Amid rising concerns over the increasing financial costs of the Indian sugar industry, Food Ministry will soon seek Cabinet nod for providing interest-free loans to cash-starved sugar mills to help them meet working capital requirements. The ministry's move follows a meeting of informal group of ministers, headed by Agriculture Minister Sharad Pawar last week, which discussed current issues faced by the sugar industry. Presently, lenders are cautious for giving loans to sugar mills due to their poor financial condition.
Food Secretary Sudhir Kumar has said that if banks come forward to lend the sugar industry, food ministry will pay the interest accrued on loans from the sugar development fund, which is around Rs 12,000 crore. Meanwhile, if banks lend about Rs 3,000 crore for two years to the sugar industry, interest would be about Rs 380-400 crore against the excise paid by them over the last two sugar seasons.
Domestic sugar industry is facing financial problems owing to the increase in cost of production and sharp fall in domestic sugar prices on account of surplus supplies. Recently, sugar mills in Uttar Pradesh, the country’s second largest producer region, have refused to operate due to the high cane price of Rs 280 per quintal fixed by the state for 2013-14 marketing year (October-September). Domestic mills cannot pay more than Rs 225 per quintal. Food ministry wants to take steps soon as if the logjam continues and crushing gets delayed, it will adversely impact the sugar production in the country. Meanwhile, sugar availability in the country would be sufficient to meet the domestic demand of about 22 million tonnes. India’s sugar production is expected to increase at 250 lakh tonnes in the 2013-14 season (October-September) as against 245 lakh tonnes in the previous year. At present, annual domestic consumption is at 230 lakh tonnes.
Food Secretary Sudhir Kumar has said that if banks come forward to lend the sugar industry, food ministry will pay the interest accrued on loans from the sugar development fund, which is around Rs 12,000 crore. Meanwhile, if banks lend about Rs 3,000 crore for two years to the sugar industry, interest would be about Rs 380-400 crore against the excise paid by them over the last two sugar seasons.
Domestic sugar industry is facing financial problems owing to the increase in cost of production and sharp fall in domestic sugar prices on account of surplus supplies. Recently, sugar mills in Uttar Pradesh, the country’s second largest producer region, have refused to operate due to the high cane price of Rs 280 per quintal fixed by the state for 2013-14 marketing year (October-September). Domestic mills cannot pay more than Rs 225 per quintal. Food ministry wants to take steps soon as if the logjam continues and crushing gets delayed, it will adversely impact the sugar production in the country. Meanwhile, sugar availability in the country would be sufficient to meet the domestic demand of about 22 million tonnes. India’s sugar production is expected to increase at 250 lakh tonnes in the 2013-14 season (October-September) as against 245 lakh tonnes in the previous year. At present, annual domestic consumption is at 230 lakh tonnes.
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