE NO. 3 
Revenue derived from Excise Duty on Sugar from 1934-35 to 1943-44 



Year (April -March) 


Amount 
Rs. 


1934-35 




.. 


97,22,000 


1935-36 






1,58,84,000 


1936-37 






2,52,49,000 


1937-38 






3,31,48,000 


1938-39 




> 


4,23,03,000 


1939-40 




. 


2,49,06,000 


1940-41 




, 


3,92,97,000 


1941-42 




t 


6,68,27,000 


1942-43 




. 


4,81,84,000 


1943-44 






6,79,00,000! 



Alterations in the Level of the Duty on Sugar in the middle 
of the Season Undesirable 

Another point. The Government have made alterations in the level 
of the excise duty and import duty on sugar with effect from March, 
i.e., along with the presentation of the proposals for the budget of the 
Government of India. While this policy may be suitable for other 
industries, it is definitely unsuitable for the sugar industry, as any 
change in the duty coming in the middle of the season is bound to 
cause serious complications and result in harmful consequences. There 
is a strong reason for deviating from the usual practice in the case of 
the sugar industry, which is a seasonal industry. As is well known, 
the manufacture of sugar in India commences about the month of 
November and continues usually till May or June. Minimum prices 
of cane are fixed by the Provincial Governments of the U. P. and Bihar 
and also in certain other parts of the country, e.g. Madras and Mysore, 
and the quantity of sugar thus affected represents about 80 per cent 
of the total sugar production of India. These minimum prices are fixed, 
at the beginning of the crushing season in November, relying on the 
continuance of the then existing arrangements in respect of Import 
Tariff and Excise Duty. If any change is made during the middle of 

1 Includes Collections of Sugar (Temporary Excise Duty) Ordinance of Nov- 
ember 1943, of As. 13 per maund of sugar. Vide Indian Sugar Industry Annual, 1943, 



vn 

the season either by an increase or decrease in the excise duty, or an 
increase or decrease in the import duty, one or other of the interests 
concerned, i.e. the cultivator or the manufacturer, is bound to be 
adversely affected, and in addition a serious dislocation is also caused 
in the trade. If, for instance, the import duty on sugar is reduced, say, 
with effect from 1st March, it would bring about a fall in the price of 
sugar and the manufacturer stands to lose on his unsold stocks of sugar, 
for the production of which he has paid cane prices at a higher rate than 
would have ordinarily been fixed by the Government concerned, in the 
event of the possibility of lowering the import duty. Similarly, if the 
import duty is increased in the middle of the season, say, from 1st March, 
the manufacturer stands to gain on his unsold stocks of sugar, but the 
cultivator can complain that he has suffered inasmuch as he would have 
been entitled to a higher rate for his cane, if the import duty was 
increased and consequently the manufacturer was enabled to get a 
higher price for his sugar. All things considered, we feel that if any 
changes in the duty on sugar, whether excise or import, are necessary, 
they should be made with effect from 1st November, as it would not 
cause any undue disturbance either to the industrialist or the agricul- 
turist or the trade. Our suggestion for making changes in duty from 
November instead of April, in the case of sugar, has found support also 
from the Indian Sugar Mills Association and the Indian Sugar Svndi- 
cate, who have both addressed the Government of India on the subject. 

In this connection, we also give below the Resolution by the writer 
(Mr. M. P. Gandhi) when he was a Director of the Indian Sugar Syndi- 
cate, which was accepted bv the Indian Sugar Svndicate in January, 
1940, and forwarded to the Sugar Control Board of the U. P. and Bihar 
in February, 1940. On the recommendation of the Sugar Control Board 
the U. P. and Bihar Governments also represented to the Government 
of India that any changes in the import or excise duty should not be 
made in the middle of the season in view of their undesirable repercus- 
sions : 

" Whereas the Sugar industry is a seasonal industry, which 
produces within a period of four or five months the quantity of 
sugar required for the country's consumption during the period of 
12 months, and 

" Whereas the United Provinces and Bihar, which produce about 
80 per cent of the total sugar manufactured in the country, fix the 
minimum price of cane to be bought by the factories, and 

