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With a view to encourage sugar mills to divert excess sugar cane / sugar to ethanol & to achieve targets of blending ethanol with petrol in line with Ethanol Blended with Petrol program, incentive on sugar sacrificed for producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar has been doubled from October 2021, onwards in their monthly release quota.

Issue

• It is pertinent to mention here that in every sugar season (October-September), production of sugar is around 320-330 Lakh Metric Tonne (LMT) as against the domestic consumption of 260 LMT which results in huge carry over stock of sugar with mills.
• Due to excess availability of sugar in the country, the ex-mill prices of sugar remain subdued resulting in cash loss to sugar mills.
• This excess stock of 60 LMT also leads to blockage of funds & affects the liquidity of sugar mills resulting in accumulation of cane price arrears.

Solution

• With a view to prevent cash loss to sugar mills caused due to subdued sugar prices, Government in June, 2018 has introduced the concept of Minimum Selling Price (MSP) of sugar & fixed MSP of sugar at Rs. 29/ kg which was revised to Rs. 31/ kg w.e.f 14.02.2019.
  
• Now, those sugar mills which will be diverting sugar to ethanol would be getting the entire quantity of sugar sacrificed on producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar in their monthly release quota.
  
• The Centre is taking several steps for diversion of sugar to ethanol. In order to find a permanent solution to address the problem of excess sugar, Government is encouraging sugar mills to divert excess sugarcane to ethanol.
• Government has fixed target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2025.

Impact

• It would benefit maize & paddy farmers, would addresses surplus grain problem; about 165 lakh tons of grains will be utilized.
• Diversion of  60 lakh tons of surplus sugar would address the problem of surplus sugar, checks depressed sale of sugar, improves liquidity of sugar mills and  will ensure timely payment of cane dues of farmers           
• It will bring new investment opportunities as about Rs.41, 000crore would be invested to set up new distilleries in rural areas & would result in job creation in villages.   
• Would improve air quality, reduces Carbon Monoxide emission by 30-50% & Hydrocarbon by 20%.
• Would save foreign exchange of about Rs. 30000 cr on account of crude oil import bill and would reduce dependence on imported fossil fuel thereby would help in achieving the goal of Atmanirbhar Bharat in petroleum sector.

Source: PIB