Sugar crisis: Call on remedial steps in 8-10 days

The Centre will take a call on a host of measures - including revising the duty drawback rate for sugar exports, providing interest-free loans for millers and lowering the time frame for re-export of imported raw sugar - in eight to 10 days to bail out the sector.

Senior ministers met on Wednesday to take stock of the crisis, caused by mounting cane arrears and huge unsold stock. Agriculture Minister Sharad Pawar, Finance Minister P Chidambaram, Civil Aviation Minister Ajit Singh, and senior officials from the food and commerce ministries participated in the meeting.

Officials said mills have to approach a committee under the chairmanship of Planning Commission member Saumitra Chaudhuri on raising the duty drawback rates. Millers want the drawback rate raised to four per cent from 1.3 per cent.

Among the suggestions discussed at the meeting was allowing mills to access loans against the excise duty paid by them; the interest on which will be adjusted from the Sugar Development Fund, and not from the millers. "This, in a way, will make such loans interest-free," said an official. Relaxation could also be granted by way of lowering the time frame for re-export of raw sugar into processed sugar from 18 months to three to four months. "This will squeeze imports, which have soared to 170,000 tonnes in October, adding to the glut," the official added.

Officials said millers across India owe around Rs 3,400 crore to farmers on account of sugarcane purchased from them last year. In UP, cane was purchased at Rs 280 a quintal in 2012-13 (October-September). Even though farmers want more than Rs 300 a quintal, the millers can't pay more than last year's price (Rs 280 a quintal), said an industry source.

"We are in no position to pay a higher sugarcane price this year as our cash position is precarious due to drop in sugar rates both in the domestic and international markets," he added.