1. Commodity News

Cabinet Approves Rs 3,355 crore Interest Subsidy for Sugar Sector

Abha Toppo
Abha Toppo

Union Cabinet on 7th March 2019 approved the proposed interest subsidy of Rs 3,355 crore to the sugar mills that are setting up distilleries for producing additional capacities as a part of the ethanol blending programme.

Finance Minister Arun Jaitley while addressing a press conference said this would be besides Rs 1,332 crore interest subvention on soft loans taken by the sugar mills announced by the Centre in June 2018.

Jaitley said, “The approval would assist the stressed sugar mills in enhancing liquidity through value addition to their revenues from supply of ethanol for fuel blending programme”. He added that this will indirectly help the sugar mills to clear up their arrears to sugarcane farmers.

A sum of Rs 2,790 crore will be allocated towards interest subvention for extending the indicative loan amount of Rs 12,900 crore by banks to the sugar mills. This will be done under a scheme to boost ethanol production in the country.


It must be recalled that the Cabinet Committee on Economic Affairs (CCEA) had also sanctioned an additional amount of Rs 565 crore towards the interest subsidy on loans worth Rs 2,600 crore. The molasses based stand-alone ethanol distilleries would be utilised for increasing the capacity through installation of incineration boilers & other methods to guarantee zero liquid discharge.

Though 268 applications have been received under the former proposal, the scheme for standalone ethanol distilleries will be prepared soon by the food and public distribution department.

An official statement said the interest subsidy to be given under each of the schemes is 6% per annum or 50 % of the commercial interest charged by banks. 

This is the 2nd such scheme announced by the Government for sugar sector in this month. Earlier on 1st March, it approved a proposal to grant soft loans amounting to Rs. 7,900 to 10,540 crore to the sugar industry, with the centre bearing interest subvention of 7 to 10 %.

The loans are being provided to help the industry clear sugarcane dues to the cane growers that has crossed Rs. 20,000 crore as on 22nd February 2019.

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