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Sugar Industry In Focus: India Restricts Diversion to Ethanol Amid Domestic Supply Concerns
Sugar industry in India: India is moving to limit the diversion of sugar for ethanol production, aiming to secure adequate domestic supplies of the sweetener. This policy shift is a blow to the industry, which has invested heavily in expanding ethanol production capacity over the past five years.
Updated Dec 7, 2023 , 12:24 PM IST
Ethanol production in India: India is moving to limit the diversion of sugar for ethanol production.
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Sugar industry in India: India is moving to limit the diversion of sugar for ethanol production, aiming to secure adequate domestic supplies of the sweetener, government and trade sources told Reuters on Wednesday. This shift is intended to boost sugar production in the country, which ranks as the world's second-largest producer. The expected decrease in sugar output, attributed to subpar rainfall in key cultivation areas, is a driving factor behind this policy change.
New Directives Impact Ethanol Production from Sugarcane
Authorities are considering directives for mills to refrain from using sugarcane juice and B-heavy molasses – a byproduct with a high sucrose content – for ethanol creation. Indian fuel retailers have been offering premium prices for ethanol derived from these sources. They have been focusing on ethanol blending with petrol to reduce dependence on exports.A government source told Reuters that a ministerial committee has resolved to prioritize sugar production this year after evaluating demand and supply dynamics. The source added that mills would be encouraged to produce ethanol exclusively from C-heavy molasses, which contains minimal sugar residue.
Officials are finalising new ethanol procurement guidelines for the 2023/24 marketing year, which began on November 1. These guidelines are expected to uphold the validity of contracts already awarded by oil marketing companies, the source mentioned.
A Blow To the IndustryThis policy shift is a blow to the industry, which has invested heavily in expanding ethanol production capacity over the past five years, stated a senior industry official. The official expressed hope that this would be a temporary setback, anticipating a return to ethanol-focused policies once sugarcane supply stabilises.
Uneven rainfall in Maharashtra and Karnataka, India's leading sugarcane-producing states, has sparked concerns about this year's sugar production levels. The Indian Sugar Mills Association reported last month that sugar production could drop by 8 per cent to 33.7 million metric tons in the 2023/24 marketing year. This anticipated decline has driven local sugar prices to their highest point in nearly 14 years.
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