The Indian Sugar Mills Association has urged the government to restructure the debt of sugar companies, and extend interest subvention on soft loans for another three years.

“...the Government and RBI (Reserve Bank of India) should slightly modify the threshold limit under the S4A (Scheme for Sustainable Structuring of Stressed Assets) scheme of debt restructuring, from ₹5 billion and ₹1 billion,” the association said in a release today.

The Centre had approved loans to sugar mills under Scheme for Extending Financial Assistance to Sugar Undertakings and soft loans worth ₹100 billion in 2013-14 when mills were unable to raise working capital due to fall in prices amid surplus supply.

The soft loan carried interest subvention on rates charged by banks up to a maximum of 12 per cent with a two-year moratorium.

Mills have to start making repayments for the loan packages from this year, but they are not in a position as their financial burden has quadrupled over the last few years, ISMA said.

“Despite improvement in sugar prices, it is still not sufficient to enable the industry to service all its debt at the same time. Additionally,₹100 billion of loans taken to pay cane price of farmers under the SEFASU and Soft-Loans have become due from the current season itself,” it said.

The representatives of the sugar industry, headed by former Agriculture Minister Sharad Pawar, met Finance Minister Arun Jaitley Tuesday over the loan repayment issue.

They also urged the government to restore prices of ethanol at last year’s level and waive off excise duty on it.