PM Modi convenes meeting to discuss Sugar Sector crisis

New Delhi: Prime Minister Narendra Modi has convened a meeting to discuss long-term measures to address the concerns of cash-starved sugar mills and expedite payment of cane arrears of over Rs. 14,000 crore to farmers.

Finance minister Arun Jaitley, Food minister Ram Vilas Paswan, Agriculture minister Radha Mohan Singh and Commerce minister Nirmala Sitharaman will be part of the meeting.

The food ministry has proposed various short and long term measures to overcome the crisis that includes mandatory higher exports, increased ethanol blending with petrol and expansion of co-generation power capacity.

"The PM's meeting on sugar is scheduled for today. The food minister will make presentation on the sugar sector," sources said.

In order to address the crisis faced by the industry, the food ministry is believed to have proposed allowing compulsory export of upto four million tonnes of sugar till prices stabilise to a certain level, sources said.

The losses, incurred by sugar mills in exports if any, would be borne by the government by raising the sugar cess from the existing level of 24 paise per kg, they



added.

As part of a long term solution, the ministry has proposed increased compulsory ethanol blending with petrol to six per cent from the current five per cent and eventually achieve 10 per cent blending over the next five years.

It has also proposed continuing all existing schemes that promote use of molasses for ethanol production, besides suggesting to increase the capacity of power co-generation.

The sugar industry -- which owes about Rs. 14,398 crore to cane farmers -- is unable to make the payment as it is facing a severe liquidity crunch on account of surplus production that has resulted in low prices of sugar in the domestic markets.

Ex-mill sugar prices have fallen below Rs. 20/kg in the country, while the cost of production is over Rs. 30/kg. There is still a surplus stock of 10 million tonnes in the country.

Sugar production of India, the world's second largest producer and biggest consumer, is estimated at record 28.3 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year. The total annual demand is pegged at 24.5 million tonnes.