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The sugar industry needs financial restructuring immediately, A Vellayan, President of Indian Sugar Mills Association (ISMA) said on Wednesday.
“The industry has incurred losses continuously in the last few years. The losses have been financed through extra loans by the banks or by the government. Most of the assistance from the government has been to pay cane price to farmers and has only added to the debt of the industry,” Vellayan said at the 81st Annual General Meeting of ISMA.
According to Vellayan, the debt burden of the industry has increased by over three times in just five years and currently stands at around ₹50,000 crore.
“A lot of sugar mills have become sick and several others have become NPA (non-performing asset) accounts,” he added.
Price stabilisation fundISMA also urged the government to take proactive steps toward setting up a price stabilisation fund for sugar as well as removing quotas on ethanol and molasses. “It is essential for this SY (sugar year) that the losses are compensated by the government indirectly. This can be done in the form of a price stabilisation fund and the government can make a direct transfer from this fund to farmers,” Vellayan said.
The fund can be funded through a cess on sugar and become active whenever sugar prices fall below production cost, he added.
“This will ensure a viable industry and farmers get their cane price on time,” Vellayan said.
Ethanol as fuelAddressing ISMA’s AGM, Nitin Gadkari, Minister of Road Transport & Highways and Shipping, said the government will next month announce a policy to allow automakers to manufacture flexi-fuel vehicles in the country.
“We are working on a policy on flexi-fuel vehicles. These vehicles can run entirely on ethanol, but also have option for petrol. I will make this announcement before January 26,” he said.
The Minister called upon the sugar industry to ramp up ethanol production in order to meet the increased demand. Currently, 130 out of 500 sugar mills are manufacturing ethanol in India but Gadkari said all the mills need to be converted for ethanol production.
“To increase ethanol blending to the 100 per cent level, sugar mills need to raise production capacity from the current level,” he said.
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