An informal group of ministers, headed by Agriculture Minister Sharad Pawar, has recommended a number of incentives to the sugar industry including financial package to pay cane farmers .

Announcing the bailout package to the sugar industry, Mr Pawar told reporters after the meeting in New Delhi today,that banks would provide 7,200 crore rupees loan at 12 per cent interest rate to sugar mills with a condition that the money would be used for paying cane farmers.

The PM-constituted panel also recommended loan recasting for mills as per the Reserve Bank norms, incentives for production for raw sugar of up to 4 million tonnes and setting up of buffer stock besides doubling ethanol-blending in petrol to 10 per cent.

The panel, however, ruled out an immediate hike in sugar import duty.

The sugar industry is facing a financial crisis due to higher cost of production and falling sugar prices that have led to cane arrears of Rs 3,400 crore from 2012-13 marketing year that ended September .