The centre has already doubled sugar import duty to 100%.
NEW DELHI: Cabinet approved a bailout package for the sugar sector, a government source said on Wednesday after a cabinet meeting chaired by Prime Minister Narendra Modi, to help struggling mills and cane growers, news agency Reuters reported.
The Rs 8,500-crore bailout package was approved for the sugar industry which includes Rs 4,500 crore soft loan for building ethanol production capacity, according to a report by news agency press Trust of India (PTI).
Food Minister Ram Vilas Paswan on Tuesday said the government would announce support measures to cut a growing sugar surplus and prop up local prices, a move aimed at helping loss-making mills and millions of cane growers who make up a key voting bloc.The cabinet also approved a Rs 1,300-crore interest subversion on the loan to be provided for creating new ethanol production capacity as also expanding the existing one, sources said.
Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers remunerative price for their crop.
Ethanol doping in petrol will also help the country cut its oil imports.
Sources said Rs 1,200 crore would be the carrying cost for building of the buffer stock.
Also included in the package is Rs 1,540 crore previously announced production-linked direct payment to help clear dues which sugar mills owe to cane farmers, according to the PTI report.
The Centre has already doubled sugar import duty to 100 per cent and scrapped export duty to check sliding domestic prices.
It has also asked mills to export 2 million tonnes of sugar.
(With Reuters, PTI inputs)