The sugar industry has requested the government to increase the ethanol price (made from cane juice/syrup) to ₹69.85 per litre from the current ₹65.61/litre. The increase is essential for the industry which needs further investment of ₹17,500 crore to raise capacity, an industry body said.

In a letter to the Department of Food and Public Distribution, Indian Sugar Mills Association (ISMA) has said to achieve the 20 per cent blending target by 2025, about 1,200 crore litres of ethanol is required. The sugar industry has contracted for supply of 400 crore litres in 2022-23 ethanol supply year (December-October), it said.

“For additional 800 crore litres, ISMA estimates massive capacity enhancement will require an investment of ₹17,500 crore with a reasonable return on investment,” the industry body said in a statement.

Below expectations

Expressing fear that without proper return, the industry and the banks will not be able to make these additional investments, ISMA said the supply of juice (for ethanol) has been less and below the government’s expectations in the current year due to non-viability at the current price.

“We request the current system of TPA (tripartite agreement) should be signed with all the suppliers. Certain amendments in the tender terms issued by OMCs, continuation of interest subvention scheme and revision of ethanol price keeping in mind the increase in FRP, other costs of production and the sugar prices will be the key requirement to achieve the goal,” it said.

Also the industry body of private sugar mills has requested the government to hike the ethanol rate suitably for next ethanol supply year starting November, considering the increase in fair and remunerative price (FRP) of sugarcane for 2023-24 season to ₹315/quintal from ₹305/quintal now.

The government fixes ethanol rates every year on the basis of feed stock used and accordingly OMCs contract with mills and distilleries. The ethanol prices for 2022-23 are ₹60.73/litre if made from B-heavy molasses, ₹58.50/litre if made from rice supplied by FCI, ₹56.35/litre if made from maize, ₹55.54/litre if made from broken rice/damaged grain and ₹49.41/litre if made from C-heavy molasses.

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