In a major breakthrough, the deadlock between the sugar industry and farmers came to an end after an informal Group of Ministers (GoM), constituted by Prime Minister Manmohan Singh and headed by Agriculture Minister Sharad Pawar, recommended a financial package to millers, which included an interest-free loan of Rs 7,500 crore to pay off arrears, which according to the sources in the industry stood at Rs 5064 crore in 2012-13.
The loan, over which interest subvention of 12% has been agreed upon, can be repaid in five years with a moratorium of two years. Of this, 5% will be borne by the Centre and 7% will come from the Sugar Development Fund under the Ministry of Food. With this development, each mill can avail loan under this arrangement equivalent to the average excise duty paid by it.
The EGoM panel also proposed 10% ethanol blending with gasoline that will help sugar companies to boost revenues from by-product. Additionally, the PM-constituted panel also recommended loan recasting for mills as per the Reserve Bank norms, incentives for production for raw sugar of up to 4 million tonnes and setting up of buffer stock.
However, the Ministers did not take any decision on raising the import duty on sugar, which is a major concern of the millers. Notably, the current import duty for sugar in India stands at 15%, which is much lower than the import duty of other agricultural commodities such as coffee and tea that stands at 100%, 80% for rice in husk, 70% for coconut and 50% for maize and apple.
The loan, over which interest subvention of 12% has been agreed upon, can be repaid in five years with a moratorium of two years. Of this, 5% will be borne by the Centre and 7% will come from the Sugar Development Fund under the Ministry of Food. With this development, each mill can avail loan under this arrangement equivalent to the average excise duty paid by it.
The EGoM panel also proposed 10% ethanol blending with gasoline that will help sugar companies to boost revenues from by-product. Additionally, the PM-constituted panel also recommended loan recasting for mills as per the Reserve Bank norms, incentives for production for raw sugar of up to 4 million tonnes and setting up of buffer stock.
However, the Ministers did not take any decision on raising the import duty on sugar, which is a major concern of the millers. Notably, the current import duty for sugar in India stands at 15%, which is much lower than the import duty of other agricultural commodities such as coffee and tea that stands at 100%, 80% for rice in husk, 70% for coconut and 50% for maize and apple.
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