New Delhi, June 23: In a move to benefit sugar mills, the government today decided to hike the import duty on sugar and provide an additional interest-free loan of up to Rs 4,400 crore to the mills to pay the dues of cane growers.
At a meeting convened by food minister Ram Vilas Paswan, the government decided that the import duty would be raised to 40 per cent from 15 per cent.
Export subsidy will also be extended till September to give relief to the sugar industry, which owes Rs 11,000 crore to cane growers, largely in Uttar Pradesh.
“We have decided to extend the interest-free loan given against excise duty paid by sugar mills for five years instead of three years,” food minister Ram Vilas Paswan said after the meeting.
To encourage the use of biofuel on the lines of Brazil, the government has decided to increase the mandatory level of ethanol blending with petrol to 10 per cent from 5 per cent. “The petroleum minister has assured 10 per cent ethanol blending with petrol,” Paswan said.
The sugar industry has not managed to supply the required quantity of ethanol to the oil marketing companies. The government has also extended the sugar export incentive of Rs 3,300 a tonne till September.
The previous government had announced a subsidy for raw sugar exports in February to help mills clear dues to farmers, but shipments slowed after domestic prices rose above global rates.
The sugar industry currently has 5 million tonnes of exportable surplus.
Paswan today said mills can get additional interest-free loans of up to Rs 4,400 crore from banks and this will improve their cash flow to make cane payments.
These decisions will be subject to the mills providing a guarantee that they will clear Rs 11,000 crore sugarcane arrears at the earliest, he said.
“These key decisions will benefit the industry and improve the liquidity of the sugar mills, which would help the industry to clear the pending payments to the cane farmers at the earliest. The 10 per cent ethanol blending would save forex of $1.6-1.7 billion, which is a huge plus for the country as it would improve reve- nue deficits,” said Abinash Verma, director-general of the Indian Sugar Mills Association (Isma).