" Whereas the effects of any changes in the import duty on sugar 
or in the excise duty on sugar made during the month of March or 
April, which fall in the middle of the season, are bound to be 
serious, either on the manufacturers or on the cane cultivators ; 
The Sugar Control Board recommends to the Government of the 
United Provinces and Bihar that they should represent to the 
Government of India the " necessity of making any changes in the 
import duty on sugar, or in the excise duty on sugar with effect 
from the month of November, that is, at the beginning of the cane 
crushing season, and not from the month of March or April, as 
has been done hitherto, with a view to avoiding undesirable effects 
either on the producers of the cane or the manufacturers of sugar 
or the merchants dealing in sugar," 



vnt 

It is a matter of regret to find, however, that no attention had been 
paid to this matter by the Government of India when the excise duty 
was increased from its high level of Rs. 2 to Rs. 3 per cwt. in March, 
1940. The increase was made effective from 1st March, 1940, i.e. in 
the middle of the season. 

The consequences of this duty were so serious in the U. P. and 
Bihar that the U. P. and Bihar Government decided to assist the sugar 
industry of these provinces by assuming immediate responsibility for 
payment to the Government of India of Re. 1 of the excise duty payable 
on each maund of sugar manufactured during the 1939-40 season and 
then lying unsold with the factories, with effect from the 25th August, 
1940. 1 

This excise payment (described loosely as rebate) of Re. 1 per 
maund was recovered by the industry in accordance with a scheme 
framed in consultation with the Sugar Syndicate by increasing the cane 
cess in the subsequent season. The Government amended the Suar 
Control Act in 1940 and provided for the realisation of the subsidy from 
the industry by means of advance from the Government of India 
through the imposition of a special cess of six pies per maund of cane 
in subsequent seasons. 

For this purpose the Provincial Governments of the U. P. and Bihar 
borrowed from the Central Government at 3 per cent per annum 
approximately Rs. 150 lacs and passed this sum on to the -factories 
temporarily.- This was recovered slowly from factories and the 
amount was repaid to the Government of India by 1944. 

When the announcement was made for the imposition of additional 
excise duty with effect from 1st March, 1940, the industry represented 
that all sugar produced on or before the 29th of February should be 
exempted from the increased duty. 3 Later, the Government accepted 
this suggestion and made an amendment to their original proposal 
exempting sugar produced on or before the 29th February from the 
additional excise duty of Re. 1 per cwt. Even this small relief which 
created a saving of about Rs. 70 lacs to the industry, was greatly appre- 
ciated by the industry. 4 

1 Vide U.P. and Bihar Government comprehensive communique issued on the 
21st August 1940, in " Sugar Industry at a Glance," 1940, p. 75 of the 1940 Annual. 

2 Vide speech of the President of the Indian Sugar Mills Association at the 
Annual Meeting in Cawnpore, on the 14th September 1940. 

* It will be interesting to observe that in order to avoid sugar produced before 
28th February having to pay a higher excise duty in the event of the Government 
increasing the excise duty along with their budget proposals, the various factories 
took out their quantities of sugar from the godowns and despatched them to up- 
country centres. To prevent such possibility and complications, the Government 
of India had to go to the length of issuing a notification whereby it was laid down 
that "no sugar shall be issued out of a factory or used within a factory in the 
manufacture of any commodity other than sugar, after 5 p.m. on the day appointed 
for the presentation of the annual or supplementary budget of the Central Govern- 
ment to the Chambers of the Indian Legislature. (Vide notification of the Gov- 
ernment of India Finance Department of the 28th December 1940.) 

4 Vide Sugar Industry Annual, 1940, p. 132. 



IX 

Declaration of Policy oj giving Protection for long time necessary 

Another point which calls for some comment is the action of the 
Government of India in not passing an Act for assuring Tariff protection 
to the industry for the entire period ending 31st March, 1946, as was 
recommended by the Tariff Board of 1937. In 1938, the Government 
of India extended protection for one year. In 1939, they extended it 
for another 2 years up to 1941. In 1941, it was again extended by one 
year, by the Protective Duties Continuation Act, and again in 1942 it 
was continued for up to -31st March 1944, by the Protective Duties 
Continuation Act, 1942, and again up to 31st March 1946. 

The industry was thus kept constantly in suspense as to the action 
the Government of India might take in regard to the tariff on suga 
during the future. 

