The government on Thursday announced a soft loan of up to Rs 10,540 crore to the sugar industry to help mills clear mounting arrears to cane growers, a move that would cost exchequer up to Rs 1,054 crore as interest subsidy.

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Abinash Verma, director general of Indian Sugar Mills Association (ISMA) and Tarun Sawhney, vice chairman and managing director of Triveni Engineering, shared their views and outlook on the development.

“Any sugar mill, which would have cleared 25 percent of their cane price dues in 2018-2019 sugar season are eligible. I think almost all of them would be eligible because I think everybody would have paid 25 percent. Therefore, the whole industry should gain,” Verma told CNBC-TV18 on Friday.

“Most of the Uttar Pradesh (UP) sugar mills, which are listed companies have reported the positive margins in the last quarter or the last couple of quarters. So at Rs 31, I believe that they should breakeven. With this kind of help which is going to take care of almost about Rs 550 crore if somebody gets a loan of Rs 200 crore from here, they save about Rs 20-25 crore on their interest burden. So it is a reasonably good number. It certainly will help the industry pay quickly to the farmers and not fall into any kind of debt burden or default of debt of the banks. So I think a very positive move, the government has taken several steps in the past few months and these two – the recent one of increasing the minimum price and now the subsidised loans to the sugar mills is certainly going to help. Big and positive move from the government,” he added.