Relief package for sugar industry: Cabinet

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New Delhi, Oct 9 (UNI) The Centre today announced a relief package for the sugar industry under which the moratorium on term loans has been extended by three years till March 31, 2010.

The package, approved by the Cabinet Committee on Economic Affairs (CCEA), enables the sugar mills to convert outstanding loans into term loans upto a maximum of five years without any change in the interest rate.

Ethanol blending in petrol would be doubled to 10 per cent and would be mandatory from October 2008, except in Jammu and Kashmir and Northeastern states, Finance Minister P Chidambaram told reporters.

There would be a uniform purchcase price of Rs 21.5 a litre (ex factory) which would be effective for three years.

Sugar mills would be eligible for bank loans equivalent to the central excise actually paid. There would be an interest subvention on these loans. The loan would help sugar mills to clear the arrears to farmers. Arrears would be calculated based on the statutory minimum price (SMP). Necessary guidelines would be issued in a day or two.

Customs duty on denatured alcohol would be reduced from 5.75 per cent to five per cent and on molasses from 10 per cent to five per cent from October 2008 when the 10 per cent ethanol blending would become mandatory.

The export assistance scheme was being extended by one year from April 19, 2008 to April 18, 2009 in order to ensure export of 30 lakh tonnes of sugar. The assistance would be available from the Sugar Development Fund.

UNI

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