According to the South Indian Sugar Mills Association, Tamil Nadu (SISMA TN), the capacity utilisation for the season ending September 2018 has come down to 27 per cent from the previous year's 39 per cent. The quantity of cane crushed was around 8.2 million metric tonnes, compared to 11.9 million metric tonnes during the previous season. Sugar production has come down to 708,000 metric tonnes, compared to over one million metric tonnes during the previous year.
The cost of production of Tamil Nadu sugar will be higher than the rest of India by Rs 10 per kilogramme, said the organisation.
However, the policy interventions by the Government of India in the recent past, including the increase in direct subsidy to farmers to Rs 138.80 per tonne of cane and the increase in remunerative prices for ethanol produced directly from cane juice to Rs 59.13 per litre and that of ethanol produced from B-heavy molasses to Rs 52.43 per litre from Rs 47.13 per litre, will help the industry.
"This would really help the industry in the coming season, which will start in October 2018," said Palni G Periasamy, president of SISMA TN.
He added that the direct subsidy to farmers could be increased to Rs 300, which would help them financially. The government could also support the industry by advising the Reserve Bank of India to have a relook at the policies related to non-performing assets (NPAs) in the sector.
The industry is expecting that a better monsoon this year, if it occurs, would result in an increase in capacity utilisation to 32 per cent during the next season. The sugar production in the state could also go up due to this.