1. Commodity News

Centre Approves up to Rs 10,540 crore Soft Loan to Sugar Industry

Abha Toppo
Abha Toppo

The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister Narendra Modi on 28th February approved a soft loan of up to Rs 10,540 crore for the sugar industry to help mills clear the increasing arrears to cane farmers.

Centre will bear the interest subvention cost at the rate of 7 to 10 percent to the extent of Rs. 553 to Rs 1054 crore for 1 year.  Sugarcane arrears to growers have crossed Rs 20,000 crore in the current marketing year 2018-19 (October-September).

In order to make sure that cultivators are paid their dues expeditiously, the government has asked banks to ask for bank account details of these cane growers from the mill owners, so that the amount is directly paid to farmers.

An official statement said, "The CCEA, in order to encourage the mills to clear their dues, has also decided that the sanctioned soft loans will be given to those units, which have already cleared at least 25 percent of their outstanding dues in the 2018-19 sugar season".

The decision to grant soft loans comes a fortnight after the government raised benchmark selling cost of sugar at the factory gate by Rs 2 to Rs 31 / kg.

Even though sugar output is estimated to decrease to 307 lakh tonnes in 2018-19 (October-September) from the record 325 lakh tonnes in the preceding year, the production will be much higher than yearly domestic consumption of 260 lakh tonnes. In addition, mills had an opening stock of about 100 lakh tonnes of stock from last year's production.

In the last one-and-a-half years, the centre has taken a number of measures to help the sugar mills and the cane growers. The steps included increasing the import duty on sugar to 100 % and scrapping of the export duty.


In June 2018, the centre had also announced a-Rs 8,500 crore package for the industry that included soft loans worth Rs 4,440 crore to sugar mills for creating ethanol capacity. For this, it is bearing an interest subvention of Rs 1,332 crore.

It had also announced an aid of Rs 5.50 per quintal of cane crushed, amounting to Rs 1540 crore to sugar mills in 2017-18. This has been increased to Rs 13.88 / quintal for 2018-19, costing Rs 4,100 crore to the exchequer.

Moreover, around Rs 1,200 crore was allotted for the formation of 30 lakh tonnes of buffer stock of sugar.

Apart from this, the government is providing assistance worth Rs 1,375 crore to the mills by reimbursing expenditure towards internal transport, cargo, handling and other charges to facilitate 50 lakh tonnes export in 2018-19 marketing year.

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