As a matter of fact, when the Government decided in 1939, to 
extend the then existing tariff on sugar for another 2 years up to 31st 
March, 1941, they observed that a further enquiry would be undertaken 
to determine the quantum of protection necessary. 1 A further Tariff 
Board enquiry within 2 years of the last enquiry hardly seemed to be 
necessary. We definitely held the view that if such an enquiry should 
be held, it would only distract the attention of the industry. In this 
connection we give below a copy of the Resolution forwarded by the 
writer (Mr. M. P. Gandhi) who was one of the Directors of the Indian 
Sugar Syndicate to the Indian Sugar Syndicate, in January, 1940. The 
Resolution was accepted by the Indian Sugar Syndicate and forwarded 
to the Government of the U. P. and Bihar in February, 1940: 

" As a result of the outbreak of war and the prevalence of 
abnormal conditions in the Sugar Industry and various other indus- 
tries in the country, the Sugar Control Board recommends to the 
Governments of the United Provinces and Bihar to urge upon the 
Government of India the futility of conducting a further Tariff 
Board enquiry for determining the measure of protection reauired 
for the Sugar Industry, as observed in the statement of objects 
and reasons appended to the Sugar Industry Protection Bill, 1939. 
The Sugar Control Board feels that the Tariff Board is not likely 
to be able to obtain any reliable information either in "regard to 
(1) the cost of production of cane, or (2) the approximate cost 
of manufacture, which depends upon various factors, or (3) in 
regard to the price at which sugar can be imported in India, owing 
to abnormal conditions due to the war. The Control Board, there- 
fore, feels that the attention of the industry should not be distracted 
in the direction of preparing a case for the consideration of the 
Tariff Board, and suggests that the Government of India should take 
suitable action themselves for giving the industry such adequate 
measure of protection as is required by it, during the next six years 
ending 31st March, 1946, and further that they should make an 
announcement in November, 1940, in regard to the protection to 
be given to the industry during the entire remaining period, so as 
to remove the uncertainty in this respect." 

1 Vide statement of objects and reasons appended to the Sugar Industry (Pro- 
tection) Bill, 1939, introduced in the Legislative Assembly. The text of the Sugar 
Industry (Protection) Act, 1939, is given in the Sugar Industry Annual, 1939, p. 6, 



It is a matter for gratification to note that the Government of India 
announced in October, 1940, that owing to the prevalence of abnormal 
and unsettled conditions of the industry as a result of the war, it would 
bo difficult for the Tariff Board to obtain proper data, and that in these 
circumstances they considered that any Tariff Board enquiries would 
be of very little value, and accordingly decided not to set up a Tariff 
Board in connection with the sugar industry and also other industries 
if the present unsettled conditions continued. 

As observed before, the Government of India have extended pro- 
tection to the industry year by year. We feel, however, that even now 
the Government should pass an Act assuring protection to the industry 
for the remainder of the period of protection i.e. up to the 31st March, 
1946, instead of keeping the industry in suspense in regard to such 
matter by extending the duties from year to year. 1 

As a result of the general increase in the import duties by 20 per 
cent with effect from 1st March, 1942, the total import duty on sugar 
has been increased to Rs. 11-1-7 per cwt. (the excise duty is maintained 
at the same old level of Rs. 3 per cwt.), and will remain at that level 
till 31st March 1946. 



1 This was done in March 1944, by the Protective Duties Continuation Act, 
1944, for a period of 2 years, whereby status quo is maintained up to 31st March 1946. 



APPENDIX NO. Ill 

SUBSTITUTION OF GUR BY SUGAR, AND POSSIBILITIES OF 
DEVELOPMENT OF PALM GUR INDUSTRY 

Necessity of Exploring Possibility of Development of 
PaZm Gur Industry 

A study of the Indian Sugar Industry will reveal at once the fact 
that the production of gur is 3-4 times as large as the production of 
sugar in the country at present. The per capita consumption of gur is 
also equally large. An idea of the size of the gur-manufacturing indus- 
try has heen given in the body of the thesis. It will be interesting to 
note that about 60 per cent of the cane crop of the country is consumed 
for the manufacture of gur, as against about 20 per cent consumed for 
the manufacture of cane sugar. 

