Centre's Rs 15,000 -crore Soft Loan Programme to Sugar Mills Moving at Slow Pace

According to All India Sugar Trade Association, at present, 3 to 4 lakh tonnes of sugar gets diverted for ethanol making. With creation of additional capacity under  the scheme, 9 to 10 lakh tonnes of sugar is expected to be diverted for ethanol production.

Sugar mills have supplied 175 crore liters of ethanol to oil marketing companies (OMCs) till October 22 of the 2018-19 season (October-September) & helped them achieve 5.2% blending with petrol, according to industry data.

As per the industry experts, the Centre’s Rs. 15,000-crore soft loan programme for sugar mills to set up ethanol units is moving at a very slow speed as banks have so far disbursed only about Rs. 800 crore. To help millers in clearing cane arrears and divert surplus sugar for ethanol manufacturing the Government had announced a loan package in 2 tranches - first in June 2018, amounting to Rs. 4,440 crore & the other in March 2019 of Rs. 10,540 crore. 

The soft loan was announced to improve liquidity of mills, reduce sugar inventory and facilitate timely clearance of the cane price dues of farmers.

According to the Food Ministry sources, the ministry had received a total of 418 applications, of which 328 were found eligible for soft loan. “The ministry has cleared 328 applications totalling a loan amount of Rs. 16,482 crore so far. Now, banks have to further process these applications and take a call,” official added.

Industry experts said only 5-6% of the total soft loan amount of Rs. 15,000 crore announced under the scheme has been disbursed so far by banks. The ministry checked whether mills have cleared loans taken from the government’s Sugar Development Fund (SDF) & also whether they supplied their quota of sugar for ration shop sale (called levy sugar) before 2013. The scheme was launched in June 2018 & still the ministry is screening the applications. In this speed, mills could not benefit from the scheme as it takes at least 18 months to establish an ethanol unit.