In a major relief to sugar industry, the government has approved Rs 4,500 crore package for the sugar industry. The package includes over two-fold jump in production assistance to cane growers and transport subsidy to mills for export up to 5 million tonnes in the marketing year 2018-19. The Cabinet Committee on Economic Affairs (CCEA) approved the food ministry's proposal that seeks to address the surplus domestic stock of sugar and help mills in clearing huge cane arrears of around Rs 13,000 crore. This is the second financial package to bail out the sugar industry after Rs 8,500 crore announced in June.
The industry is facing a glut-like situation because of record production of 32 million tonnes (MT) in the 2017-18 marketing year (October-September), resulting in a closing stock of 10 MT at the end of this month. Under its 'Comprehensive policy to deal with excess sugar production in the country', the ministry has recommended offsetting cost of sugarcane to sugar mills by increasing the production assistance paid to growers at Rs 13.88 per quintal for the 2018-19 marketing year from Rs 5.50 per quintal for this year.
With low global prices, the ministry has suggested helping mills to export 5 million tonnes of sugar under the Minimum Indicative Export Quota (MIEQ) during 2018-19 by compensating expenses towards internal transport, freight, handling and other charges. The ministry has proposed a transport subsidy of Rs 1,000 per tonne for the mills located within 100 km from ports, Rs 2,500 per tonne for mill located beyond 100 km from the port in coastal states and Rs 3,000 tonnes per tonne for mill located in other than coastal states.
Like in the current year, the production assistance will directly be credited into the sugarcane farmers' account on behalf of the mills as part of the government's measures to clear more than Rs 13,500 crore in arrears sugar mills have towards farmers.
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