As a matter of fact, it must be observed that the continuance of the 
production and consumption of gur in such large quantities, even in the 
face of all the modern methods of sugar refining, is a remarkable feature 
of the national economy of the country. With the imorovement in the 
purchasing power of the people, the spread of the tea habit, and the 
substitution of sugar for aur in the sweetmeat trade, and the demand 
for a clean and white product from sugarcane, it would normally appear 
1hat the consumption of gur should show a tendency to decrease as 
time progresses, but pctually this has not been the case. The replace- 
ment of aur by sugar and the extent of such substitution depends greatly 
on the level of the urices (if sugar and gur. If sugar becomes 
cheaper (but it should not be forgotten that it has to bear a heavv 
excise duty of Rs. 3 per cwt.) , most likely it may be preferred to aur 
to some extent and for some uses. But if sugar rises in price, as has 
been the ca.se during the last 3-4 years, people, particularly in the 
villages and 70 per cent of the population of India live in villages will 
certainly replace it to some extent by gur. 

My view is that, as in the past, the consumption of gur and sugar 
will continue to grow slowly with the improvement in the economic 
condition of the people, but it is improbable that there will be anv 
serious reduction in the consumption of gur as a result of increased 
consumption of sugar, for gur is a delicious food liked by millions in 
the country, and is not easily substituted by sugar. It is not only a 
sweetening ingredient in food and drink, but it is itself an article of 
food and is on the dietary of a very large population in all parts of the 
country. 

Indeed, it is also commonly believed that gur has superior nutritive 
value and its production deserves encouragement not only on the 
economic ground of promoting a cottage industry, but also for its 
superior character described above. Mahatma Gandhi, in the course 
of an editorial in the " Harijan" dated 13th April, 1935, observed : 

" Most undoubtedly people will be advised to use gur for their 
milk and tea. Thev will be told, as they are being told, ihat it is 
superstition to think that gur taken in milk or tea is injurious to 



Xll 



health. One correspondent says that on his wife beginning to take 
gur with her tea instead of sugar she lost her constipation, I am 
not surprised, because gur has a mild laxative effect which sugar 
certainly has not." 

Gur is produced not only from cane, but also from Palmyra, 
Cocoanut, Date Palm 1 Sago and Wild Date. Except Cocoanut, which 
requires cultivation, the other varieties grow wild and no nursing is 
necessary for them. There is a great possibility of development of this 
palm gur industry in all the provinces of India. 

Possibility of Development oj Palm Gur Industry should be Explored 

Having discussed the possibility, rather the improbability, of substi- 
tuting gur by sugar, to any large extent, it would be interesting to 
assess the possibility of the development of the palm gur industry in the 
country. Palm and Date trees are in abundance in various parts of 
India. It is estimated that there are about 4 crores of Palmyras alone. If 
these are utilised for manufacture of gur, they will not only add to the 
national wealth but create a revolution in agriculture. If the required 
numbers of palms are planted, it does not seem to us improbable that 
within the next 30 or 40 years, a bulk of the 4,00,000 acres of good 
agricultural land which is under cane at present could be relieved. And 
if this comes off, it would be possible to release such land for producing 
cereals and other food crops in the production of which there is a 
serious deficiency in the country. 2 

We would, therefore, suggest that a proper investigation should 
be made in regard to the possibility of replacing cane gur and sugar, 
by palrn gur and sugar, to such an extent as is possible, in the larger 
economic interests of the country. 



1 Palm jaggery is as good as cane jaggery. The utility of this commodity as 
an avenue of employment for the erstwhile toddy drawers has been recognised 
now. The total quantity of Palmyra jaggery is estimated at about 1,00,000 tons, 
40,000 tons being in Madras Presidency alone. Also vide Report of the All-India 
Village Industries Association, 1938 and 1939, and Indian Sugar Industry Annual, 
1939, 1940 and 1941. 

2 The severe famine in Bengal in 1943 revealed the deficiency of India in 
regard to food crops for the requirements of her population. Any land that can 
be released for growing food crops would therefore be of help in solving this 
problem to some extent. 



APPENDIX NO. IV 

IMPORTANT PROBLEMS FACING THE SUGAR INDUSTRY 
AND AWAITING SOLUTION 



1. Regulation both of the cane crop and of sugar production by 
a careful planning, for the purpose of preventing overproduction of 
sugar, either by restrictions on establishment of new factories or by 
extensions to the plants of existing factories, or by assignment of quotas 
among all factories in the country, either by All-India legislation or a 
private agreement amongst the factories, with a view to avoiding wide 
fluctuations in production from year to year, and to ensuring a carry- 
over of between 2 to 3 lacs tons of sugar every year. 

