The government is mulling a proposal for providing additional interest-free loans of Rs 4,400 crore, over the granted Rs 6,600 crore to cash-starved sugar mills to clear dues to cane farmers. Further, the food ministry is also looking at raising the import duty for sugar from 15% to 40%, to curb cheap imports and contemplating a proposal for increasing ethanol blending in petrol to 10% as an effort to improve the liquidity of mills. It might also consider fixing the export incentive on raw sugar for two years against the current practice of revising it every two months.
The bailout package for sugar industry was discussed in the meeting attended by Transport Minister Nitin Gadkari, Women and Child Development Minister Maneka Gandhi, Agriculture Minister Radha Mohan Singh and others.
In the inter-ministerial panel meeting, government broadly agreed to work on a mechanism to enable state governments to bear the burden of fixing a higher state advised price (SAP) over the price determined by the Centre. The previous United Progressive Alliance (UPA) government had decided to give an export incentive of Rs 3,300 per tonne on raw sugar to bail out millers suffering losses due to the falling retail price and rising cane purchase cost. The incentive was part of a package determined by the previous government, which summed up to Rs 6,600 crore.
Currently, sugarcane arrears stand at about Rs 11,000 crore across the country, with the maximum of Rs 7,200 crore in Uttar Pradesh, according industry body, Indian Sugar Mills Asssociation (ISMA), which also highlighted that banks have disbursed about Rs 3,500 crore loans of the total Rs 6,600 crore approved by the government.
