High-level meeting tomorrow to discuss Rs 11,000 cr sugarcane dues

Currently, sugarcane arrears stand at about Rs 11,000 cr across country, with maximum of Rs 7,200 cr in Uttar Pradesh

Food Minister Ram Vilas Paswan has called a second high-level meeting tomorrow to discuss ways to bail out the sugar industry that is unable to pay Rs 11,000 crore dues to sugarcane growers.

In the first meeting held on June 6, the informal ministerial panel had suggested various steps for improving liquidity of sugar mills including providing Rs 4,400 crore additional interest-free loans to sugar mills, hiking import duty to 40 per cent and increasing ethanol blending in petrol.

Besides Paswan, Transport Minister Nitin Gadkari, Agriculture Minister Radha Mohan Singh, Commerce Minister Nirmala Sitharaman, Petroleum Minister Dharmendra Pradhan, Women and Child Development Minister Maneka Gandhi, MSME Minister Kalraj Mishra among others are part of the panel.

"The meeting of an informal group of ministers is scheduled to meet tomorrow to discuss issues concerning the sugar sector," sources said.

Sources said Cabinet Secretary Ajit Seth will also attend tomorrow's meeting, which has been called following the direction of Prime Minister Narendra Modi to sort out problems faced by growers and sugar millers.

Some major decisions are expected as Modi has given clear cut directions on the suggestions made in the previous meeting to ensure sugar mills pay cane arrears at the earliest, sources said.

To improve cash flow of sugar mills, the government had in December 2013 approved Rs 6,600 crore interest-free loans to the sugar industry exclusively for clearing sugarcane arrears. It decided to give loans via banks equivalent to the excise duty paid by the mills in the past three years.

The sugar industry has been facing a cash crunch due to higher cost of production and lower selling prices in the wake of surplus output over the past few years.

Currently, sugarcane arrears stand at about Rs 11,000 crore across the country, with the maximum of Rs 7,200 crore in Uttar Pradesh.

Mills are facing a cash crunch as domestic prices have slipped below the cost of production, hurting their profits. They also fear domestic prices could fall further if cheaper imports are not curbed.