2. Improvement of the quality of cane and the average yield per 
acre to at least 50 tons per acre and eradication of pests and diseases 
of cane. 

3. Reduction of the cost of production of cane to about Rs. 0-2-6 
per maund. 

4. Development of improved varieties of cane, particularly in 
reserved areas for factories in the U. P. and Bihar, and in close vicinity 
of factories in other parts of India. 

5. Provision of demonstration farms for cultivation of different 
varieties of sugarcane, in close proximity to the factories for experi- 
mental purposes, and distribution of hardy and healthy seeds of early 
ripening and late ripening qualities suited for various areas from the 
factory farms. 

6. Large supplies of fresh and rich cane with high sucrose content 
from areas adjacent to mills which would yield larger recovery, and 
acquisition of land in the vicinity of factories for research or production 
of suitable cane. 

7. Provision for irrigation of tube-wells, drainage facilities and 
better roads, and removal of municipal tolls, etc. * 

8. Dissemination of knowledge amongst the cultivators regarding 
manuring, crop rotation, ratooning of the cane crop, electro culture, 
suitable fertilisation, modern agricultural implements and methods for 
eradication of diseases in cane crop, and plantation of improved 
varieties. 

9. Extension of the duration of cane crushing season for factories 
from 4 months as at present to about 7 months in a year, by develop- 
ment of early ripening and late ripening varieties of cane. 

10. Chemical, Technological and Agricultural Research on a 
comprehensive scale for increasing the recovery percentage of sugar, 
efficiency of plants for extracting maximum sucrose, cultivation 
of improved varieties of sugarcane, and for studying scientific methods 
of combating and eliminating of cane pests, by providing larger amount 
of money for research work annually. 



XIV 

11. Establishment of a Central Research Institute for the U. P. 
and Bihar for cane development, for testing of seedlings and under- 
taking breeding work for the U. P. and Bihar, as is being done in 
Coimbatore for drought resistance, for hybridisation by crossing sugar- 
cane with bamboos and with sorghum, etc. 

12. Utilisation of molasses, particularly for manufacture of power 
alcohol, and of bagasse, and of press-mud, produced in factories. 

13. Necessity of good feeder-roads, tramways and aerial ropeways 
for quicker and cheaper transport of cane and abolition or reduction of 
Municipal and local tolls in various places on cane carts. 

14. Utilisation of the proceeds of the Cane Cess for suitable deve- 
lopment of cane in the U. P. and Bihar, through a representative Com- 
mittee consisting of representatives of the industry and agriculturists. 

15. Regulation of production of cane, and of sugar from year to 
year in order to avoid cycles of overproduction and underproduction, 
as far as possible, in the interest of the stability of the industry. 

16. Scientific marketing of sugar and control of sugar prices in a 
manner which would avoid wide fluctuations from year to year. 

17. Evolution of an efficient and scientific Common Sales Orga- 
nisation for the entire industry which would undertake direct sales 
and distribution of sugar in appropriate quantities in the various 
markets, avoiding criss-crussing of traffic, thus economising in freight 
charges and avoiding wasteful transport. 

18. Proper location of factories at suitable places spread all over 
the country, and rectification of the defects of haphazard location of 
factories and of concentration in the U. P. and Bihar, in the sub- 
tropical region, by an appropriate dispersal of industries. 

19. Co-operation of railways and Steamship Companies in reduc- 
ing freights and grant of other facilities like sufficient supply of suitable 
wagons for transport of sugar, cane, molasses, sulphur, lime, gunny 
bags, etc. 

20. Necessity of adoption of a long term policy which would lead 
to a progressive reduction in the prices of cane and also of sugar with 
a view to eliminating the necessity of the present high tariff at an early 
date. 

21. Evolving of a suitable method of fixing minimum prices of 
cane, at a level which would give a fair return to the cultivator, and a 
fair distribution of the profits, with a view to affording suitable incen- 
tive to agriculturists to grow superior quality of cane by giving higher 
prices therefor. 

22. Standardisation of quality of sugar and of improvement, 
therein, and improvement of quality of gur and its keeping qualities. 

23. Propaganda for increased consumption of sugar by dissemi- 
nating information about its nutritive qualities, by opening retail shops 
in suitable areas for selling sugar, by selling products made from sugar 
at cheap rates in industrial and agricultural areas, by educating people 
about other industrial uses of sugar and by developing subsidiary in- 
dustries like the manufacture of confectionery, syrups, cubes etc. 

