Sugar mills want loans recast, stock limits lifted

It also appealed to Centre to direct RBI for continuation of exemption of levy on excise duty on ethanol

The sugar industry has urged the Centre to direct the Reserve Bank of India to restructure bank loans of mills, like they were in 2007.

It also sought a review of stock-holding limits on mills and continued excise duty exemption on ethanol for blending with fuel.

A delegation led by former Union Agriculture Minister Sharad Pawar, in a memorandum to Finance Minister Arun Jaitley, said the government's intervention was vital for a sugar industry facing a crisis.

Pawar said ex-mill sugar prices were ruling below the cost of production for three years. The Centre had released soft loans in 2014 and 2015 to allow mills to clear cane arrears to farmers. These loans are now due for repayment.  

“This year, it will be difficult with the current sugar sales realisation. After defaulting on loans, these units will be restricted from further financial assistance,” Pawar said in the memorandum.

He added the mills needed their loans restructured with a three-year moratorium and seven-year repayment schedule. In 2007, the Centre had restructured similar loans to allow for a 15 year repayment with a five-year moratorium.

Dilip Walse-Patil, chairman of the National Federation of Cooperative Sugar Factories, who was part of the delegation, said, “We requested the continuation of the excise duty exemption on ethanol supplied to oil companies. The government notified the levy on August 10 and it has affected supplies.”

The delegation also pressed for withdrawal of the cess of Rs 100 per quintal of sugar imposed in January and a review of the Centre’s decision to impose stock-holding limits on mills.

A special package was sought for mills in the drought-affected regions of Maharashtra and  Karnataka that are facing a 50 per cent decline in cane supply in the upcoming crushing season.