The government is considering an additional soft loan of Rs 7,400 crore to sugar mills for <a href="http://www.wionews.com/business-economy/india-plans-to-export-two-million-tonnes-of-sugar-to-china-from-next-year-176213">creating ethanol capacity </a>under a recently launched scheme, according to sources.

The food ministry is also considering tweaking the scheme to ensure that non-molasses-based distilleries are also able to avail soft loans under the scheme launched in June for expansion and setting up of new ethanol plants.

Under the scheme, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years, including a moratorium period of one year.

However, the ministry has received 282 applications seeking Rs 13,400 crore soft loans. Out of this, 114 applications for a loan amount of Rs 6,000 crore has been approved, the sources said.

Sources further said the ministry is planning to seek a Cabinet approval for the balance 168 applications and sanction an additional soft loan of Rs 7,400 crore.

The subsidy burden would be Rs 1,600 crore for the balance loan amount, they added.

A proposal is being prepared to seek approval for an additional soft loan under the scheme as well as amend the rules to allow even grain-based distilleries take the benefits, the sources added.

Currently, molasses-based distilleries are allowed under the scheme. The entry of standard distilleries will help diversion of more cane during the surplus season.

Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers with a remunerative price for their crop. Ethanol doping in petrol will also help the country cut its oil imports.

India, the world's second-biggest producer, is likely to produce 31.5 million tonnes (MT) of sugar in the 2018-19 marketing year, slightly lower than 32.5 MT last year, according to industry body ISMA's forecast.

The government is considering an additional soft loan of Rs 7,400 crore to sugar mills for creating ethanol capacity under a recently launched scheme, according to sources.

The government is considering an additional soft loan of Rs 7,400 crore to sugar mills for creating ethanol capacity under a recently launched scheme, according to sources. The food ministry is also considering tweaking the scheme to ensure that non-molasses-based distilleries are also able to avail soft loans under the scheme launched in June for expansion and setting up of new ethanol plants. Under the scheme, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years, including a moratorium period of one year. However, the ministry has received 282 applications seeking Rs 13,400 crore soft loans. Out of this, 114 applications for a loan amount of Rs 6,000 crore has been approved, the sources said. Sources further said the ministry is planning to seek a Cabinet approval for the balance 168 applications and sanction an additional soft loan of Rs 7,400 crore. The subsidy burden would be Rs 1,600 crore for the balance loan amount, they added. A proposal is being prepared to seek approval for an additional soft loan under the scheme as well as amend the rules to allow even grain-based distilleries take the benefits, the sources added. Currently, molasses-based distilleries are allowed under the scheme. The entry of standard distilleries will help diversion of more cane during the surplus season. Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers with a remunerative price for their crop. Ethanol doping in petrol will also help the country cut its oil imports. India, the world's second-biggest producer, is likely to produce 31.5 million tonnes (MT) of sugar in the 2018-19 marketing year, slightly lower than 32.5 MT last year, according to industry body ISMA's forecast.

Government mulls additional soft loan of Rs 7,400 crore to mills for ethanol expansion

India&nbsp;will&nbsp;build&nbsp;government&nbsp;stockpiles of&nbsp;sugar&nbsp;to&nbsp;cut&nbsp;a&nbsp;surplus&nbsp;in the market, two official sources said on Tuesday, a move that will prop up local prices and help money-losing mills pay dues to millions of cane growers, a key voting bloc.

The cabinet of Prime Minister Narendra Modi would soon approve a plan to create "buffer stocks" of 3 million tonnes of&nbsp;sugar&nbsp;to suck the extra supply out of the domestic&nbsp;market&nbsp;and to stave off a free fall in prices, one of the sources said.

Buffer stocks refer to government-held purchases.

Other than creating buffer stocks of&nbsp;sugar, the government could look at other means of supporting prices, said the second source. The sources, directly involved in policy making, sought anonymity in line with government policy.

A Food Ministry spokesman declined to comment.

