Bengaluru: Shares of Indian sugar companies rose on Tuesday following reports that the federal government would announce a bailout package of over Rs7,000 crore ($1.04 billion) for cash-starved sugar mills to help clear dues to farmers.

Dhampur Sugar Mills Ltd and Mawana Sugars Ltd gained 7% each, while Balrampur Chini Mills Ltd and Avadh Sugar & Energy Ltd climbed more than 6% each.

Uttam Sugar Mills Ltd, Magadh Sugar & Energy Ltd and Dalmia Bharat Sugar and Industries Ltd rose 4% each.

The Cabinet Committee on Economic Affairs is scheduled to meet on Tuesday to decide on the bailout, according to the report.

Reuters reported late last month, citing official sources, that the government would soon approve a plan to create “buffer stocks" of 3 million tonnes of sugar to prune surplus in the domestic market and stem a free fall in prices.

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