24. Necessity of vigorous development of cane areas reserved for 
the various factories in order that factories would receive their com- 
plete requirements of cane from such areas within a few years. 



25. Improvement in efficiency of Khanclsari method of production 
of sugar. 

26. Necessity of development of Cane Co-operative Societies for 
supply, and development of cane, in a manner which would ensure 
co-operation of factories with them. 

27. Provision of adequate storage facilities to prevent dampness 
and deterioration of the quality of sugar. 1 

28. Acquisition of other markets like Nepal, Tibet, Afghanistan, 
Kashmir, Ceylon, Burma, Iran, Iraq and the Middle East for Indian 
Sugar. 

29. Continuance of efforts for export of sugar to U. K. and other 
countries and acquiring of suitable preference in the U. K. market for 
Indian sugar. 

30. Availability of accurate and detailed information, by im- 
provement of our statistics of the total cane crop, of Khandsari and gur 
manufacture, of percentage of cane crushed in factories, gur making 
etc., to enable scientific planning and future development. 

31. Establishment of an All-India Control on the industry, with 
a view to adoption of a national policy, and to achieve suitable regional 
development of this factory in all provinces by directing further loca- 
tion of factories in areas outside U.P. and Bihar. 

32. Solution of problems created by Indian States, e.g. levy of an 
import duty on Indian Sugar entering their territory with a view to 
encouraging development of the industry in their area ; prohibition of 
import of Indian sugar in their territory in order to encourage import 
of sugar at ports in their territory, e.g. Morvi State in Kathiawar etc., 
through diplomatic channels and through the agency of the Central 
Government etc., etc. 

33. Establishment of a Sugar Research Foundation, on the lines 
of American Foundation of June 1943, for carrying on research relat- 
ing to sugar and any or all uses, of sugar, in any form whatsoever, 
and whether as a food or an ingredient of foods and beverages, or in 
industry or otherwise. This research will include studies in Nutrition, 
Biochemistry, Physiology, Medicine, Dentistry, Metallurgy, Micro- 
biology, Organic Chemistry both fundamental and applied, Beet and 
Cane by-products, etc. 

34. Dissemination of information regarding sugar being one of 
the cheapest, concentrated, most universally used and palatable sweet- 
ening agent of proved high calorific value, easy of transport and unique 
for quick conversion into energy, containing 100 per cent carbohydrate 
and its value as a prime and vital food being enhanced due to the 
shortage of carbohydrate in general all over the world, as revealed in 
the Hot Springs Conference of 1943, where the shortage of energising 
foods like potatoes, sugar and cereals, all over the world, was 
emphasized. 



1 It is interesting to note that the U.P. and Bihar Sugar Factories Control 
Rules make it compulsory for any new factory allowed to be established, to 
build storage accommodation for at least one-third of the estimated annual pro- 
duction of sugar at the factory. 



APPENDIX V 
BIBLIOGRAPHY 



The Indian Sugar Industry Its Past, Present and Future, by M. P. Gandhi, 1934, 
380 pages. With a foreword by Sheth Walchand Hirachand. Rs. 5-8. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1935. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1936. With a foreword by 
Lala Karamchand Thapar. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1937. With a foreword by 
Sardar Kripal Singh, President, Indian Sugar Mills Association. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1938. With a foreword by 
Dr. Rajendra Prasad. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1939. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1940. With a foreword by 
Dr. Syed Mahmud, Ex-Minister, Education and Development Department, 
Bihar. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1941. With a foreword by 
Mr. D. R. Sethi, Director of Agriculture, Bihar. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1942. Rs. 5-14. 

The Indian Sugar Industry Annual, by M. P. Gandhi, 1943. Rs. 6-6. 

Research in Sugar Problems and Utilisation of By-products, by M. P. Gandhi. 

Single Sugar Selling Organization (A Central Marketing Board), by M. P. Gandhi. 

The Indian Sugar Industry and Problems of Transport, by M. P. Gandhi. 

Possibilities of the Development of Sugar Industry in Bengal, by M. P. Gandhi. 

The Indian Sugar Industry Its Present Problems and Future Needs, being a Memo- 
randum submitted to the Tariff Board in May 1937, by M. P. Gandhi. 

