Sugar industry gets 5,500 cr package

 New Delhi: In third incentive package for sugar mills in four months, the Union government Wednesday announced a Rs 5,500 crore package for the sugar industry, including over two-fold jump in production aid to cane growers and transport subsidy to mills for exports.

The measures since June have ranged from higher price for ethanol extracted from sugarcane to financial assistance to sugar mills to create ethanol capacity and are aimed at helping the cash-starved mills clear Rs 13,000 crore they owe currently to farmers before the 2019 general elections. 

The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, Wednesday approved a Rs 5,500 crore package to address the surplus production and stock of sugar in the country. "Last and this year, sugar production is high.

It is expected that sugar output next year will remain high. Therefore, a comprehensive policy has been approved by the CCEA to deal with the excess production," Finance Minister Arun Jaitley told reporters after the meeting. A total assistance of Rs 5,538 crore has been approved to offset cost of cane and facilitate export, he said. 

Food Minister Ramvilas Paswan said Wednesday’s decisions will help stabilise the domestic market and enable mills to make cane payment to growers. The government will provide financial assistance of Rs 13.88 per quintal cane crushed in 2018-19 marketing year to offset the cost of cane, as against Rs 5.50 per quintal announced for the current 2017-18, ending this month. 

The total expenditure on this account would be about Rs 4,163 crore, an official statement said. That apart, the Centre will provide assistance to mills by compensating expenditure towards internal transport, freight, handling and other charges to facilitate 5 million tonnes (MT) export during the 2018-19 (October-September). 

A transport subsidy of Rs 1,000 per tonne will be given for mills located within 100 kms from the ports, Rs 2,500 per tonne for mills located beyond 100 kms from the port in the coastal states and Rs 3,000 per tonne for mills located in other than coastal states or actual expenditure, whichever is lower. 

The total expenditure on this account would be about Rs 1,375 crore, the statement said. "To ensure payment of sugarcane dues of farmers, both the assistance would be credited directly into the accounts of farmers on behalf of sugar mills against cane price dues payable to farmers against FRP (fair and remunerative price) including arrears relating to previous years," it added.

With assembly elections due in some states and upcoming general polls in mid-2019, the government wants to address cane grower’s payment issue. These steps will enable mills to boost sugar exports and clear cane arrears, which currently stand at Rs 13,567 crore.