Following up on its guarantee of providing ₹6,000-crore assistance to the beleaguered sugar industry, the Food Ministry released the notification of the scheme here on Thursday.
The purpose of the loan, it states, is it should be used for payment of cane price arrears of farmers for the 2014-15 sugar season (October to September) relating to the Fair and Remunerative Price (FRP) of sugarcane fixed by the Centre.
Sugarcane farmers and millers from Uttar Pradesh and Bihar staged a protest earlier this week to allow State-run agencies to export three million tonnes of sugar to help arrears that had mounted to over ₹21,000 crore.
Other measures taken by the Centre to bail out the industry include a hike in sugar import duty to 40 per cent from 25 per cent and removal of excise duty on ethanol to be supplied for blending with petrol.
Banks will provide the soft loan to mills after due diligence, the notification dated June 23 said, to facilitate payments equivalent to the stock value of 25 lakh tonnes (lt) at ₹24,000/tonne.
Interest burden up 10 per cent simple interest or actual rate charged by the bank will be borne by the Centre. “The maximum loan that can be advanced under the scheme shall be about ₹6,000 crore…banks will consider the loan application of only those mills which have cleared at least 50 per cent of the cane price payable for the current season,” it said.
“The mill-wise quantum of soft loan shall be determined by taking into account 11 per sent of their reported production of white sugar in sugar season 2013-14…,” it added.
The notification also covered non-performing units provided the concerned State Government gives a guarantee for the new loans.
Mills will have to furnish a certificate from central excise authorities concerning the quantity of white sugar produced in 2013-14 and undertaking of sugar production during the current season.
“Once the loan is sanctioned…the Bank will obtain from the respective sugar the list of farmers along with bank account details, borrowable account numbers of farmers…and regular saving back or current account numbers in respect of farmers who have not availed credit facility,” the notification informed.
The loan will be apportioned on a pro-rata basis in accordance with outstanding arrears and all loans sanctioned and disbursed by September 30, 2015, will be covered under the interest subvention scheme.
The first tranche of the interest subvention amount will be released in October 2015, followed by successive tranches in January, April and July 2016.