The Centre is likely to provide financial support to cane farmers for produce sold to sugar mills, two government sources said, in a rare move to subsidise the industry which is reeling under a glut and struggling to export because of low global prices.
India, the world’s biggest sugar consumer, last month scrapped a 20 per cent export tax and made it compulsory for mills to export at least 2 million tonnes (mt) of sugar. But mills said they would incur a loss of at least $150 a tonne because global prices were near a 2-1/2-year low.
The Centre is likely to approve a proposal to pay around ₹55 for every tonne of cane sold to the mills, sources said, seeking anonymity in line with government policy.
Mills say a sharp fall in sugar prices erodes their profitability, making it difficult for them to pay cane growers on time. Sugar mills now owe ₹17,000 crore to farmers.