The surge in export and diversion of sugar for ethanol production has come as a big boost for the sugar industry saddled with a huge inventory due to record sugar production during the last crushing season 2021-22.
India exported one crore metric tons of sugar and diverted 35 lakh MT to ethanol production during the 2021-22 sugar season.
“It is a good omen for the sugar industry struggling to dispose of the excess sugar production,” Deepak Guptara, secretary of UP Sugar Mills Association (UPSMA), representing over 100 sugar mills in the private sector, said. “Despite the export and significant increase in ethanol production, the market price of sugar is still Rs 3-4 kg lower than the cost of sugar production.”
He added: “The exports and surge in ethanol production will have an overall positive impact on the finances of the sugar industry, enabling it to clear the dues of the sugarcane farmers at the earliest.”
Export of one crore MT sugar till August 1, 2022 in the current sugar season has helped in improving the liquidity of sugar mills by Rs 33,000 crore, enabling them to clear cane dues of farmers.
Further export of 12 lakh MT of sugar would help in improving the liquidity of sugar mills by Rs 3,600 crore, enabling them to clear cane dues of farmers which stood around Rs 9,700 crore on August 4, 2022.
During the past few years, sugar production in the country has been consistently more than the domestic consumption, thereby creating the surplus situation. With a view to address the problem of surplus sugar in the country, the Central government has been encouraging sugar mills for the last several years to divert surplus sugar to ethanol and is also facilitating mills to export surplus sugar, thereby improving liquidity of sugar mills, enabling them to clear cane dues of farmers.
Export of sugar and diversion of sugar to ethanol during recent times has also helped in maintaining demand-supply balance and stabilising domestic sugar prices, the ministry said.
The Central government, meanwhile, is also concerned about food inflation. Therefore, with a view to ensure sufficient availability of sugar for domestic consumption within the country at a reasonable price, the government, in May, 2022, imposed restrictions on export of sugar beyond one crore MT.
Uttar Pradesh is leaving no stone unturned to boost ethanol production. With the aim to meet the Central government’s target of 20 percent ethanol blending by 2025, the state is adopting various measures. The ethanol production in UP has increased from 43.2 crore litre in 2016-17 to 107.21 crore litre in 2020-21.
Till the year 2014, the ethanol distillation capacity of molasses-based distilleries in India was only about 215 crore litre. However, in the past eight years, due to the policy changes made by the government, the capacity of molasses-based distilleries has been increased to 569 crore litre. The capacity of grain-based distilleries, which was 206 crore litre in 2014, has increased to 298 crore litre. Thus, the total ethanol production capacities have increased from 421crore litre to 867 crore litre in the last eight years.