Incentives given to sugar sector to facilitate payment of Cane dues to farmers
Incentives given to
sugar sector to facilitate payment of Cane dues to farmers
The Central Government has
given a number of incentives to sugar sector so far to facilitate payment of
Cane dues to the farmers. These incentives are expected to improve the
liquidity position of the industry reportedly stressed by sustained surpluses of
production over domestic consumption during the last four years. These steps
/measures include:-
· Scheme for extending financial
assistance to sugar undertakings (SEFASU-2014):
The Government on 3.1.2014
notified the scheme (SEFASU -2014) envisaging interest free loans worth Rs.
6600 crores by bank as additional working capital to sugar mills, for clearance
of cane price arrears of previous sugar seasons and timely settlement to cane
price of current sugar season to sugarcane farmers. Interest burden on
this loan, estimated at Rs. 2750 crores over next five years would be borne by
the Government through Sugar Development Fund
· Incentive for marketing and
promotion of raw sugar production targeted for export:
The Government vide
notification dated 28.02.2014 has announced incentive towards Marketing and
Promotion Services of Raw Sugar Production linked to export of raw sugar during
sugar season 2013-14. Till 31.03.2015, incentive of Rs. 183.87 Crores has been
reimbursed during financial year 2014-15 to eligible sugar mills for the
quantity of 7.015 Lac Metric Tons of raw sugar exported upto 30.09.2014.The
Government has further extended the scheme for current sugar season 2014-15 and
provided incentive @ Rs.4000/- per Metric Tons of raw sugar produced and
exported upto 30.09.2015 subject to quantitative ceiling of 14.0 Lac Metric
Tons.
· Ethanol Blending with Petrol
(EBP) programme:
The Government has fixed
remunerative prices for Ethanol supplied for blending with petrol. It has
dismantled the tender based price discovery procedures for ethanol and fixed
attractive prices for ethanol supplied for petrol blending. Remunerative
ex-depot price of ethanol in the range of Rs.48.50 to Rs.49.50 per litre have
been fixed. As a result, the supply levels of ethanol, which were about
32 cr. Liters per year, have shot up to a level of 83 cr. Liters this
year. It has also been decided to waive the excise duties on ethanol for
the ensuing sugar season 2015-16 to further incentivize ethanol supplies for
the blending program. This would further increase the ex-mill price of
ethanol and help improve the liquidity of the industry and enable them to clear
the cane price arrears.
Besides, the Government has
scaled up blending target from 5% to 10% and has laid down the road map for
Targeted Ethanol Blending Program based on a National Grid finalized in
consultation with states which networks the distilleries to the OMC depots and
details the quantities to be supplied.
· Hike in import duty
With a view to improve the
price sentiments of sugar, the government has also increased the duty on import
of sugar from 25% to 40% and abolished the Duty Free import authorization
Scheme (DFIA). To prevent possible leakages of sugar in the domestic
markets, the government has also reduced the export obligation period from 18
months to 6 months under the Advanced Authorization Scheme.
· Soft Loan scheme
The Central
Government, with a view to facilitate payment of Cane dues of the farmers for
the current sugar season 2014-15 has notified the scheme for extending soft
loan to the sugar mills equivalent to the stock value of 25 lack M.T. @
Rs.24000 per M.T. Sugar mills who have cleared at least 50% of total cane price
payable for the current sugar season 2014-15 calculated on the basis of FRP by
31.8.2015 will be eligible for the loan. The Government will bear interest
burden up to 10% simple interest or actual rate of interest charged by the
bank, whichever is less for maximum of one year by way of interest
subvention.
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