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High debt forces sugar mills to delay crushing, seek Govt help

The sugar mills have also asked the government to state the cane price linkage clearly for them to start functioning again.

Indian Sugar Mills Association (ISMA) stated that in  India, we have a surplus sugar of 8.8 million tonnes which will rise to 10 million tonnes in the coming season if the appropriate measures are not taken. ISMA President M Srinivasan said that escalating cost of production and high sugarcane prices have made it difficult for sugar mills to sustain production at the current prices.

 Accounting the losses sugar industry has sustained last year and explaining the difficulty in raising capital Srinivasan said, ‘banks are refusing to extend the working capital to the mills without rationalising in cane pricing, especially in Uttar Pradesh, for the coming season, until the cane prices are rationalised. In such a case, sugar mills would be unable to start their crushing operations.'

The state advised price (SAP) of cane in Uttar Pradesh was recently revised to Rs 280 per quintal. Sugar price prevailing in north India is Rs 31 per kg and Rs 29.5 per kg in Maharashtra. Total amount of cane arrears currently is around Rs 4,000 crore, out of which the share of UP is highest at Rs 2,400 crore.

The Rangarajan Committee in its recommendations has connected the cane price with the price of sugar and byproducts. However, cane price still remains a state subject and is often kept high to appease farmers.

The ISMA president while suggesting that the government make appropriate arrangements for low-interest and interest-free loans to meet the working capital requirements also suggested a hike in import duty on sugar to 40 per cent in the absence of a ban on imports to stabilise the prices.
 ISMA also suggested the government to allow conversion of existing sugar stocks into ethanol as an alternative.
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