The government is likely to allow diversion of 1.7 million tonnes of sugar for the production of ethanol, an official aware of the matter said Friday, a few days after it directed sugar mills and distilleries not to use sugarcane juice and syrup for ethanol production in the 2023-24 supply year.
The government will come out with a fresh notification allowing this, the official from the food ministry said.
The notification will mention the amount that can be produced from juice and syrup, the official added.
On December 7, the government issued a directive banning the use of sugarcane juice or sugar syrup to make ethanol during the current ethanol supply year (November 2023 to October 2024). It, however, permitted utilising B and C heavy molasses and food grains subject to a monthly review.
The government’s decision came amid concerns about a fall in the production of sugarcane due to erratic weather conditions, and rising prices of the sweetener in the domestic market. The all India average consumer wholesale price of sugar was INR 4,142.21 per quintal on December 14, compared with INR 3,934.39 on the same day last year, according to government data.
Food inflation, which accounts for nearly half of the overall consumer price basket, accelerated to 8.70% in November, against 6.61% reported the previous month, prompting the government to take various steps to curb the prices of essential food items. In October, the Ministry of Commerce and Industry and the Directorate General of Foreign Trade amended the export restriction on sugar beyond October 31, 2023, to an indefinite period.
Industry body Indian Sugar Mills Association said the sudden ban on the use of cane juice for ethanol would have an adverse impact on capacity utilisation of mills, putting at risk their INR 15,000 crore investment in the last three years to set up plants for the green fuel. It also fears that there could be a delay in payments to sugarcane farmers.
Rainfall in states of Maharashtra and Karnataka was 3% and 18% lower, respectively, on-year this year.
