Prime Minister Narendra Modi convened a high-level meeting here on Saturday to review issues related to the sugar industry, particularly on the question of repayment of arrears owed to sugarcane farmers, which stood at a whopping Rs.18,000 crore at the beginning of July.
“Taking note of the current supply-demand issues with regard to sugar, the Prime Minister called for assiduous efforts to increase ethanol blending of fuel. He also called for exploring all possibilities for export of sugar,” said an official statement.
Excess supply has created a glut in the domestic market and resulted in massive losses for the industry. The arrears situation could worsen with the Indian Sugar Mills Association (ISMA) estimating production at 28 million tonnes (mt) for the 2015-16 season (October-September) in addition to 10.4 mt of carryover stock, far higher than the requirement of around 4.3-4.5 mt.
Domestic production is pegged at 28.3 mt for 2014-15 and domestic consumption is expected to be around 25.2 mt next season. The industry cites a drop in ex-mill sugar prices – at around Rs 22/kg in Uttar Pradesh and Rs 19-20/kg in Maharashtra – as being the reason for losses. Cost of production in UP is estimated at Rs 33/kg and Rs 29-31/kg in Maharashtra.
The Centre has pitched in to help the beleaguered industry by raising import duty on raw and refined sugar and providing a subsidy of Rs 4,000/tonne for exports of 1.4 mt of raw sugar. The excise duty on ethanol was also waived to spur higher production of ethanol by mills for the blending programme.
An interest-free loan of Rs 6,000 crore was also granted in June to help mills clear arrears owed to sugarcane farmers. But reports of suicides by cane farmers in Karnataka trickling in likely prompted the Government to take another look at the sector's problems through this meeting.
“The Prime Minister reviewed the progress with regard to the Rs 6,000 crore incentive package approved by the Union Government in June 2015… (he) emphasized that the farmers' interest be kept foremost at all times, and issues related to sugar sector be monitored regularly. Long-term measures with regard to the sector were also discussed,” the statement added.
The meeting was attended by Cabinet Ministers Arun Jaitley, Radha Mohan Singh, Ram Vilas Paswan, Nirmala Sitharaman, Sanjeev Kumar Balyan, besides senior officers from the various Ministries including Agriculture, Food and Consumer Affairs, Finance and Commerce.
Officials from the NITI Aayog and Prime Minister’s Office also attended the meeting, the statement added.