India gives loans to sugar mills to help clear $3.3 billion owed to farmers

India has approved interest-free loans for cash-strapped sugar mills to help them pay nearly 30 percent of the record $3.3 billion they owe cane farmers, many of whom are struggling with huge debts as the first country-wide drought in six years looms.

Mills in India, the world's biggest sugar producer after Brazil, have been lobbying the government for months seeking relief as prices of the sweetener have fallen below the cost of production due to ample supplies.

Sugar cane prices, meanwhile, have jumped over the years due to the populist policies of state governments to raise minimum support prices for farmers.

The federal government earlier this year approved a subsidy to export raw sugar, although that failed to boost shipments amid a global glut. On Wednesday, a ministerial committee chaired by Prime Minister Narendra Modi agreed to provide a loan of 60 billion Indian rupees ($940 million) to mills for which the government will bear the interest for a year.

"This is a significant immediate step to provide relief to farmers," Road Transport Minister Nitin Gadkari told reporters after the committee's meeting, which also cleared a proposal to raise imports of pulses to cool prices

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