Cooperative sugar industry body NFCSF today said many banks are not providing interest-free loans to cash-starved mills for especially clearing cane arrears instead some banks are even charging processing fee.
Demanding the government to address the loan disbursal issue, the NFCSF also sought additional-interest free loan, extension of sugar subsidy scheme and import duty hike to 40 per cent among others to improve liquidity of millers for paying Rs 6,500 crore arrears to growers at the earliest.
The country is estimated have a carry over stock of 7.6 million tonnes from this year, of which 3 million tonnes can be easily exported. Sugar output is pegged at 25.3 million tonnes for 2014-15, it said.
Sharing the problems being faced by cooperative mills at its 55th Annual General Meeting (AGM) here, National Federation of Cooperative Sugar Factories (NFCSF) President Kallappa B Awade said: "The interest subvention at 12 per cent is available for factories. However, many banks charge more than 12 per cent interest."
"Some banks even charge processing fee on this loan which is not desirable. We request the government to issue suitable guidelines to bankers in this regard," he said at the AGM.
Since sugar prices continue to remain low and do not cover the cost of production, Awade also demanded the government to provide additional interest-free loan for mills.
In January, the previous government had announced interest-free loans of Rs 6,600 crore to mills to clear cane arrears. As on September 4, Rs 5,511 crore has been disbursed out of Rs 6,094 crore sanctioned, as per official data.
Besides additional interest-free loan, the NFCSF President sought extension of the sugar export subsidy scheme saying that 5.25 lakh tonnes of raw sugar has been exported so far with the support of subsidy, there is still 35 lakh tonnes yet to be exported under the scheme.
"It is therefore, requested that announcement of the incentives for 2014-15 season starting next month may be made well in advance, preferably in September, so that sugar factories can plan their production accordingly," he said.
The subsidy scheme will end this month. For August- September, the subsidy has been fixed at Rs 3,371 per tonne.
NFCSF's Awade also demanded the government to further raise the import duty from the existing 25 per cent to 40 per cent to ensure sugar prices firm up and their profit increase, thereby helping payment of arrears to growers.
He also sought the government to amend the income tax law to ensure cane price paid over and above the fair and remunerative price (FRP) is not taxed by authorities, impose penalty on oil marketing companies for not purchasing ethanol in a timely manner and keep sugar out of mandatory packing in jute bags.
