While sugarcane price is fixed by the Centre, some states like Uttar Pradesh set their own State Advisory Price (SAP) which is normally higher than the central rate.
As per the rule, mills have to pay cane price within 14 days of supply of raw material, failing which interest at 15 per cent per annum is charged on amount due for the delayed period.
In an official statement, the Food Ministry said: "Despite higher production and lower sugar prices in the current season as compared to previous sugar season, the cane price arrears are relatively lower."
Cane arrears are lower than the last season because of various measures taken by the central government and efforts of state governments, it said.
As on date, cane price arrear in the current season on SAP basis is at Rs 7,826 crore in comparison to Rs 8,982 crore during the corresponding period of last season, it added.
The ministry also said: "Crushing of sugarcane during current season is in full swing and mills will be able to liquidate their cane dues by the sale of sugar and their by- products in the coming days".
Even the cane price arrears for the 2016-17 season have been reduced to only Rs 52 crore (on the basis of central price FRP) and Rs 1,076 crore (SAP basis) against cane dues of Rs 57,608 crore.
Thus, about 99.9 per cent of cane dues (FRP basis) in respect of 2016-17 season have been cleared.
In case of arrears of the 2015-16 sugar season, only Rs 122 crore (FRP basis) and Rs 710 crore (SAP basis) are pending and payments for earlier arrears are in process, the ministry added.
India is the worlds second biggest sugar producer.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)