Out of 527 sugar mills that were operational in the current marketing year ending on September 30, 154 mills have stopped crushing, the trade body said.
The central government has allocated sugar quota for sale to each of the 524 mills in the country.
The government’s decision to give subsidized loans to sugar mills is designed to solve the politically sensitive issue of cane arrears in the run-up to elections
Indian Sugar Mills Association (ISMA) Director General Abinash Verma said mills interest burden will reduce by Rs 800-900 crore with government providing the interest subvention.
The Australian Government first lodged a counter-notification with the WTO over to India's sugar subsidy practices last November.
The inter-governmental body, in a quarterly report, said the smaller surplus was mainly due to diminished outlooks for production in Brazil and the European Union which was partially offset by an upward revision for Thailand.
Brazil argues that Indian subsidies have caused significant impacts on the world sugar market.
Despite being lower than the last season, production in sugar season 2018-19 is likely to exceed sugar demand of around 26 million tonne (MT).
Mills in the western state of Maharashtra produced 8.3 million tonnes sugar during the period, up 11 percent from a year ago.
On February 14, the government had announced a 7 percent increase in the minimum support price to Rs 31 per kg from Rs 29 for sugar.
The increase of Rs 2 per kg in the minimum selling price of sugar is much less than what the industry wanted but even this comes with strings attached. The government wants cane arrears cleared.
The government has increased the minimum selling price (MSP) of sugar to Rs 31,000/MT from Rs 29,000/MT (announced in June 2018), to support the oversupply hit sugar industry.
The minimum selling price (MSP) is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.