Windfall for sugar mills as Centre allows export of alcohol-based sanitiser

Hit by the slump in sugar demand following lockdown and consequent subdued realisations, mills have run up huge farmers' outstanding pertaining to the current sugar season 2019-20

Unlocking an additional revenue stream for the beleaguered domestic sugar sector, the Central government has allowed the export of alcohol-based hand sanitizer, a commodity in high demand globally in the fight against Covid-19.

On May 6, the Centre banned the export of the product to ensure domestic market availability, although non-alcohol-based sanitizers were allowed to be shipped.

In his June 1 order, Director General of Foreign Trade (DGFT) Amit Yadav, who is also the ex-officio additional secretary at the Centre, notified the export of alcohol-based hand sanitizer with immediate effect “in any other form/packaging” other than in containers with dispenser pump.

Hit by the slump in sugar demand following the lockdown and subdued realisations, mills have run up huge sums outstanding in the current sugar season 2019-20 with mills in Uttar Pradesh alone accounting for Rs 15,000 crore.

Recently, a few major private sugar millers petitioned the Centre asking it to allow the export of alcohol-based sanitizer considering robust installed capacities and abundant production to serve the domestic market.

For example, manufacturing capacity in UP is around 530,000 litres a day, while current production is about 280,000 litres. At present, 87 units in UP are commercially manufacturing hand sanitizers, of which 37 are standalone sanitizer plants, 27 sugar mills, 12 distilleries, and 11 independent entities.

The mills that have set up sanitizer facilities include Balrampur Chini, Birla, Dalmia, Dhampur, and Uttam.

 

 

Talking to Business Standard, UP Sugar Mills Association (UPSMA) secretary Deepak Guptara welcomed the order saying it would have a positive impact on the domestic sugar industry.
 

“There is high demand for hand sanitizer in the Indian subcontinent and our immediate markets, such as Sri Lanka. Besides, hand sanitizer manufactured by mills is 80 per cent pure, although the World Health Organisation (WHO) norms mandate purity of 65 per cent and above,” he added.

Some mills are manufacturing bulk quantities or supplying to other firms for bottling and marketing, a few others have signed contracts to supply ethanol/ethyl alcohol/extra neutral alcohol (ENA) to external plants.

While sanitizers are generally manufactured with isopropyl alcohol (IPA), they have been found equally effective with ethanol/ethyl alcohol/ENA, which are sugar byproducts.

Since, mills are focussed on producing hand sanitizers rather than marketing the commodity, they have been able to maintain the high purity ratio, said Guptara, adding that mills have instituted substantial production capacity.

Earlier, Sanjay Bhoosreddy, UP sugar industry and sugarcane development principal secretary, had said sanitizer manufacturers were getting trade enquiries from foreign buyers, but the state was focussing on ensuring adequate domestic supply before exports could be considered.

Although the 2019-20 sugarcane crushing season is tapering off, mills are likely to continue with sanitizer production, since they have abundant stock of ethanol/alcohol, especially in UP.

So far, the UP-based units have collectively produced about 9 million litres, of which over 7.5 million litres have been supplied to the retail market.