Sugar Development Fund (SDF)

The government has recently introduced revised guidelines for loans obtained under the Sugar Development Fund (SDF), aimed at providing relief to sugar mills facing financial challenges.

• This move includes options for debt restructuring and one-time settlements, addressing the outstanding loans and penal interests accumulated by sugar mills.

Highlights of Revised Guidelines:

• The revised operational guidelines, issued by the food ministry on February 28, outline measures for restructuring SDF loans to alleviate financial burdens on sugar mills.
• Restructuring entails capitalization of balance interest, principal, and rescheduling of payments.
• Sugar mills have been offered 2 options: debt restructuring and one-time settlements, both aimed at mitigating financial strain.
• In case of restructuring, penal interest will be waived off, and a moratorium period of 24 months is provided for repayment of principal and interest.
• Sugar factories that have experienced continuous cash losses over the last 3 financial years or possess negative net worth are eligible for these options.
• Mills must also ensure uninterrupted crushing operations, with no closure exceeding 2 sugar seasons, excluding the current one.

Significance:

• The revised guidelines aim to alleviate financial stress among sugar mills, fostering stability in the industry.
• By facilitating debt restructuring and one-time settlements, the government seeks to bolster the financial viability of sugar mills and support their continued operations.

About the Sugar Development Fund (SDF):

• The Sugar Development Fund (SDF) is a special fund established by the Government of India to promote the growth and development of the sugar industry in the country.
• It was established under the provisions of the Sugar Development Fund Act, 1982.
• It operates under the administrative control of the Ministry of Consumer Affairs, Food and Public Distribution.

Objectives:

• Promotion of Sugar Industry: The primary objective of the SDF is to promote the development and growth of the sugar industry in India.
• Modernization and Expansion: It aims to facilitate modernization and expansion of existing sugar mills to enhance their efficiency and productivity.
• Research and Development: Funding research and development activities to improve sugar production techniques and technologies.
• Infrastructure Development: Supporting infrastructure development in the sugar industry, including transportation and storage facilities.

Funding:

• The SDF is funded through various sources including levies on sugar produced and imported, loans from financial institutions, and grants from the government.
• The fund is also supplemented by contributions from sugar factories and other stakeholders in the industry.

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