The 2021-22 sugarcane crushing season promises to be a historical one for the sugar industry. With sugar prices bullish in both domestic and international markets, the industry hopes to see healthy exports without the need of government subsidy.
The decision of the central government to push for ethanol has also proved to be game-changer for the industry and will help it function independent of any government help or subsidy, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories.
On Wednesday, the Union cabinet also increased the procurement price of ethanol by oil marketing companies, which was a welcome move, said Naiknavare.
Speaking to The Indian Express, he said 34 lakh tonnes of sugar were expected to be diverted for production of ethanol this year, as against 22 lakh tonnes diverted last year.
Naiknavare said ethanol was a fast moving commodity, with payment for it being released within 15 days. “Sugar prices are not static, while ethanol prices are fixed. Mills do not have to make special efforts to sell it, and the last drop of it is picked up by the oil marketing companies,” he said.
At present, the country’s installed capacity for ethanol production is 456 crore litres, with Naiknavare saying he expects India to achieve 10 per cent blending in fuel by the end of this season. “Once we achieve 20 per cent blending by 2024-25, 60 lakh tonnes of sugar will be permanently diverted for production of the fuel additive. This will be a turning point for the industry…,” he said.
But cooperative mills have failed to raise finances for expanding or starting green field production facilities. In 2014, the government had announced an interest subvention scheme for setting up of ethanol production units. Till date, banks have disbursed finances to 52 mills, of which 15 are from the cooperative sector. “We have taken up the matter with the Finance Ministry as well as the newly-formed Ministry of Cooperation also,” said Naiknavare.
He said the country will see production of 315 lakh tonnes of sugar, which includes 34 lakh tonnes diverted for ethanol this season. Given the bullish trend in sugar prices, the industry hopes to export 50 lakh tonnes of sugar during the season. “We have lost out important markets of Afghanistan and Sri Lanka but we are hopeful of getting entry into new markets,” said Naiknavare.
However, nearly Rs 1,500 crore worth of subsidies is yet to be released by the government towards export and buffer stock creation.
