To clear cane arrears, sugar mills to get interest-free loans of ₹4,400 crore

The Government today decided to hike the import duty on sugar to 40 per cent from 15 per cent to curb inflow of cheaper sweetener, a move that could see a rise in sugar prices.

Also, it decided to provide additional interest-free loans of about ₹4,400 crore to the cash-starved sugar mills to clear cane payment arrears estimated at around ₹11,000 crore.

This is even as farmers continued to stage protests in Bangalore and the northern district of Bijapur in Karnataka demanding early settlement of their dues and seeking the State Government’s intervention in this regard.

Tracking the Centre’s decision, scrips of sugar companies such as Balrampur Chini Mills and Shree Renuka Sugars soared on the bourses on Monday.

Scrips surge

Balrampur Chini Mills gained 7.04 per cent higher to end at ₹85.15, while Shree Renuka Sugars closed 10.32 per cent higher at ₹29.4. Scrips of Bajaj Hindusthan ended 9.87 per cent higher at ₹29.5, while DCM Shriram Ltd closed at ₹155.75, up 6.50 per cent. Simbhaoli Sugars ended 4.96 per cent higher at ₹22.20 on the BSE.

After a high-level meeting in Delhi on Monday, Food Minister Ram Vilas Paswan also announced that the subsidy on raw sugar exports would be extended till September 2014. Also 10 per cent mandatory blending of ethanol (a by-product of sugar) with petrol would be allowed against 5 per cent at present.

However, Paswan made it clear that all these decisions were subject to the sugar industry's guarantee that it would clear all arrears, official sources said.

The decision was taken after a high-level meeting on Monday attended by Road Transport & Highways Minister Nitin Gadkari, MSME Minister Kalraj Mishra, Petroleum Minister Dharmendra Pradhan, Commerce & Industries Minister Nirmala Sitharaman, MoS Consumer Affairs, Food and PDS Raosaheb Patil Danve, MoS Agriculture Sanjeev Balyan, Women & Child Welfare Minister Maneka Gandhi, and Cabinet Secretary Ajit Seth. Agriculture Minister Radha Mohan Singh was away in Hyderabad. Welcoming the Government’s move, the Indian Sugar Mills Association said these decisions would benefit the industry and improve the liquidity of sugar mills, which would help the industry clear pending payments to cane farmers at the earliest.

(This article was published on June 23, 2014)
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