A traders' organization on Monday threatened to stop importing sugar from July 1 to demand the removal of 4% value added tax (VAT) on the essential commodity.
The Federation of All Orissa Traders' Association (FAOTA) said the state government will be solely responsible for any inconvenience caused to consumers due to the shortfall.
According to the traders, Orissa is completely dependent on other states such as Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra for sugar.
Orissa's annual sugar requirement is around 6.5 lakh tones but the six mills in the state can only cater to 5% (35,000 tonnes) of this demand, they added.
"It's impossible on our part to do business by paying 4% VAT to the government. No state in the country has imposed such an arbitrary rule on an essential commodity such as sugar.
The government had assured us that it would rollback its decision, but nothing has happened so far," said FAOTA general secretary B K Mohanty.