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TN CM Palaniswami tells FM to take urgent steps to revive sugar industry

Our Bureau | Updated on October 26, 2019

Chief Minister Edappadi K. Palaniswami   -  The Hindu

Tamil Nadu Chief Minister  Edappadi K. Palaniswami has urged Union Finance Minister Nirmala Sitharaman to take urgent steps to revive the Tamil Nadu sugar industry, and protect the livelihood of nearly 4 lakh farmers.

Palaniswami urged orders for restructuring of loans availed from banks/financial Institutions by sugar industry and SDF loans got by private and cooperative mills.

The banks and financial institutions may be instructed to finalise the debt restructuring package soon, he said in a letter to Sitharaman.

Until steps are finalised to revive the sugar sector, banks / financial Institutions may kindly be advised not to take any harsh measures under the Insolvency and Bankruptcy Code or the SARFAESI Act or refer cases to the DRTs.

The Centre may sanction additional sugar release to mills in Tamil Nadu, as a special measure so as to improve the financial liquidity of the mills.

Banks may be advised to release loans to farmers for cultivating sugar cane, even if the earlier loans have not been repaid by them. This non-repayment of loans is due to the non-payment of FRP dues by the gugar mills, Palaniswami said in the letter.

He recollected Sitharaman's interactive meeting on sugar industry in Chennai on September 10 with representatives of the State government, SISMA and the cane growers, taking into consideration the various issues faced by the sugarcane growers and sugar industry in Tamil Nadu. This has increased the level of confidence amongst the stakeholders, Palaniswami said.

As suggested by the Finance Minister, a high level meeting with the participation of delegation from Government of India, Government of Tamil Nadu, Reserve Bank of India, senior representatives from various banks, SISMA and representatives from Sugarcane Growers’ Associations was conducted on September 24 in Chennai. The various issues of the sugar industry in Tamil Nadu and the redressal measures required to bring the Industry out of crisis were discussed in the meeting.

As proposed in the meeting, a special SLBC meeting to discuss debt restructuring of the Mills was conducted on September 30 in Chennai. In the meeting, it was decided to constitute a ‘Sugar Mills Revival Committee’ with members from Government of Tamil Nadu and the banks to evolve a mechanism for restructuring the loans owed by the Sugar Mills to banks, Palaniswami said.

The Chief Minister in the letter said that the following measures have been taken by the State Government to improve  financial status of the Sugar Industry:

1. Government of Tamil Nadu has provided Transitional Production Incentive at Rs.200/- per MT of cane, over and above FRP, amounting to Rs.134.53 crore to 1,44,882 farmers for the cane crushed during season 2017-18.

2. Government of Tamil Nadu has also announced Rs.200 crore as Transitional Production Incentive at Rs.137.50/- per MT of cane,over and above FRP, for the cane crushed.

3. Government of Tamil Nadu has taken active steps to improve the cane area under Drip Irrigation to about 34,000 Ha in the 2019-20 planting season.

4. The State Government will be providing additional subsidy of Rs.68.35 crore, over and above the funds provided under NADP scheme.

Due to these steps and the normal rainfall forecast for 2019, planting of cane during 2019-20 season is expected to increase, which will help the mills in Tamil Nadu to improve their capacity utilisation. The capacity utilisation of Tamil Nadu Sugar Industry on an average, is expected to be not less than 45 per cent  - 50 per cent during season 2020 – 21, which would enable the Mills to move on a positive trajectory, Palaniswami said.

Published on October 26, 2019

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