The CCEA’s decision has not pleased the federation much.

“We had requested the government to provide financial assistance rather than a loan. Even after the government’s decision, we would have to take more loans,” said Sanjiv Babar, managing director of the federation.

Babar added, “The loan would not be beneficial to sugar mills in the long run. We are producing sugar at Rs 32/kg while we are selling it at Rs 22-24 and the losses are mounting.”

The government has also fixed remunerative prices for ethanol supplied for blending with petrol. It has dismantled the tender-based price discovery procedures for ethanol and “fixed attractive prices for ethanol supplied for petrol blending”, a government note said.

Prices were fixed at Rs48.50-49.50 per litre, depending on the distance from the depot, thereby effectively giving Rs42 per litre to the mill as against Rs32 per litre last year.