Tamil Nadu CM urges Centre to step in and distressed sugar industry

Wants Union govt to instruct banks and FIs to finalise debt restructuring package for industry in the State and not take harsh steps under IBC or SARFAESI Act

Tamil Nadu Chief Minister Edappadi K Palaniswami has urged the Government of India to instruct banks and financial institutions to finalise the debt restructuring package for sugar industry in the State and not to take harsh measures under Insolvency and Bankruptcy Code or the SARFAESI Act or refer cases to the Debt Recovery Tribunals. In a letter to the Union Finance Minister Nirmala Sitharaman, he urged the Centre to sanction additional sugar release to mills as a special measure to improve financial liquidity of the mills.

"Banks may be advised to release loans to farmers for cultivating sugar cane, even if the earlier loans have not been repaid by them. This non-repayment of loans is due to the non-payment of FRP (fair and remunerative price) dues by the Sugar Mills. In order to protect the livelihood of nearly 400,000 farmers of Tamil Nadu, I request your continued support and favourable orders from the Government of India for reviving the Tamil Nadu Sugar Industry," he said.

Restructuring of loans from Banks and financial institutions and Sugar Development Fund (SDF) loans received by private and cooperative mills are required for revival of the sugar industry in the State.

Government of Tamil Nadu has taken active steps to improve financial status of the industry, and to increase the cane area under Drip Irrigation to about 34,000 Ha in the 2019-20 planting season. The State Government will be providing additional subsidy of Rs 68.35 crore, over and above the funds provided under NADP scheme. 

This, along with the normal rainfall forecast for 2019, planting of cane during 2019-20 season is expected to increase, and it will help the Mills in Tamil Nadu to improve their capacity utilisation. The capacity utilization of Tamil Nadu Sugar Industry on an average, is expected to be not less than 45 - 50 per cent during season 2020–21, which would enable the Mills to move on a positive trajectory.

Government of Tamil Nadu has also announced Rs 200 crore as Transitional Production Incentive at Rs 137.50 per MT of cane, over and above FRP, for the cane crushed during the season 2018-19. This was in continuation of the issuance of the same incentive, amounting to Rs 134.53 crore to 1,44,882 farmers for the cane crushed during season 2017-18.

The Union Finance Minister has conducted an interactive meeting on sugar industry in Tamil Nadu in September, this year, with representatives of the State Government, sugar industry association and the cane growers to discuss various issues faced by the industry.

A High Level Meeting with the participation of delegation from Government of India, Government of Tamil Nadu, Reserve Bank of India, senior representatives from various banks, South Indian Sugar Mills Association (SISMA) and representatives from Sugarcane Growers’ Associations was conducted on during the same month later, at Chennai. The various issues of the Sugar Industry in Tamil Nadu and the measures to redress them and required to bring the Industry out of crisis were discussed in the meeting.

A Special SLBC Meeting to discuss debt restructuring of the Mills was conducted in the end of September. In the meeting, it was decided to constitute a ‘Sugar Mills Revival Committee’ with members from Government of Tamil Nadu and the Banks to evolve a mechanism for restructuring the loans owed by the Sugar Mills to banks, said the Chief Minister