Bowing to pressure from sugar mills in the country, the government has extended the date for clearing part dues that the mills owe to sugarcane farmers to March 26 from the earlier deadline of February 28.

In a gazette notification issued on Wednesday, the Department of Food and Public Distribution (DFPD) said banks could consider loan applications of those sugar mills which would have cleared 25 per cent of the cane price payable to farmers in the current sugar season (October 2018-September 2019) by March 26.

A Cabinet meeting on February 28 cleared a DFPD proposal which sought to give soft loans up to the tune of ₹10,540 crore – 85 per cent of stock value of 4 million tonnes of sugar at the rate of ₹31,000 per tonne -- to sugar mills to help them clear the sugarcane arrears. The government said it would bear the interest subsidy of 7 per cent on these loans given to the mills.

In its earlier Gazette notification issued on March 2, the government said the quantum of the loan available to the mills by taking into account 10.55 per cent of their white sugar production in the previous sugar season.

The banks were also asked to collect the bank account details of farmers whom the mills owe money and disburse the money into the farmer accounts. A sugar industry source said that the industry was happy that the government acquiesced its demand.