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Sugar mills to get Rs 50,000 crore relief package

New Delhi, Nov 20 (): Sugar mills in UP and Maharashtra are likely to be given interest-free loans to tide over the crisis facing the industry. The Centre has convened a high-level meeting today to discuss a relief-package for the sugar industry.

Giving mills access to interest-free loans from banks, a main demand of the industry will be taken up in the meeting, to be attended by the ministers of finance, agriculture, commerce, and petroleum.

Under the interest-free loan scheme, millers can get funds from banks while the Centre will pay the interest cost on their behalf. A similar scheme was put up a few years ago when the sugar mills had faced a cash crunch.

The meeting, officials said, will explore the issues of hiking import duty on sugar to 50% from the existing 15 per cent, thereby creating a buffer stock of five million tonnes, increase in tenure of loans given to sugar factories, export incentive package and other measures.

The package would be of around Rs 50,000 crore and could come up for discussion today, a senior government official said. He said sugar mills in UP and Maharashtra are facing a crisis because sugar production in 2013-14 (October-September) is expected to be much more than market consumption.

Sugar mills in Uttar Pradesh and Maharashtra, the two sugar-producing states have not yet started crushing sugarcane in the current crop year, which began in October, citing rising cane arrears, heavy unsold stocks and the inability to pay high procurement price to farmers.

Officials said sugar millers across India owe around Rs 3,400 crore to sugar cane farmers for sugarcane purchased last year.

In UP, cane floor price was Rs 280 a quintal in 2012-13 (October-September). Farmers are demanding a higher price above Rs 300 per quintal, but the mills can’t afford to pay more than last year’s price as sugar prices both in the domestic and international markets are low. Sugar mills have to sell 1.75 million tonnes of sugar stocks to begin crushing.