The Government may announce some incentives to ease the cane payment burden of the beleaguered sugar mills this week.

The Cabinet Committee on Economic Affairs is likely to consider a proposal on providing interest free loans of about Rs 7,200 crore to sugar mills on Thursday. “The incentives will be announced in stages. Some incentives will be considered this week, while some more will be considered next week,” Agriculture Minister Sharad Pawar told reporters. Pawar, who heads an informal group of ministers that is working on relief package sugar mills, said the panel had received a number of suggestions from the sugar industry and major sugarcane producing States such as Uttar Pradesh, Maharashtra and Karnataka.

“We have come up with our own recommendations,” Pawar said hinting that the Government could also announce concessions to encourage the production of raw sugar for which there is export demand. The industry has traditionally produced refined sugar and the Government is likely to support the production of raw sugar as a new product. As part of the interest-free loans being considered for the sugar industry, banks will lend equivalent to the excise duty paid by mills in the last three years, while the entire interest of 12 per cent would be borne by the Centre and the Sugar Development Fund.

Reeling under the impact of high cane costs, the sugar industry is facing payment crisis as glut in production of the sweetener has resulted in a bearish trend in prices.

The industry is currently saddled with arrears estimated at Rs 3,400 crore.

The reluctance on the industry to start crushing for the 2013-14 season time due to high cane costs had forced the Government to intervene and a panel headed by Pawar was asked to look into the issue.

The panel had suggested extending interest free loans of Rs 7,200 crore to the crisis-ridden sugar mills to start the crushing season.

It has also recommended recast of loans availed of by mills according to the Reserve Bank of India norms, incentivise production of four million tonnes of raw sugar and create buffer stock, besides doubling ethanol blending in petrol to 10 per cent.

vishwanath.kulkarni@thehindu.co.in

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