Govt decides not to offer soft loans under SDF to sugar mills for a year

The government has decided not to extend soft loans for at least a year to sugar mills for capacity expansion under the Sugar Development Fund (SDF), which offers financing at 2 percentage points below the prevailing bank rate.

“The decision has been taken keeping in view the prevailing market conditions of the sugar sector having surplus stocks, despite diversion of sugar and cane juice for production of ethanol. We will review it after fiscal 2021-22,” said a food ministry official.

The country has 735 sugar mills with a total annual sugar production capacity of 34 million tonnes. The government has so far disbursed ₹8,840.53 crore to sugar mills since 1982 when the SDF was set up.


“Funds have been used to scale up capacity besides modernisation of plants. So far total default has been ₹2,821 crore, including ₹1,164 crore as principal amount. We are expediting process to recover the dues from defaulting mills,” the official said.

He said the production of sugar in the 2020-21 season would likely be 30.2 million tonnes — 4.2 million tonnes more than the annual domestic consumption.