CCEA approved Rs 6,600 cr interest-free loans for sugar mills
The Cabinet Committee on Economic Affairs (CCEA) approved Rs 6,600 Crore interest-free loans to cash-starved sugar mills in order to make payments to cane farmers. The interest subvention will be 12%, which will be borne by the Sugar Development Fund.
The loans provided by banks to sugar mills are solely for making payments to sugarcane farmers, including arrears. The loans are equivalent to the excise duty paid by the mills in the past three years. Mills will have to repay the loans in five years and can avail of a moratorium on repayment for the first two years.
The PM-constituted panel headed by Agriculture Minister Sharad Pawar recommended for interest- free loans, to help millers to clear dues and make timely payment in the current crushing season 2013-14 to cane growers.
Currently, sugar industry is facing a financial crisis due to higher cost of production and decline in the prices of sugar. This has led to Rs. 3400 crore cane arrears from 2012-13 during the marketing year that ended in September 2013. Thus, owing to liquidity crunch, the sugar mills demanded interest-free loans for working capital requirement, hike in import duty, and export subsidies among others. This financial package will allow millers to pay money they owe to the farmers.