The Cabinet Committee on Economic Affairs today approved the guidelines for financial assistance to the sugar industry for payment of cane price arrears.

Cabinet gave its final approval to the proposal to provide interest subvention for financial assistance to the sugar industry for effecting cane price payments as per guidelines of the "Scheme for Extending Financial Assistance to Sugar Undertakings, 2013". The expenditure for the scheme will be met fully from the Sugar Development Fund (SDF).

(i) The Central Government will provide an interest subvention upto 12%, at a simple rate of interest, for the additional working capital loans to the sugar undertakings, equivalent to last three sugar seasons excise duty, cess and surcharge on sugar (including notional equivalence for exports or availed Cenvat), to be provided by the banks.

(ii) The sugar undertakings with loans classified Non Performing Assets (NPA) by the banks will also be eligible for the loans provided the concerned state governments give guarantee for their new loans.

(iii) The interest subvention would be for a total loan duration of 5 years including 2 years moratorium period. No interest subvention to be provided for the period of default in the principal repayments.

(iv) The loans would be meant exclusively for effecting cane price payments by the sugar mills.

Interest subvention for sugar industry working capital loans to secure cane price payments under central scheme with state guarantees. The Central Government will fund an interest subvention on additional working capital loans-charged to the Sugar Development Fund-exclusively for effecting cane price payments; undertakings with accounts classified as Non Performing Assets remain eligible if state governments provide guarantees, and subvention covers the prescribed loan tenor including a moratorium but excludes periods of default in principal repayment.