The Indian sugar industry has urged the Government to ease or remove key conditions of the proposed bank loan scheme to clear the dues to cane farmers.

In December last year, the Cabinet Committee on Economic Affairs had approved Rs. 6,600-crore interest-free loan to the sugar industry and announced that the 12 per cent interest subvention would be borne by the Government. OP Dhanuka, Chairman and Managing Director, Riga Sugar, and senior committee member of Bihar Sugar Mills Association, said the proposed loan scheme has “stringent provisions” regarding the finances of sugar companies. Since a majority of sugar manufacturers have been incurring losses for the last four to five years, they would not be eligible for the scheme.

“Net worth of almost all the companies have also been eroded substantially. So, if banks judge the sugar companies on usual benchmarks, then these companies will not be eligible for the loan,” Dhanuka said at a press conference here on Thursday.

Cane price arrears

The industry’s current cane price arrears is pegged at approximately Rs. 10,000 crore. Under the scheme, the borrowing limit is equivalent of a unit’s cumulative excise payment of three prior years. According to Dhanuka, the industry pays nearly Rs. 3,000 crore a year as excise duty.

Managing losses

Dhanuka said, the industry has demanded Rs. 3,000/tonne incentive for sugar export, creation of buffer stock of sugar by the Government, and increasing import duty to 40 per cent from 15 per cent now. “If the industry does not get any major incentive with a projected bumper production estimated for the current crop year, it would lead to a loss of approximately Rs. 15,000 crore for the sugar industry,” he added.

While the average cost of production for the country has increased to nearly Rs. 3,400/quintal, ex-factory sugar price is ruling at Rs. 2,800-2,900/quintal.