Can India Export Sugar? Being a Memorandum submitted to the Tariff Board 
in August 1937, by M. P. Gandhi. 

The Indian Sugar Industry (Protection) Supplement submitted to the Tariff Board, 
1937, by M. P. Gandhi. 

The Sugar Industry in India a pamphlet published on the occasion of the Eastern 
Group Conference held in India in 1940, at the instance of the Government 
of India, by M. P. Gandhi. 

The Indian Cotton Textile Industry Its Past, Present and Future, with which is 
incorporated the 1937 Annual, by M. P. Gandhi. With a foreword by 
Sir Purshotamdas Thakurdas, Kt., C.I.E., M.B.E. 

The Indian Cotton Textile Industry Annual, 1938, 1939, 1940, 1941, 1942 and 1943 by 
M. P. Gandhi. Rs. 4-4 each. 

The South African Sugar Journal (Durban), Monthly. 
Facts about Sugar (New York), Monthly. 

Sugar News and Industrial Review (Manila, P.I.) 7 Monthly. 
The International Sugar Journal (London), Monthly. 
Lamborn's Sugar Journal (New York), issued weekly. 

Indian Sugar, issued by the Indian Sugar Syndicate, Ltd., Cawnpore, Monthly for 
various years. 

Indian Fanning, a Monthly issued by the Imperial Council of Agricultural Research. 
Delhi 

Plan for Provincial Reconstruction, by Dr. Syed Mahmud. 

Annual Reports of the Imperial Council of Agricultural Researchfor several years. 



xvn 

Reports of the Agricultural Department, and of the Industries Department, Govern- 
ments of Bihar, U.P., Bombay, Bengal, Madras and various Indian States. 

Monthly Survey of Business Conditions in India, issued by the Government of 
India. 

Philippine Sugar Industry with a Plea for Research in Indian Sugar Industry, by 
Mr. C. P. Gupta. With a foreword by Mr. M. P. Gandhi. 

Proceedings of the Indian Legislative Assembly and Council of State for several 
years. 

All -India Sugar Production Forecast Final General Memorandum of the Sugarcane 
Crop and Review of the Sugar Industry in India, in several issues of the 
Indian Trade Journal, Calcutta. 

Economic Aspects of Cane Sugar Production, 1927, by F. Maxwell. 

Industrial Organisation in India, by Dr. P. S. Lokanathan. 

Economic Development of India, by Anstey (Vera). 

The State and Industry, by A. G. Glow. 

The Indian Tariff Problem, 1933, by H. L. Dey. 

Principles of Industrial Management, N.Y., 1931, by K. Duncan. 

Industry and Trade, 1919, by Alfred Marshall. 

Economic Conditions in India, 1925, by Dr. P. P. PillaL 

Some Aspects of the Tariff Question, 1915, by F. W. Taussig. 

Theory of Location of Industries, 1929, by Alfred Weber. 

Method of Rationalisation, by L. E. Urwick. 

Inter-regional and International Trade, by B, Ohlin. 

Proceedings of the Sugar Conference, 1933, Simla. 

Annual Reports of the Indian Sugar Mills Association and of the Indian Sugar 
Syndicate. 

Annual Review of the Trade of India for several years. 

Indian Industrial Commission, 1916-18 Report. Appendix to the report and evi- 
dence, Vols. 1 to 5. 

Report of the Royal Commission on Labour and Evidence Volumes, 1931. 
Indian Fiscal Commission, 1922 Report and Evidence Volumes 1 to 3. 
Indian Sugar Committee Report, 1920. 

Indian Tariff Board Sugar Industry Report, 1931, Vol. 1 and Written and Oral 
Evidence volumes. 

Indian Tariff Board Sugar Industry Report, 1939, Written and Oral Evidence 

volumes. 

Report of the U.P. and Bihar Joint Power Alcohol Committee, 1938. 
Bihar Labour Enquiry Committee Report, 1940. 

Utilisation of By-products of the Sugar Industry, by H. S. Chaturvedi. 
Power Alcohol Question in its Present State, by Charles Schwitzer. 

World Progress of Power Alcohol Industry, by H. Bose. (International Sugar 

Journal, Vol. 34, pp. 26 and 28, 1932.) 

India and Democracy, by Sir George Schuster and Guy Wint, 1941. 
Monthly Journals of the Indian Merchants' Chamber, Bombay. 