India, where&nbsp;sugar&nbsp;output usually yo-yos, has created buffer stocks in the past to tackle a supply glut.

Once&nbsp;India&nbsp;approves the plan to&nbsp;build&nbsp;buffer stocks,&nbsp;sugar&nbsp;mills, saddled with excess&nbsp;supplies, will stock the sweetener in their warehouses and the government will pay the carrying costs for the commodity, the sources said.

The plan would cost around 12.15 billion rupees ($178.49 million) to the government, they said.

Other than the creation of the buffer stock, the government could also look at giving cheap loans to&nbsp;sugar&nbsp;mills to expand their ethanol production capacity, the sources said.

India, the world's biggest&nbsp;sugar&nbsp;producer after Brazil, is likely to churn out a record 30.3 million tonnes of the sweetener in the 2017/18 season that ends on Sept. 30, up from 20.3 million tonnes in the previous year.

A sharp jump in output has led to a drop in local&nbsp;sugar&nbsp;prices to their lowest level in 28 months, making it difficult for mills to pay farmers mandatory cane prices.

As a result,&nbsp;sugar&nbsp;mills now owe nearly 220 billion rupees which could leap to a record 250 billion rupees in the current 2017/18 season.

New Delhi scrapped a 20-per cent tax on&nbsp;sugar&nbsp;exports in March, and in April asked mills to export 2 million tonnes of&nbsp;sugar&nbsp;to&nbsp;cut&nbsp;back inventories.

The government also decided to share some burden of&nbsp;sugar&nbsp;mills by approving a plan to provide financial support to cane farmers for produce sold to&nbsp;sugar&nbsp;mills.

The government is keen to placate&nbsp;India's 50 million cane growers, who make up an influential political lobby, especially with national elections barely a year away in May 2019.

India will build government stockpiles of sugar to cut a surplus in the market, a move that will prop up local prices and help money-losing mills pay dues to millions of cane growers, a key voting bloc

India will build government stockpiles of sugar to cut a surplus in the market, two official sources said on Tuesday, a move that will prop up local prices and help money-losing mills pay dues to millions of cane growers, a key voting bloc. The cabinet of Prime Minister Narendra Modi would soon approve a plan to create "buffer stocks" of 3 million tonnes of sugar to suck the extra supply out of the domestic market and to stave off a free fall in prices, one of the sources said. Buffer stocks refer to government-held purchases. Other than creating buffer stocks of sugar, the government could look at other means of supporting prices, said the second source. The sources, directly involved in policy making, sought anonymity in line with government policy. A Food Ministry spokesman declined to comment. India, where sugar output usually yo-yos, has created buffer stocks in the past to tackle a supply glut. Once India approves the plan to build buffer stocks, sugar mills, saddled with excess supplies, will stock the sweetener in their warehouses and the government will pay the carrying costs for the commodity, the sources said. The plan would cost around 12.15 billion rupees ($178.49 million) to the government, they said. Other than the creation of the buffer stock, the government could also look at giving cheap loans to sugar mills to expand their ethanol production capacity, the sources said. India, the world's biggest sugar producer after Brazil, is likely to churn out a record 30.3 million tonnes of the sweetener in the 2017/18 season that ends on Sept. 30, up from 20.3 million tonnes in the previous year. A sharp jump in output has led to a drop in local sugar prices to their lowest level in 28 months, making it difficult for mills to pay farmers mandatory cane prices. As a result, sugar mills now owe nearly 220 billion rupees which could leap to a record 250 billion rupees in the current 2017/18 season. New Delhi scrapped a 20-per cent tax on sugar exports in March, and in April asked mills to export 2 million tonnes of sugar to cut back inventories. The government also decided to share some burden of sugar mills by approving a plan to provide financial support to cane farmers for produce sold to sugar mills. The government is keen to placate India's 50 million cane growers, who make up an influential political lobby, especially with national elections barely a year away in May 2019.

India to build sugar stockpile to cut surplus supplies in market

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