Studies in Indian Economics, issued by the office of the Economic Adviser to 
the Government of India : (1) The Burden of the Indian Tariff, by T E 
Gregory and W. R. Natu. (2) History of Indian Tariff, by B. N. 
Adarkar. 

Report of the International Labour Conference, 1939. 

Economic Problems of Modern India, Vol. 1, edited by Radha Kamal Mukerjee. 

Indian Tariff Problems, by H. L. Dey. 

Annual Reports of the Federation of Indian Chambers of Commerce and Industry. 

Problems of Industry in the East, by Harold Butler. (Issued by the International 
Labour Office. 1938). 



XVlll 

Report on the Marketing of Sugar published in the " Indian Finance " weekly 
from Calcutta. In India and Burma published by the Government of 
India, 1943. 

Annual Marketing Review Premchand Roychand and Sons, Bombay. 

Minimum Wage, International Labour Office, Geneva, 1939. 

Indian Finance, Calcutta Annual Supplements and various weekly issues. 

Commerce, Bombay Annual Supplements and various issues. 

Capital, Calcutta Annual supplements and various weekly issues. 

A Monograph on Indian Railway Rates, by S. C. Ghosh. 

Agricultural Marketing in India Annual Reports. 

The Indian Journal ol Economics various issues. 

Industrial Labour in India, edited by the International Labour Office, Geneva, 1938. 

Accounts relating to the Seaborne Trade and Navigation to British India various 
issues. 

Reports of the National Planning Committee, 1940. 

Proceedings of the various meetings of the Sugar Committee oi the Imperial Council. 

Reports of the All-India Manufacturers' Organisation, Bombay. 

Journal of Economics of the Royal Economic Society, London. 

Indian Fiscal Policy with Special Releience to Sugar, by B. P. Adarkar of Alla- 
habad University. 

Indian Tariff Policy, by B, N. Adarkar. 

Dr. Burn's Report on Possibilities of Technological Development in Agriculture 

in India, 1945. 

Reports of the Railway Board lor various years. 
Prosperity through Industry, by Sir M. Visvesvarayya, 1942. 
Food Planning for Four Hundred Millions, by Dr. Radhakamal Mukerjee, 1938. 
Guidance in the Theory of International Trade, 1937, by J. Viner. 
British Industries and their Organisation, 1933, by G. C. Allen. 
Modern Industrial Organisation, 1933, by Von Backeratt. 
Tariffs, the Case Examined (1932), by S. W. Beveridge. 
Economics of Overhead Costs, 1933, by J. M. Clark. 
The Logic of Industrial Organisation, 1933, by Florence and Sargent. 
The New Industrial Organisation, 1936, by Levy Herman. 
Report of the United Kingdom Sugar Industry Inquiry Committee, 1935. 
Report on the Work of the Imperial Council of Agricultural Research in applying 

science to crop production in India, by Sir John Russell, D.SC., F.R.S., 1937. 
World Sugar Statistics, 1938, by F. O. Lichl, and Monthly issues. 
Australia Today, 1942. 

Cane Sugar, 2nd edition, revised and enlarged, by Noel Dee IT. 
Cane Sugar and Its Manufacture, by H. C. Prinsen Geerligs. 
Cane Sugar Production, 1912-37, by H. C. Prinsen Geerligs. 

Handbook for Cane Sugar Manufacturers and their Chemists, by Dr. Guilford L. 
Spencer. Revised by George P. Meade, B.S., ch.E. Seventh edition. 

Manufacture of Cane Sugar, second edition, by Elewellyn Jones and F. I. Scard. 
Modern Milling of Sugarcane, by Francis Maxwell. 

Plantation White Sugar Manufacture, by W. H. T. Harloff and H. Schmidt. 
Sugar, by Geofrey Fairrie. 



LIST OF SUGAR MILLS IN INDIA AND BURMA 

WORKING AND PROJECTED 
(1944-45) 



THOROUGHLY REVISED AND BROUGHT UP-TO-DATE 



APPENDIX 



Publishers : GANDHI & CO. (Publishers), 

Jan Mansion, Sir Pherozeshah Mehta Road, 

FORT - BOMBAY 



Telegrams : " KEEN ", BOMBAY. Telephone : ( ^ ; 259 f ' * 4 47 

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